Top Trends 2022 – Financial Technology
Irrespective of which industry you work in, if you're making money, you would have to deal with some sort of finances - whether it is for making payments or managing the quarterly budget. So, it's obvious that you need to be up-to-date with the latest in financial technologies to be able to #manageyourmoniesright!
So, without further ado, dive in to explore the top 5 Financial Technology trends that 2022 has in store for you!
"Once upon a time, money was really salt," said uncle Scrooge McDuck. Just like you, his three grandchildren (Huey, Dewey and Louie) were like "SALT! That's hard to believe." Well, there used to be a time when Roman soldiers received their salary in the form of salt. Imagine financial managers of that era keeping huge heaps of salt in their backyards to finance their armies. Preposterous, right?
Thankfully, we are past the Roman times and the days when financial data was manually maintained in gigantic libraries. FinTech progressed but that still wasn't good enough, so the invention of the Trans-Atlantic cable made it easier to transfer financial data quickly. Then, digital services truly shifted the way the world traded in the 1970s.
Then came credit cards and their buddies ATMs, that made 'spending... so easy, it was hard to save a dime.' Here we are today, surrounded by stock markets, mobile applications and internet banking that has made it possible to deal in billions of dollars in tens of seconds. In reality, many of us don't even know what $1 billion looks like! Take it from Uncle Scrooge McDuck, "Pick one $1 bill up each second, day and night without a break, in 32 years you'd have them all but your back would ache." #NoThanks
We’re glad we don't have to do that because of the developments in Financial Technology. We don't even need any intermediaries anymore, be it physical banks or depositories - all thanks to Neobanks and Open Banking - some of the top FinTech trends from 2021. Much like everything else, a lot has changed in the world of FinTech in the past year as well.
So, let's see the top FinTech Trends of 2022 and how they will change the way transact and shop this year.
Trend 1: Voice-enabled Payments Will Be In Focus
There used to be a time when managers of large factories used to command their bookkeepers for purchasing groceries for the house.
Well, history is sort of repeating itself - only this time, there wouldn't be a bookkeeper, instead voice-enabled assistants will be doing the needful. With the latest trend of using voice assistance technology for all our daily tasks, it was only inevitable that FinTech would jump on the bandwagon. The convenience of talking will soon overtake typing for making payments in 2022.
Voice payments are not a new thing. Back in 2017, around 18 million people used voice for payments and transactions. Since then, this trend has become a revolutionary thing within the financial sphere. In 2022, there will be more than 20 million people in the United States alone, interacting with this easy transactional system. The founder of Moven, a financial services firm, Brett King suggests, "When you think about the world and how we'll access banking services, we'll talk to Alexa and Siri and get financial aid..." Soon, we will find voice assistance and voice-enabled features on most payment apps and portals.
TechDogs Opinion: All the advancements in language modeling and Natural Language Processing (NLP) have improved the understanding of machines, a trend that banks and financial firms will leverage for convenience in the years to come. Voice payment systems will become even more common as the tendency to use voice commands over typing increases. For instance, Amazon Alexa will soon be able to make payments to saved contacts just by voice commands. One aspect that businesses need to consider is integrating voice recognition to verify if the payments are being made by the owner of the device or account.
However, the main barrier to implementing voice-assisted payments is the outdated banking infrastructure. As digital platforms gain prominence, we believe progressive FinTech businesses will integrate voice assistance and get a dominant foothold in the market. The applications of this technology will be limitless – from saying “yes” to authorize payment requests to vocally entering the transaction details – making financial activities a purely hands-free experience.
Trend 2: Digital-only Banking Will Be On The Rise
We covered the fact that open banks or digital banks would get immensely popular in 2021 - and they have. In fact, they're on their way to becoming even more in-demand. Thanks to recent changes, the virtual world has taken over the need for physical banks. Cloud banking services are transforming the way we interact with our finances but the time is not too far when the entire world will transact online. 2022 will be the start of this financial revolution.
Most finance companies are already adapting to this change – by taking the first steps to enter the virtual world of banking in 2022. Alan MacIntyre, Senior Managing Director of Banking at Accenture says, “Whether it is tapping a ring that you wear or facial recognition, the payment will become more seamless. The idea of taking the card out of the wallet will seem archaic. What you think as transactional banking will disappear.” Everything that traditional banking does, digital banking will do virtually, quickly and more securely. According to Statista, roughly 65.3 percent of Americans will interact with digital banking services in 2022.
TechDogs Opinion: Somehow, we are already feeling more comfortable banking within the virtual world thanks to its convenience, speed and security. Moreover, many financial innovations and the rise of PFM (personal finance management) applications means digital banking will see higher demand in the coming years. Virtual banking will also make it easier to keep track of money that is spent and encourages users to assess their buying patterns based on the data from every transaction. We also have a strong feeling that digital banking will go farther than we can imagine right now. Using QR codes, tap-to-pay NFC and automated transactions, making and receiving payments will be made easier by digital banking.
Moreover, as more businesses are transitioning to eco-friendly initiatives, we’re sure digital banking will help them reduce their carbon footprint through paperless bills and statements. The effect will be even more profound as customers won’t have to physically drive to banks – they will be able to access all financial services online. For businesses that hope to reduce expenses by using greener alternatives, digital-only banking will serve as a significant contributor.
Trend 3: ‘Buy Now, Pay Later’ Will Be The New Slogan
How many of you use Amazon’s “Pay Later” option to purchase groceries or daily goods? We’re sure most of you have tried it at least! That's one of the most prominent examples of the BNPL or "Buy Now, Pay Later" payment option. Not to mention no-cost EMIs and Pay Later wallets that have become a much sought-after choice to make payments across the spectrum - especially with the lucrative rewards and convenient purchases that these options come with.
The BNPL payment system is becoming increasingly popular among the GenZ with 6% of the generation already using the BNPL option actively in the US in 2019 - a number that has exponentially reached 36% in the last 3 years. When it comes to millennials, this number was 41% in 2019 and has doubled since. Slowly, older generations (Gen Xers and Boomers) are getting used to this financial feature too – hence, starting 2022, BNPL will become a household term and businesses will look to make the most of it.
TechDogs Opinion: We are likely to see the BNPL option expand to more sectors than just eCommerce and retail. We believe, even the education industry would soon allow students to complete their studies and then pay for the tuition or college fees using the BNPL model – or Study Now, Pay Later to be precise! Another feature of BNPL is that it attracts a larger target audience, including those who cannot afford certain high-end products at their lumpsum price. We believe that this trend will be leveraged by automotive and luxury goods manufacturers to boost revenues in 2022.
More importantly, the BNPL trend will attract a larger section of consumers to purchase products without relying on a credit card to do so. This is a plus for businesses, as most of them have seen a slump in sales and revenues due to the pandemic. However, FinTech experts warn that consumers opting for a BNPL approach may have higher attrition and non-remittal rates than traditional payment modes.
Trend 4: Blockchain Technology Will Be Rocking
NTF is a cool new buzzword; have you done your research about this one yet? People have started selling virtual goods (digital representations of real-world objects) and services via blockchain networks. Even celebrities have started accepting payments through cryptocurrencies – which are also based on blockchain technology. No doubt, blockchain in itself is a whole new revolution for the financial sector and world economy. In a nutshell, it's the future of finance – and hence, one of the most important FinTech trends for 2022.
In the next 5 years, experts predict there will be digital assets circulating in place of fiat currencies - that is physical currency. Not just money, even digital goods and services will be available on the blockchain network, just as groceries and electronics are available on the Amazon website today. Businesses will start investing to develop their own blockchain networks or leverage the existing ones keeping in mind the future of finance is blockchain-based.
Everything the finance sector demands – secure transactions, accurate records, non-duplication of payments, quick refunds, low transaction costs – is made available by blockchain. No doubt, it will be a major player in the financial sphere in 2022 and beyond. According to a Cision PR Newswire Report, the size of the international blockchain market is predicted to grow to $39 billion by 2025 from a mere $3 billion in 2020.
TechDogs Opinion: Even though companies are worried about the various factors of using this revolutionary technology, we cannot ignore the growing acceptance of blockchain. The time is almost here when this system will become the most significant technological innovation in the financial industry and we believe that the credit goes to the decentralized nature of the blockchain. No single body, human, bank, government or corporate can control the policies and decisions of any cryptocurrency as it requires at least half the users on the blockchain to agree to any change.
However, with the constant news of hacks and scams in the crypto world, blockchain technology will need to be much more secure in the future if it is to replace traditional banking. Businesses will leverage Machine Learning, Artificial Intelligence, Big Data and other digital transformation initiatives to bolster the blockchain security protocols. However, we are really certain that business is going to get super-real with this one!
Trend 5: Platform-as-a-Service (PaaS) Will Help Customize FinTech Solutions
There is a constant tug-of-war between cyber security concerns and the convenience of transactions when we talk about FinTech. So, as the policies and regulations are evolving, newer financial services and tools are being introduced and consumer behavior constantly changes – traditional banks and financial institutions will have to keep up with the constant flux. This will be done by leveraging PaaS (Platform as a Service) – a highlighted trend in 2022. With this technology, financial platforms will be able adjust quickly to take in required changes and deploy a robust and customized infrastructure. In 2022, every business using a cloud-based financial platform or tool will be able to adapt as quickly as the price of Bitcoin changes!
When creating and deploying applications becomes easier, financial companies can work with leniency on their infrastructure as they can quickly pivot as and when required. This will make FinTech integrations more scalable and also create an improved and convenient digital experience for consumers. This is the reason why more and more FinTech corporates are adopting this service to retain flexibility in their digital deployments. The PaaS market is continuously rising and is expected to be a market of $16.7 billion by 2024. As 77% of financial institutions plan to increase their focus on innovation to boost customer retention, PaaS will be a major component in helping them innovate according to changes in the financial market in 2022.
TechDogs Opinion: We believe when a company has a reliable application for every department, it becomes that much easier for the board to keep up with the financial situation of the company. Whether it is payment processing, resource management or investing in new technology, with a handy PaaS approach, businesses will be able to customize their financial applications and tools to serve them better.
As the importance of having a tailored cloud infrastructure stack has grown over the years, financial businesses will also begin leveraging PaaS to create more personalized FinTech apps and websites – for internal users as well as consumers. One thing FinTech companies will need to consider is the cloud-based PaaS deployments might be susceptible to cyber-attacks and hacks, especially if the development is outsourced. Securing PaaS deployments should be a point of focus for financial businesses looking to leverage this FinTech trend in 2022.
To Sum Up
Financial Technology is developing faster than we could ever imagine – and the FinTech industry needs to keep up. The money itself is changing rapidly, however, all we have to do is keep up with the latest trends and see how the world will evolve in the years to come. From digital banking to PaaS deployments and blockchain to BNPL payment models, these trends will surely help you figure out the best of FinTech in 2022.
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