With the world getting increasingly consumer-focused, it was natural that there appeared a brand new generation of technologies to enhance traditional forms of finance. From simple mobile payment apps to complex blockchain networks, the fintech industry allows millions of consumers to have more innovative and secure financial experiences.
It’s safe to say that fintech is exponentially growing: according to Statista, the total value of investments in fintech companies increased from $9 billion in 2010 to a whopping $226.5 billion in 2021. Over the recent years, fintech has considerably evolved, primarily due to the latest innovations in technology. In this article, we’ll walk you through the top trends that have been shaping the fintech landscape over the last year and are likely to stay for longer.
1. Business intelligence
Fintech companies have started progressively adopting business intelligence to leverage their resources more effectively. Thanks to business intelligence software technology, fintech players can continuously monitor user behavior and market trends, which allows them to make more informed decisions and modify their solutions to better align with the end users’ needs. In addition, business intelligence goes a long way toward improving security by efficiently identifying fraudulent behaviors.
2. Neobanking
Although neobanks are nothing new in 2022, they keep thriving and attracting millions of new users. Neobanks provide all their services online, meaning their clients don’t even need to visit a physical bank to open an account. Neobanks allow you to quickly pay your bills and transfer funds in a matter of seconds, use convenient expense management, and leverage real-time analytics. This trend is predicted to develop in the years to come — according to Statista, the number of neobank users will grow to 376.89 million by 2027.
3. Open API
Open API, or open banking, is the practice of providing access to bank client data to third parties in order to improve client experiences. For example, open APIs enable clients to connect external analytical tools to their financial data to monitor their expenses and consumer habits. Open banking has proved effective for cooperation between banks and fintech companies, helping to boost the variety and quality of financial services. As a result, users benefit from open banking getting access to innovative, personalized services.
4. Artificial intelligence
The financial sector generates enormous amounts of data, making fintech one of the areas with a tremendous Big Data growth rate. Given that, the industry requires a robust tool to collect, process, and store data. This is where artificial intelligence (AI) comes into play, facilitating a range of operations across banks and other financial institutions. Some most common use cases of AI in fintech include:
- examining typical user behavior in a banking app that allows to effectively identify fraudulent activities;
- AI-powered chatbots help customers to solve issues 24/7;
- analyzing user habits to offer personalized financial advice;
- predicting business results, which allows companies to adjust their strategy for better results.
5. Growing need for crypto custodies
The widespread adoption of cryptocurrencies has created the need for effective ways to securely store crypto assets. While the digital currency was initially supposed to be held in digital wallets and accessed via private keys, this method remains vulnerable to hacks. In addition, digital assets are lost forever in case their holder loses access to the private key. The whole thing gets way riskier when talking about institutional investors who keep large amounts of crypto.
To avoid the risk of losing crypto assets, institutional investors leverage cryptocurrency custodians — third-party services that provide secure storage for crypto assets. As cryptocurrencies are getting more and more traction, new crypto custodians appear on the market, with their number likely to increase in the near future. How does crypto custody work? Just two simple steps: the holder of crypto assets undergoes AML and KYC checks, and the assets are transferred to secure storage owned by the custody provider.
6. Blockchain
Originally designed to store Bitcoin, blockchain technology is renowned for its outstanding ability to ensure a secure and decentralized record of transactions. In other words, blockchain makes it impossible to change, remove, or forge the recorded data. With the high level of data security blockchain provides, there’s no wonder that fintech is enthusiastically adopting this technology to ensure a more secure transaction environment. This trend is predicted to persist in the coming years, with blockchain technology expected to achieve a market size of around $22.5 billion in 2026.
7. Voice payments
People are already used to utilizing voice assistants to search for information, manage their homes, or order goods. This technology makes daily life more convenient, so it was natural for fintech companies to pick up this trend to improve user experiences. Besides payments, voice technology is used for quick and easy peer-to-peer transfers. What is more, voice can be used for enhanced protection of sensitive user data and to make financial services accessible for people with disabilities.
8. Embedded finance
Another 2022 trend that is expected to stay and grow — embedded finance — allows eCommerce companies to offer customers credit without leaving their websites. And not only that — embedded finance also involves banking, payments, lending, investments, and insurance. One of the most prominent features of embedded finance that became all the rage in 2022 is the BNPL (buy-now-pay-later) option. It allows consumers to get a product and make payments later. With online shopping skyrocketing in popularity, this trend is sure to persist.
Final thoughts
The fintech industry players keep quickly adopting the latest technological advancements to offer improved customer experiences and stay competitive. However, various fintech trends all boil down to two common goals — better security and convenience for the end user.
