These days, Financial Technology or FinTech is encountering a rapidly positive change. Progress in this industry is implied to help banks, financial institutions, and their clients who opt for their services to abstain from overspending, navigate risks, and usually deal with their finances better.
One of the worthiest transformations has been the introduction of new advancements of FinTech services and products designed for particular functions inside the financial ecosystem like Reg-tech, insurtech, and robo-advising. Before discussing the top FinTech trends to explore in 2022, let’s reflect on what FinTech is!
What is FinTech?
FinTech or Financial Technology certainly means finance and technology integrating with a viewpoint to contributing and producing creative solutions for businesses and assisting financial service providers in serving their clients better. The use of technologies, such as eCommerce, biometrics, Artificial Intelligence, Blockchain, and more supports this all.
FinTech is neither a brand name nor a piece of software. Rather, it’s a collective term for tech trends in the Fintech or financial sector. FinTech solutions enable banking quicker and smarter. Whether implemented in combination or individually, they can make a business more effective and help interact with employees, clients, or suppliers more easily.
Moreover, FinTech solutions can organize business operations by combining many software products into one completely digital ERP solution. Using new-gen secure mobile apps, users don’t need to waste their time on daily activities. Sending alerts, tracking, and making payments, sending invoices or receipts become no issue with FinTech solutions.
FinTech provides you more opportunities to get new credit options, borrow money, and more detailed access to innovation. Looking for investors and mentorship in this industry is possible. Online selling of products and services, receiving digital payments in any form, and from anywhere that is feasible and legal for every party involved – that is the reality made by FinTech.
Top FinTech Trends to Encounter in 2022
The list of FinTech trends we mentioned below may not be new necessarily, but the pace of transformation or adoption level is notable, particularly as other business fields are decreasing. Let’ see what FinTech trends to watch out for 2022 and beyond!
1. Digital-Only Banking
When a bank virtually provides P2P transfers, contactless MasterCard alongside free transaction fees, global payments, and an opportunity to purchase and exchange Ethereum, Bitcoin, and other cryptocurrencies, the financial sector notices fast.
Digital-only banks are extremely beneficial – nobody needs to spend a moment visiting any bank physically, no tedious paperwork to hands, and no queues for testing your patience. This is why they are developing in revenues and numbers worldwide.
Visits to banks are going to drop 36% from 2017 to 2022 due to the rise of digital-only banks. Some other benefits include feasible cost management, fast bill payment, reset pins from home, real-time analytics, and fast balance review.
2. Biometric Security Systems
Mobile banking and other digital financial services have become popular as they are at one’s fingertip. This is not just a great accomplishment but also raises many security-related queries. In the meantime, cybercrime expands day by day.
Hence, every FinTech company should take all necessitous security measures and the biometric system is the greatest way of bringing security to a further level. It offers users the confidence that their information is safeguarded. Nevertheless, presently, the biometrics market is experiencing big changes under the circumstances’ pressure.
Biometric sensors that include physical contact are predicted to drop in popularity. Despite the entire development in the use of biometric technology for verifying identities, contactless solutions will take over the market of the touch-based fingerprint reader.
3. Blockchain Technology
According to the report by Business Insider Intelligence, 48% of banking representatives believe that new technologies like Blockchain are going to have the biggest effect on banking through 2020 and beyond.
Blockchain is predicted to bring about a worldwide transformation in financial systems. It does not just provide new technology but also a new philosophy of decentralized finance that concentrates on reducing centralized procedure.
By now, Blockchain technology has inspired the development of different online peer-to-peer financial platforms that allow monetary interactions for taking place more decentralized manner. It’s a distributed ledger technology that can improve current procedures and systems. Banks are already using Blockchain technology with the hope of reducing expenses and enhancing internal procedures.
4. Neobanking 2.0
With more than 75 challenger banks globally, the industry is getting saturated having virtual options to branch-based banking that enable digital account opening without monthly fees. Competition is causing a demand for distinguishing among neobanks.
From apps focused on financial recommendations and credit-building to niche-focused platforms – the next-gen digital-only banks are offering more than just debit cards and basic checking. This trend’s part will arise from non-FinTech organizations having a settled client or employee base that can get benefitted from banking services.
Big economy organizations can provide employee banking that deducts withholdings, gets wages, and permits for advances depending on earnings history.
Moreover, business cost handling tool providers are introducing total business banking platforms that incorporate credit lines for cash flow, deposit accounts, and corporate cards.
5. Artificial Intelligence
Since bank revenues are surpassing the countries’ incomes, undoubtedly they will adopt the AI at first. These days, banks are fine-tuning their AI solution tactics, which will enhance the greater acceptance of AI in the sector.
According to Autonomous research, AI is planned to lower the operating expenses of banks by 22% around 2030, which means that banks can have $1 trillion savings. Nevertheless, the way toward this outlook can be difficult. Simply like other global employers, banks don’t have a lot of AI-skilled experts.
Being capable of working with unstructured information, AI is well-balanced to manage the rising cybercrime incidents, financial fraudulence threats among them.
Artificial Intelligence has already become popular having the most efficient client service software using some smart systems like chatbots. FinTech institutions won’t be an exception, enabling quicker transactions and providing clients the feasibility they look for.
6. Open Banking
This is another noteworthy technology that brings banks and financial technology together, allowing data networking across many institutions. Directly associated with the Second Payment Services Directive (PSD2), it makes banks to understand their info in a standardized, secure form for data to be shared more simply among genuine companies digitally.
It permits controlling the banking and other financial data of clients by third-party apps via data sharing using AI and APIs. Now, several industry giants anticipate that open banking is going to reconstruct the banking sector. Moreover, open banking is reported to have produced $7.29 billion in 2018 and is predicted to reach $43.15 billion by 2026.
Financial institutions require FinTech which needs credit unions and community banks. And evolving from this demand, open banking partnerships can offer clients a completely integrated view of their financial accounts so they could be handled more easily.
As an outcome, the availability of open banking services and products are predicted to aid lower debt, better financial decision making, and enhanced long-term wealth production.
This benefits FinTech employees, banking institutions, API industry figures, clients, and even underserved communities. Albeit it permits banks for opening up, open banking also introduces some unresolved problems such as data security and handling of security threats.
However, collaboration and awareness across financial institutions can help make value-added services for individuals and abstain from difficulties.
The financial industry is a regulated sector and FinTech innovations need a simultaneous growth of Reg-Tech. This indicates new tech solutions that enhance and organize regulatory procedures. Reg-Tech has evolved regarding the highest institutional demand that has appeared from the massive development of compliance expenses.
Reputed financial actors, tech firms, and legislators will work together for introducing new regulatory innovations; however, these require time for maturing.
8. Payment Innovations
In FinTech, payment innovations have many elements, including contactless payments, mobile payments, smart speaker systems, mobile wallets, AI and machine learning for security, and identity verification technologies.
Gen Zers will be the competent driver of payment innovations. Mobile payments will increase further in 2021. In 2018, almost 440 million people were using contactless payments. This target is about to reach 760 million through 2020.
Furthermore, mobile wallets have almost replaced physical wallets. The wallet using reward cards, users’ credit cards, and more have acquired a wider audience. Only in 2019, there were almost 2.1 billion mobile wallet users.
9. Autonomous Finance
For autonomous finance, FinTech applications are the prime building blocks. They remodel people’s way of interaction with money, becoming many people’s services of choice especially because of their advantages.
FinTech’s benefits lay the ground for more growths like autonomous finance. It emerges around the concept of self-driving funds. Not just the technology assists clients in making immediate decisions regarding their money such as how to approve a loan at more suitable rates of interest, where to invest the money, or what to do with an overdrawn account, but also it performs all these jobs for them.
The autonomous finance began from robo-advisors that were involved with software-based financial strategies and mutual funds handling. Then, it has emerged to automotive-saving apps and finally, into credit card debt handling solutions, like the ones that assist with student loans also.
Autonomous finance utilizes the power of machine learning and artificial intelligence to handle users’ funds. Such apps assess the available options algorithmically and help a user enjoy the most beneficial ones.
10. Alliance for Financial Inclusion
FinTech promises huge advantages not just to countries but also to every client. FinTech if done with no appropriate strategy would drive already marginalized players away from the prevailing.
The foundation of the AFI (Alliance for Financial Inclusion) is a great step towards making sure that FinTech doesn’t leave out big sectors of societies as it shifts fast changing the worldwide economy.
The financial services industry is rapidly growing. The FinTech trends we have mentioned above have evolved regarding clients’ demands. They help providers deliver greater financial services that permit enhanced availability of financial data, faster transaction processing, enhanced transparency, better assistance for the client lifecycle, and more secure identity verification.
The FinTech revolution is becoming stronger. Hence, if you don’t want to be left behind, earn your clients’ trust, listen to them, create a smooth and transparent experience, explore industry trends of Fintech, respect your clients’ privacy, and always make tech investments targeted for aligning the latest tech developments with people’s demands.