Top 5 fintech trends for 2022
The global financial sector has undergone significant changes over the past few years. In particular, the rapid rise in popularity of online payments has contributed to the emergence of new and modernizing old methods of providing financial services. In this article, we’ll take a look at the top trends in fintech for 2022.
What are fintech trends for 2022?
Fintech trend №1: Virtual banking
Virtual banking (or neo banking) is rapidly gaining the trust of users around the world. According to research, for 2021, the number of online banking users is 2,043 million and continues to grow.
What is neo banking?
Neo banking is a new, global fintech trend that aims to simplify financial transactions between users and companies. Neo вank is a company that provides all traditional online banking services without physical representation.
Since neo banks operate 100% online, users can instantly get the information they need or complete any transaction.
Pros of neo banking:
- Low start-up costs – Neo Bank does not require a significant investment due to fewer regulatory requirements.
- Fast response time – when a client contacts, most requests are processed automatically, without involving employees. Thanks to this, the user can receive the required service within a few minutes;
- Convenience – neo banking clients receive services 24/7 and from anywhere in the world.
Cons of neo banking:
- Although most countries of the world are trying to digitalize by introducing digital technologies into everyday life, only in the USA 25% of people over 65 do not use the Internet;
- Due to the lack of physical branches, neo banks may not appeal to customers accustomed to personal communication.
- Lack of transparent regulation. Many countries still have not developed laws that would explain the legal interactions between neo banks and their clients.
Neobank in 2022
Even though neo banking cannot wholly replace traditional banks, it is one of the top fintech trends worldwide and will change the perception of the banking sector as a whole in the future. In 2022, we will see more and more users migrate to neo banking. It is especially true nowadays when paying for goods and services on the Internet or paying salaries to employees becomes possible in a few clicks.
PayDo – is an example of such a service.
Fintech trend №2: Autonomous finance
Autonomous finance is another rapidly growing trend. Autonomous finance is an algorithm-based service that makes decisions and acts on behalf of a client to simplify financial management. This technology is based on automation, which includes artificial intelligence and machine learning.
Pros of Autonomous Finance:
- The introduction of automation into workflows allows you to process large amounts of data. It allows more data to be collected and more accurate predictions;
- Autonomous finance provides for more precise risk assessment, timely detection, and prevention of fraudulent transactions;
- The accuracy of the calculations will increase, and the likelihood of human error will decrease.
Fintech trend №3: Decentralized finance
The term decentralized finance refers to a movement that aims to create an open and accessible ecosystem of financial services accessible to every user and can operate without government influence.
With decentralized finance, users will maintain control of their assets by interacting with the ecosystem through peer-to-peer, decentralized applications (dapps).
Benefits of decentralized finance:
- Transparency. Blockchain provides regulators with access to information about crypto wallets. It contributes to increased transparency between financial institutions, banks, and regulators;
- Instant transfers. Blockchain allows you to accept and make payments within a few seconds;
- Smart contracts. For complex financial transactions, smart contracts will improve business processes since they are automatically triggered when certain conditions are met;
- The blockchain records and stores information about every transaction with a clear real-time audit trail. Thus, there are much fewer errors or tamperings;
- Optimization of costs. Blockchain can significantly reduce operating costs for the financial sector as it eliminates the need for intermediaries such as savings banks and clearing companies.
Fintech trend №4: Cybersecurity
Financial service providers, including banks, credit card companies, investment organizations, collect and process personal data from customers. This data includes home address, social security number, passport details, bank details, phone number, email address, and income information.
In the case of a data leak, all of it could end up in the hands of cybercriminals, with serious consequences for both financial institutions and their customers.
By far, the most global fintech trend for 2022 is cybersecurity.
According to the Federal Trade Commission, Consumer Sentinel Network, there has been a boom in cyber fraud complaints in 2020.
The financial services industry certainly needs more qualified cybersecurity professionals. It is essential in all business areas, but financial services companies are often a top priority and must be extra vigilant when it comes to cybersecurity. Financial institutions that store customer personal data are subject to an increasing number of cybersecurity rules and regulations.
Companies are interested in investing heavily and collaborating to improve cybersecurity preparedness, response, and resiliency across the sector.
Remember, there are two types of financial services companies—those who have fallen victim to cyberattacks and those who have yet to face them.
Fintech trend №5: Big Data
Talking about global fintech trends, one cannot fail to mention Big Data.
In finance, Big Data refers to vast arrays of structured and unstructured data that banks and financial institutions can use to predict consumer behavior and develop strategies.
The financial sector receives, processes, and generates vast amounts of data every second. Among them are distinguished:
- Structured data.
- Unstructured data.
Structured data is information stored internally in a company to provide key data for decision-making at the right time. Unstructured data accumulate from various sources in an ever-growing amount, providing significant analytical potential.
Modern financial technologies make it possible to use Big Data to predict customer behavior and create complex risk assessments, distinguishing them from traditional financial institutions.
Big Data benefits:
- Customer centricity. As one of the fintech trends, Big Data can segment customers more accurately following their profiles to provide optimal solutions.
- Data security. While fraud is a common problem in the digital banking sector, Big Data can help fintech develop accurate fraud detection systems by detecting suspicious activities.
- Risk assessment. Fintech companies can operate with greater financial confidence, manage cash flows, and offer consumers competitive commissions through improved risk assessment.
- Improving user experience. Based on user behavior, companies can identify customer needs and provide solutions faster and more accurately.
In this article, you have examined the most promising global fintech trends that companies worldwide will be targeting.
Fintech’s possibilities are endless as innovation is based on ever-evolving technology. Consumers want better and more diversified services, and companies are eager to provide them. Due to the continuing competition, it is essential to always stay on the wave’s crest and not miss out on development opportunities.