Top Fintech Trends to Follow in 2022

Top Fintech Trends to Follow in 2022

In 2020, the financial services company Plaid, together with The Harris Poll, asked 2,000 people about the impact of COVID-19. 76% admitted technology made it easier to try new financial areas. It reduced anxiety related to financial matters for 68% of respondents and helped 45% save money. 73% of people saw fintech as the “new normal” after the global pandemic.

The “new normal” includes contactless payment applications, digital banks, embedded finance, and other tools. And these solutions will most likely stay with us after the restrictions end and develop into new products and markets ideas. The Rocketech experts prepared a guide to the leading fintech trends to expect in the upcoming year.

What is Fintech?

Fintech (short for financial technology) is a technology or innovation businesses use to provide customers with financial services. The “tech” includes big data, artificial intelligence and machine learning, automation, blockchain, cloud computing, biometrics, and others.

Simply put, it is an application, software, business model, or any innovation that makes the interaction between people and their money simpler, faster, and more secure. The term ‘fintech’ also describes a business approach when companies compete with traditional financial institutions to win customers using innovative solutions.

Online shopping and cashless payments hardly surprise anyone. The fintech industry is growing exponentially and taking more advanced forms going beyond checking your account balance online. According to Toptal, in 2018, fintech accounted for $128 billion out of $254 billion invested in venture capital worldwide. We picked up three examples best illustrating today’s fintech area.

Blockchain

A blockchain is a decentralized database that is simultaneously stored on multiple computers connected to each other on the Internet. Such a structure ensures that the data is resistant to any modifications and provides the highest levels of reliability. It is the underlying principle of cryptocurrencies.

When you send, for example, a Bitcoin, thousands of computers globally confirm and store all the information about the transfer. The process takes a few minutes, and the money is impossible to lose or counterfeit. There are no third parties or intermediaries, and the technology’s mathematical accuracy guarantees the accuracy of the calculations.

As of the end of November 2021, there are almost 80 million registered blockchain wallets worldwide.

Blockchain applications are plenty: smart contracts, proof of copyright, biometric authentication, trading, deal-making, energy distribution, and even voting.

Digital Banking

Digital banking is a broad term that describes an ongoing shift from the traditional form of banking towards partial or complete digitization of banking services. While offline banks implement more flexibility with partial online services to retain customer loyalty, neo- and challenger banks win new clients by introducing branchless and fully digital service models.

Kearney expects Europe to have 85 million neobank users by 2023.

Forward-thinking financial institutions have already moved towards cloud-native core banking. It makes their systems more agile when implementing and developing new services for their customers.

Embedded Finance

Embedded finance means the seamless integration of financial services into non-financial products and solutions. The banking-as-a-service (BaaS) model enables e-commerce businesses to offer their customers simple credits or in-installment payments. In a broader sense, it makes banking transactions available for any business’ customers when they need them at any location.

73% of European brands are to implement embedded finance services by 2023.

Today, the market offers embedded investment instruments, debit cards, insurance, and lending.

Top 5 Trends to Shape Fintech in 2022

Although the financial world is rather conservative, the recent global events have changed consumer needs and altered the way investors see the market. Implementing innovative technologies has always been associated with high risks in the financial sector. Today, it is changing as companies have to adjust to new, highly competitive environments. We summarized five leading fintech trends industry experts expect to dominate the field.

Contactless Services

In 2020, many companies had to change customer experience due to pandemic regulations. It significantly reduced cash turnover. Non-financial businesses had to adapt to this new reality as well. For example, real estate businesses implemented innovative solutions providing customers with loan and mortgage options online. Today, it is already possible to take out a loan to buy an apartment, insure it, and make a design project within a few hours using your favorite gadget on a couch.

Sharing Economy

Coworking, carsharing, co-living, and other forms of temporary shared ownership are becoming increasingly popular. It attracts more investments. Customers’ desire to save and allocate resources more rationally led market pioneers to new product ideas. These ideas will grow into broader concepts in the near future.

For example, family credit sharing will allow families, relatives, or even friends to share future property and loans for large purchases. And sharing loans for public spaces can become crucial for local communities with self-government. It includes sports- and playgrounds, roads, or recreational areas. Following this model, homeowners can make collective decisions and share loan payments in monthly utility payments. These products can help banks expand their customer reach and increase brand loyalty.

Voice User Interfaces and Personal Assistants

Amazon’s Alexa and Apple’s Siri have already settled in many homes worldwide. Following this example, banks and other financial institutions have realized that creating their own voice assistant helps improve customer experience significantly while saving budgets on maintaining call centers.

U.S. Bank, Bank of America, Turkish Garanti, and Russian Tinkoff Bank are among the financial services companies that developed voice assistants for their mobile apps. Customers can quickly find answers to the most frequent questions, set reminders, get assistance in money transfers, and much more – as if they interact with a human.

Creating Ecosystems

Ecosystems as a business model are not new. Think of Apple products. Excellent synchronization between different devices pushes people to purchase a couple more devices of the same brand. At some point, the idea of switching to another brand does not look attractive as you want to maintain your own ecosystem of connected gadgets.

The ecosystem allows companies to earn more money by expanding the product lining and gaining an advantage in the struggle for daily communication with users. This business model is, for the most part, a way of buying or expanding a customer base. Potential customers may not want to sign up for a particular bank while using its other services without realizing they belong to the same brand.

This trend, however, may make it difficult for new small companies to compete with industry giants. After all, it is cheaper and more convenient to buy one subscription for several services at a single interface than to sign up for each product separately from different startups.

Investments Instead of Bank Deposits and Savings Accounts

People show more interest in investments – both classical instruments (stock and funds) and new ones (IPOs and cryptocurrencies). In the traditional view, it involves financial investment in a business model that has proven effective and has the potential to scale. However, there is more to it. There is always a person or a group of people at the heart of any project. And people like communicating with people, not with brands. For many, a chance to invest in human-driven projects means the idea of changing the world for the better besides getting financial profit in the long run.

Final Thoughts

We are already used to paying for the groceries at a local shop using a smartphone or communicating with chatbots when looking for necessary information on a company website. We are not surprised by the endlessly rising Bitcoin exchange rate and expect personalized content in most digital services we use daily. However, more changes are yet to come. And these changes transform technologies making businesses adjust to meet consumer needs.

Fintech is undoubtedly one of the most challenging industries due to higher risks and, as a result, the need for the highest levels of security. At Rocketech, we stay on top of the most recent developments and hottest trends in fintech. Combining our extensive experience in mobile development with expert business analytics, we create high-quality, valuable products according to the needs of our clients. Contact us today!