As per Statista, the global Fintech revenue amounted to 92 billion euros in 2018. And this revenue will grow at an average rate of 12%, reaching 188 billion euros by 2024.
The fintech industry has experienced massive growth during the Covid-19 pandemic with rapidly emerging fintech trends. In fact, the growth of fintech companies in the past few years has been astounding.
Do you know why?
Well, the pandemic caused huge disruption to all industries, including the financial industry. A large number of people turned to apps and other online means of managing their finances. An analysis report by eMarketer noted that by 2022, approximately 78% of the US millennials will become digital banking users.
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As the demand for innovation continues to surge, people will likely become more comfortable with fintech apps. Consequently, 2022 will see a rapid evolution of this industry.
Here are 10 fintech trends that will shape the financial world for 2022 and beyond.
Leading FinTech Trends for 2022
Blockchain Decentralized Finance
As of 2021, $40 billion is currently locked in decentralized finance (DeFi).
Essentially, DeFi is a system where anyone can get financial products without depending on intermediaries like brokers or banking institutions. Digital money is one example of DeFi.
DeFi has the potential to revolutionize the financial sector. Currently, all financial systems use a centralized approach. Banks serve as trusted arbitrators for borrowing and lending finances. But several instances have proved that even banks can fail.
With decentralization, two parties can deal directly with each other. And with blockchain, once a transaction is logged into, no one can delete or alter it. This ensures greater security and transparency. Lastly, no intermediary will also mean lower fees and better interest rates.
RegTech (Regulatory Technology)
RegTech or regulatory technology helps financial institutions to keep pace with new and existing regulations. Recently, RegTech has gained a lot of traction. According to a study, the RegTech market worldwide was projected at $5.31 billion in 2019. And this is expected to grow at a CAGR of 21.27%, reaching $33.1 billion by 2026.
The rise in digital products has also increased regulatory requirements. Additionally, the hefty regulatory fines and the ballooning cost of compliance have encouraged financial companies to invest in RegTech.
Lastly, RegTech solutions also provide excellent actionable insights that promote better decision-making. They also help to reduce the risk by providing data on money laundering activities conducted online.
Robotic Process Automation (RPA)
RPA uses digital programs or robots to mechanize all routine and repetitive tasks that were previously performed by humans.
An increasing number of financial institutions are leveraging RPA to improve work accuracy and make the most of the resources. They are using it for simple tasks like information processing, loan processing, customer onboarding, data entry, etc.
Currently, Bank of America has incorporated RPA. Its Pega Robotic Automation system helps execute payments, resolve card disputes, automate customer service, and much more.
The RPA market will most likely double in growth and adoption rate by the end of 2023.
Voice-Enabled Payments
The voice command technology isn’t something new. Owing to the massive acceptance of voice assistants such as Apple’s Siri, Microsoft’s Cortana, and Google’s Alexa, a large number of people are using voice commands. In fact, 40% of adults use voice search daily.
That said, the adoption of voice command technology in the fintech industry is still in its nascent stages. Some financial companies are experimenting with voice commands and using them to allow users to sanction transactions.
The most common examples include Barclays, the Royal Bank of Canada, and Santander. The institutions are using Siri voice recognition to authorize mobile payments. Additionally, MIA is using the technology to offer a smooth voice-enabled experience while executing financial tasks such as sending money, trading currency, extracting account information, etc.
Autonomous Finance
This is another one of the top fintech trends to watch out for. Autonomous finance is the delivery of automated and personalized financial services by leveraging AI.
As per a survey, 85% of the millennials reported feeling too exhausted to attempt financial research and planning on their own. And this is where autonomous finance can come to the rescue. As an increasing number of consumers place their faith in digital banking and online payment processing, they also warm up to the idea of AI managing their funds.
Autonomous finance apps can help users to plan for their retirement, suggest a financial plan based on one’s goals, propose investment possibilities, advise on debt management, etc. without any effort from the users.
Several autonomous finance apps have come up that automatically perform financial transactions without the participation of humans. The most common examples of this technology include automated disbursements for insurance premiums or autonomous investing through robo-advisers like Wealthfront.
Biometric Security Systems
A major reason why several people still don’t trust mobile banking is because of cybercrime threats. The more information is there online, the more susceptible a person is to online crimes. And this is why biometric security is anticipated to be a huge fintech trend in the coming times.
With biometric sensors, online financial companies can enhance their security protocol. Besides, they can also boost the login speed and ensure an improved customer experience.
Most common examples of biometric technology include facial recognition, fingerprint scanner, voice analysis, retinal scanning, palm vein patterns, etc. With these security methods, financial institutions will also be able to eliminate the need for PINs and passcodes.
Below is a graph showing the growth of biometric technology in various sectors, including mobile banking.
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Open Banking
Open banking enables banks to connect third-party APIs to their banking platforms and permit data networking across financial infrastructures. For instance, the customers may grant access to a utility app to pay bills directly from their bank account. This way, the customers don’t have to create a separate account or have another payment method on file.
With Second Payment Services Directive (PSD2), the banks have to release all financial information in a secure and standardized format. And this has fuelled the trend of open banking.
In 2019, open banking generated revenue of $7.29 billion. And this revenue is expected to reach $43.15 billion by 2026.
The graph below shows the rise in the number of open banking users in the UK.
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Artificial Intelligence and Machine Learning
An increasing number of banks across the world are integrating AI into their operations. In fact, it has become one of the fastest-growing fintech trends. This is because AI will help to cut operational costs by a big margin. According to a study, the average cost savings for banks from AI applications is expected to reach $447 billion by 2023.
Apart from that, banks can also benefit from AI-enabled chatbots to answer customer queries. These bots can learn from previous client conversations, thanks to machine learning. Consequently, they can customize future customer interaction and provide a seamless experience.
Lastly, AI is also a powerful tool that can tackle the rising cybercrime by identifying financial frauds and attacks.
Gamification
As per Statista, gamification investment amplified from $4.91 billion in 2016 to $11.94 billion in 2021.
Gamification is growing at an equally quick pace in the fintech industry as anywhere else. Companies belonging to the insurance, stocks, bank, and personal finance niche have begun exploring the potential of gamification.
One of the emerging fintech trends, gamification makes the users much more engaged in an app. It helps to turn a business app or a monotonous financial app into a pleasant activity.
For instance, Monobank is an online bank in Ukraine that is leveraging this trend and offering a gamified app. The app enables the users to shake their phones to activate a peer-to-peer money transfer.
Similarly, Smarty Pig is an online saving bank that allows users to save up for their financial goals and even vacations. The users can set their budgetary goals and transfer money from their bank account towards their chosen goal. There are several game mechanics that further makes their experience engaging.
Mobile Wallets
It is no surprise that mobile wallets are among the swiftly growing fintech trends. In fact, after the pandemic, these wallets have become a fundamental component of the digital payment revolution.
As per statistics, 21.5% of all transactions in 2020 were made via mobile wallets. Also, the mobile wallet market is expected to surpass $80 billion by 2026.
With the vast market potential, mobile wallets is one segment of the fintech industry is that is expected to boom in the coming times. Currently, the world’s leading tech companies like Google and Apple have their own e-wallet platforms. But the impending years may also see several new financial organizations investing in mobile wallets.
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The Future of Fintech
This is our roundup of some of the greatest and most exciting fintech trends that will drastically shape the financial world. Implementation of technologies like AI, ML, blockchain, etc. can make transactions more secure and reduce cybercrimes.
If you have a fintech idea, you must explore it now. A thorough analysis of the emerging trends can further help you identify the ones best suited to your business model.
