FinTech refers to the combination of finance and technology to improve corporate operations and provide financial services. Despite pandemic-induced delays, 2021 was a good year for financial technology or fintech. The role of FinTech in society is growing more important than ever.
Mobile payment applications, cryptocurrency, and blockchain, such as Bitcoin, are examples of FinTech in our daily lives. FinTech businesses are assisting in lifting people out of poverty and creating a more financially inclusive society. This is done by providing access to main financial services such as mobile money and e-wallets.
The third quarter of 2021 was the second-highest record for fintech finance, with a 147% year-over-year rise. So, what does the year 2022 have in store for fintech? After carrying out extensive research in the field, I have come up with the eight best trends of fintech to follow in 2022.
Why is the FinTech Industry Booming?
FinTech refers to software and other contemporary technologies utilized to provide automated and improved financial services. When it comes to long-term and significant advances in our daily lives, FinTech ranks high. The sector is flourishing and will continue to do so. But why is fintech expanding at such a rapid pace?
Several main elements, ranging from improved customer service to compliance rules, are fuelling its expansion. The major driver of the expansion of fintech is technology. Because it functions nearly entirely in the virtual environment.
It has altered the financial services industry, making it practically unrecognizable from a decade ago. Machines and algorithms have enabled us to automate formerly manual operations. And technology in general elevated FinTechs above traditional financial institutions.
Top 8 FinTech Trends You Must Follow in 2022:
The FinTech business needs a robust tool to gather, organize, and store data. Artificial intelligence is one of these (AI). According to McKinsey, AI adds up to $1 trillion in value to the global banking industry each year. Smart algorithms enhance many activities in banks, credit unions, and insurance companies.
The system monitors user activities and provides individualized financial advice on better terms for the client. An AI system aids in the prediction of business outcomes, allowing the management to adapt the company’s development plan.
The pandemic has shown financial organizations the value of mobility, remote working, and a digital connection with consumers. With social distancing, cloud services have made it feasible to help enterprises.
Cloud provides financial institutions with scalable storage and enormous processing capacity at cheap pricing. The cloud facilitates open banking and the FinTech industry’s digitization. As a result, Markets and Markets forecast 24.4 percent annual growth in financial cloud services.
Open API, often known as open banking, works on the principle of giving bank customer data to third parties with the owner’s permission. It is advantageous to the bank user. The account holder receives frequent information on the balance, spending, and savings through open banking.
Insurance firms, retailers, and other organizations receive information about the client’s money from the bank. Before providing insurance, loan, or permitting payment in installments, they must check the client’s solvency.
Open banking is revolutionizing the market by enabling customers to pay for things online in a few steps. Statista predicts that 63.8 million individuals will utilize open banking by 2024.
Cybersecurity specialists believe that biometric authentication is more secure than traditional passwords and PINs. Biometrics can safely secure personal data from fraud or theft. Unique fingerprints, iris patterns, features, or voices cannot be imitated. That is why FinTech firms rely on financial technology.
Even if your smartphone or laptop is taken, your confidential information will be protected. 93% of customers consider financial account security as the most significant concern.
FinTech is quickly becoming a priority industry for biometric authentication technologies. The worldwide biometrics market will expand from $36.6 billion in 2020 to $68.6 billion in 2025, according to Statista analysts.
Virtual cards are quickly becoming a reliable method of paying for products and services via the Internet. The user pays for things using a 16-digit number from a temporary digital analog rather than the information on a real bank card.
These cards are kept in a phone’s digital wallet. They are used in both physical and online businesses for contactless payments.
The card can be disabled while still allowing access to the principal physical bank card. The virtual card is secure. Each purchase generates a unique number that does not function after payment. Even if a hacker acquires the code, they will be unable to utilize it. This is how individuals consistently protect their money from internet crooks.
The e-commerce industry has grown significantly in the previous two years. And there is a huge need for convenient digital payment methods. As a result, the e-commerce operators have collaborated with financial firms to develop custom gateways and portals. It ensures that clients do not abandon the site owing to payment alternatives.
Your business can be located anywhere, but you can receive payments online from anyone buying your products or services. According to a recent survey, the worldwide cross-border money flow has increased by 5%. International transactions have significant development possibilities for even small enterprises with FinTech.
Financial software development firms make software robots that replicate human activities for process automation. A “robot” performs repetitive duties such as report generation, risk assessment, financial data management, data entry, and much more.
It is highly reliable, fast, and accurate, which is why many companies dealing with big data highly rely on it. Process automation is the key to FinTech success. The sector is predicted to grow 400% by 2023.
Super apps provide a wide range of services and goods from a single platform. Transportation (Uber, Lyft), shopping (eBay, Amazon), food delivery (DoorDash, Zomato), banking, entertainment (BookMyShow), and other services are among those offered.
Customers can use their smart applications to buy items and services. You can also book appointments, make reservations, and even send shipments to wherever you want.
The trends are propelling the FinTech sector forward. Mobile and cross-border payments, BNPL, financial software development, and super-apps have all been made possible by technological advancements.
Banks and financial institutions are increasing prospects, boosting service availability, and sustaining the brand with these technologies.
Businesses may keep a competitive edge in a turbulent market by tracking FinTech developments. Using AI and machine learning, FinTech services will further revolutionize the industry.
Fintech investment is predicted to surge in 2022, reaching US$310 million. In the coming years, you can expect more featured FinTech technologies. This will make FinTech products an important part of our digitized lives.