With the world gravitating towards an online realm, the digital platforms are now evolving faster than ever. The new age customers are only opting for financial institutions that are more user-friendly and holistically integrated with fintech. As per several reports, the global fintech market is forecasted to reach $309.98 billion in 2022 which is more than double of its value in 2018. Moreover, the pandemic gave a further boost to its growth as people started relying heavily on digital apps and online services for finance related operations.
The regions with low bank account ownership have also emerged as very promising markets for fintech and that is expected to keep the investments high in the years to come.
Let’s look at the top 5 fintech trends to watch for in 2022:
1. Extreme growth in Embedded finance- Of late embedded finance has witnessed a constant upward growth trajectory as more and more banks are looking forward to become service providers for non-financial institutions. Numerous companies or apps while trying to provide a seamless experience with their service through a single platform are incorporating embedded finance in their infrastructure, which allows the customers to complete their payment process without being redirected to third-party destinations.
From ordering food to hailing a ride or shopping for your favorite merchandise, embedded finance has completely transformed the user experience for companies across various sectors by simplifying the customer’s payment process.
2. Targeting underdeveloped regions- Investors and most powerful stakeholders will accelerate their efforts in entering the underdeveloped regions which have extremely low bank account ownership and financial services. Therefore, one can expect more fintech deals in regions like Africa, ASEAN, Latin America and the Middle East.
3. The rise in cross-border e-commerce- The pandemic completely revolutionized the e-commerce landscape where the global cross-border payment flow is growing at about 5% per year and is estimated to exceed $156 trillion in 2022.
International transactions via cross-border e-commerce holds tremendous opportunities for SMEs whose services are limited only to domestic markets. The fact of the matter is that the new age consumers predominantly just expect a secure and convenient payment option and it doesn’t really matter how far away they are placing the order from.
4. The advent of Neo banks- The growing adoption of digital services by the customers is accelerating the growth of Neo banks that carry out all their operations online. Traditional banks are now rethinking their approach for catering to the masses as neo banks have made banking more convenient and accessible. These banks are providing a more cost-efficient alternative to traditional banks as they don’t require physical branches.
Not to forget, with the advancements in artificial intelligence, biometrics and cyber security, customers can now make use of all kinds of financial services at the comfort of their smart phones and other devices. This development has gone miles in terms of minimizing the bank’s operational costs.
5. Blockchain and its growing popularity- Cryptocurrency, virtual realities, Metaverse and all new forms of digital transformation are here to stay. 2022 is said to be a promising year for blockchain technology considering financial institutions are now drawn towards blockchain’s amazing security offerings to both sides of the transaction and especially with identity management.
Further, its growing efficiency to fight fraud is only adding to its popularity. It won’t be surprising to witness a surge in demand for blockchain-as-a-service (BaaS) as organizations are looking for innovative ways to digitize and streamline all areas of their operations.