There is no doubt this past year has seen more innovation in the financial technology sector than ever before. According to CB Insights, the fintech sector reached a record $91.5 billion in global funding by the third quarter of 2021 – that’s almost twice as much as what the sector collectively did in all of 2020. As fintech continues to grow and more startups are emerging, there’s no end in sight for this industry.
This article will cover the top 10 global trends in fintech and banking we should expect to see in 2022.
1. Platform as a Service (PaaS)
A major trend we should expect to see in 2022 is the Platform as a Service (PaaS) market. Platform-as-a-service essentially means that banks and FinTechs can adapt to changing needs with a customized infrastructure, enabling them to embrace the cloud. These services provide the infrastructure to perform a variety of tasks, including team collaboration, resource management, payment processing, and credit risk management.
2. Payment Facilitation
One of the most popular trends we have noticed over the past year is companies monetizing payments as Payment Facilitators. Becoming a Payment Facilitator is a complex process with high returns and is lucrative for many brands. According to industry analysts, by 2021, Software as a Service (SaaS) providers and independent software vendors (ISVs) will generate $4.4 billion in revenue as payment facilitators. Becoming a payment facilitator may be one of the smartest business decisions you make. Once you’re up and running, you’ll enjoy a new revenue stream while boosting your brand in numerous ways. Some of the benefits include faster merchant onboarding, increase of business valuation and being able to offer value-added client services.
3. Buy Now, Pay Later (BNPL)
Buy Now, Pay Later (BNPL) is taking the payments industry by storm. BNPL refers to customers taking home their purchases and paying installments for them over time. Most BNPL companies do not charge interest if you pay on time. Research indicates that more than one-third of U.S. e-commerce brands plan to offer purchase financing options in the next 12–24 months due to its many benefits.
4. White label fintech
The next fintech trend that you should not miss out on is white-labeling. White label means placing your brand name on a product or service that a third-party company has developed. It offers the reseller the opportunity to offer the product or service without having to spend the time and money on designing, developing, testing, and proving it themselves. It is an actual win-win since it provides the distributor with a larger customer base and minimizes initial launch costs for the reseller. White labeling your platform boosts visibility for your brand, strengthens the loyalty of clients, along with many more benefits.
5. Voice-enabled payments
Voice-enabled payments have blown up due to technologies like Amazon’s Alexa, Google Assistant, and Apple’s Siri. 100’s of millions of Americans used voice control technology and/or voice assistants in 2020 and even more in 2021. Voice-enabled payments are payments that are transacted using one’s voice, but how they work is more complex. In the near future, we can expect deeper integration with mobile banking apps, and e-commerce businesses, as well as improving security through better voice recognition, biometrics, and face ID.
6. Digital banking
Digital banking has been a hot topic since last year but has shown steady growth to becoming much more mainstream in 2022. At the start of the pandemic, financial institutions had to solve the emerging challenge of serving customers and closing brick-and-mortar stores across the world. Digital banking has improved the customer experience and delivers faster and more efficient services. Statista estimates, as of 2020, as many as 1.9 billion individuals worldwide actively used online banking services with that the number forecast to reach 2.5 billion by 2024.
7. Financial institutions exploring crypto
As we’ve all noticed over the past year, cryptocurrency has become extremely popular around the world. Many businesses and financial institutions have already announced that they plan to start accepting cryptocurrency in the near future. Analysts have predicted that global cryptocurrency investments will more than triple by 2030. It’s unknown exactly what crypto will bring in 2022, but many are betting on a positive outcome.
8. AI technologies
Artificial Intelligence is a critical part of the fintech space in terms of collecting data, analyzing information, security, and facilitating transactions. Many financial services already use AI in some of their systems. AI is constantly evolving, and FinTech will continue to be one of the leading industries to benefit from the power of AI.
9. Cross border payments
Cross-border payments are transactions between banks, financial institutions, businesses, or individuals operating in different countries. With a solid international payment strategy, businesses can achieve a greater ROI, gain better control over international transactions, leverage advanced reporting tools, and enhance payment security. According to research by Tipalti, cross-border payments are expected to reach $26.6 trillion worldwide by 2022. Currently, 73% of US-based companies regularly make cross-border payments of some kind.
10. Lending as a Service (LaaS)
Lending as a Service is one of the newest fields in alternative financing and is projected to reach $5.5 billion in 2024. With this new service, banks utilize technology to offer their services on platforms outside of their usual banking channels. As customers move away from brick-and-mortar and towards online lending, LaaS will reach an all-time high.