The coming year will see many important developments in the fintech space. In this article, we look at the top 5 fintech trends for 2022 that are expected to change the financial landscape and affect all industries more broadly in the coming year.
Fintech trends to watch in 2022
Let’s take a look at five trends that will shape the future of fintech.
1. Cashless is king
Cash payments now account for less than one in six, according to the British Finance Corporation. The pandemic has accelerated an already sizable shift to cashless payments, with payments using paper money or coins down 35% in 2020.
This trend will only increase in 2022 with the rise of cashless merchants and increased digital transformation across industries including digital accounting and financial management operations. Before long, it will be the norm to only pay with debit or credit cards, using apps like Google Pay on your phone, or via other electronic payment methods.
2. The Year of Blockchain
With many key developments taking place, 2022 will be a landmark year for blockchain technology.
Blockchain as a Service
Demand for blockchain-as-a-service (BaaS) products will continue to grow. With the growth of cryptocurrencies and the broader digital transformation, fintech companies building products on blockchain are expected to gain greater traction as companies across industries look for ways to digitize and simplify all areas of their business . To name two examples, blockchain solutions are increasingly being used to manage corporate invoices and cross-border payments.
Traditional Banks Really Embrace Blockchain
According to Deloitte’s 2021 Global Blockchain Survey, 76% of executives surveyed globally “believe that digital assets will be a strong or complete replacement for fiat currencies in the next 5-10 years.”
It’s no exaggeration to say that corporations and traditional banks are largely aware of blockchain’s potential to transform society, offering a whole new way of transacting and serving customers. The 13 largest banks in the world have invested a total of $3 billion in cryptocurrency development, either directly or by funding cryptocurrency companies.
Notably, investment banks have started adding crypto assets or funds to their portfolio products. Arguably the most prominent of these is JPMorgan. JPMorgan CEO Jamie Dimon, once a prominent crypto skeptic, led the group to embrace crypto, registered a Bitcoin fund with the SEC and even launched its own token. Companies can expect a dramatic increase in interest in this institutional banking cryptocurrency by 2022.
The emergence of a global cryptocurrency framework
Regulators around the world have been discussing implementing an agreed international framework in response to the massive rise of cryptocurrencies and decentralized finance, Bank for International Settlements (BIS) executive Benoît Cœuré recently revealed. The overarching goal of such a framework is to develop measures to limit the associated downside risks, while taking advantage of the significant benefits it can generate.
Cœuré said a realistic draft proposal would take shape in 2022. Such a framework would represent a massive acceptance of cryptocurrencies and blockchain and could help drive further mainstream adoption by businesses and society as a whole.
3. Video Banking Goes Mainstream
As part of the migration to non-branch banking, financial institutions are looking at how to use video as a means to best serve their customers. Video Banking is built on an intelligent chatbot service by using artificial intelligence and machine learning techniques. For example, AI can generate appropriate answers to specific customer questions.
ABN AMRO is one of the main adopters of video banking. Joeri Hartmans, Investment Banking, said: “Clients are really looking for personal conversations with quality and expertise. What we’re adding with video banking is the digital convenience that clients demand.”
More tech-savvy traditional banks are likely to invest in video banking in the coming year as a way to drive customer engagement, combining human staff with the help of artificial intelligence and machine learning.
4. The war for talent is fiercer than ever
The Great Resignation has seen millions of talented professionals leave their jobs since the onset of the pandemic. This development, coupled with a surge in demand for professionals with specific skills, especially in data science and customer experience, will see organizations in technology and finance fight for the best talent.
Key to this battle will be how organizations respond to the growing workforce’s need for flexibility, including scheduling, remote work environments and meaningful work, the latter of which is a key requirement for a sizable segment of millennials and Gen Z professionals .The ability to attract and retain top professional talent will go a long way in helping financial institutions succeed in 2022 and beyond.
5. Fintech collaborations digitize banks
The pandemic has led major banks around the world to aggressively digitize in response to market demand, driven by lockdowns and restrictions. Banks have been able to implement digital processes relatively quickly and serve their customers well by doing so, negating the impact of the pandemic in impressive fashion.
Traditional banks are also more open to the huge benefits of cloud computing and the opportunities that open banking can bring in 2022. However, it is only by partnering with the right fintech organisations that banks can truly excel in digitalisation. By doing so, banks gain ready-made digital solutions and are able to tap into specialized talent without going through the often time-consuming and expensive recruitment process.
With banks now facing enormous challenges in recruiting top talent, the ability to partner with innovative fintechs makes business sense for responding to markets, digitizing and managing internal costs.