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The year 2021 has almost gone by and accelerated the processes that many fintech companies were trying to implement before, while also shedding light on some new industry problems. We have seen a series of technological breakthroughs, which opened many opportunities for fintech companies and took them to new heights. However, there were also some challenges due to which many players had to improve their functioning rapidly, optimize costs and implement new solutions.
In this context, it is the right time to look at some tips and things to keep in mind in accordance with fintech trends for 2022.
The next stage of evolution in the financial services industry has already begun. We have witnessed the rise of digital banking much earlier, with a subsequent rise in digital payments and the peak of online infrastructures. However in 2022, it's not only about closing branches and going online anymore, this is about virtual banks: digital banking is not just about going paperless and cashless – the underlying technologies have substantially contributed to the shift from a centralized traditional banking model to a more distributed, technology-driven one.
Effective interaction with customers, faster turnaround time in resolving complaints, and excellent support services are not enough anymore. Providing your customers with far more tailored products as well as financial services is going to play a crucial role in the upcoming year. According to industry experts, in 2022, customers are expecting companies to understand their unique needs and expectations.
However, there is still a need for real-time analytics as well as an immediate update about clients' banking status and financial products providing.
Despite the fact that neo-banking cannot completely replace traditional banks, it is one of the top fintech trends in the world nowadays and it may completely change the perception of the banking sector in the near future. In 2022, we are going to see many more customers in neo-banking. This is especially relevant for goods and services payments on the Internet or paying salaries to employees.
Financial service providers, including banks, neo-banks, lending institutions, etc. collect and process customers' personal data. There are multiple sources of information: home address, identity document details (social security number/aadhar, etc.), passport details, bank details, telephone number, email address, and income information. Another trend for fintech in 2022 is that all the information, if available, has to be present with user consent and through verified sources.
Due to the pandemic, a large number of users switched to the online mode as the main source of obtaining financial services. In fact, online channels allow companies to reduce operating costs significantly, as well as to gain access to a wider audience on the one hand. However, today we are witnessing a huge spike in misuse of personal information and when it comes to the Internet it leads to an increasing number of cyber-attacks globally. Hence, the secure storage of user data is becoming one of the most important issues in today's time.
According to an industry report, the average cost of data losses in 2019 amounted to 3.92 million USD. Leakage of customer-sensitive data such as personal information, payment card numbers, passwords, financial transaction data, passport data, and other personal documents can lead to a complete loss of customers' trust. Users want to see the transparency of their operations as one of the criteria of high-quality services provided. The year 2021 has shown that fintech companies need solutions that combine both factors – transparency and security – more than ever. The best solution is a reasonable reduction in the turnover of personal data and direct user identifiers, combined with the use of alternative sources of information, such as device data, internet connection data, and user behavior information.
Another ongoing trend is related to newer payment methods, faster transactions, and improved accessibility. Many stores will become more automated and clients will have more opportunities to use contactless mobile payment methods.
Also, many companies will make serious efforts in reducing the number of issued credit and debit cards. The usage of plastic cards and cash has been steadily declining over the last two years. Indeed, due to some environmental problems many BNPL (Buy Now Pay Later) companies refuse from issuing new cards – interest-free installment plans are now offered in many online companies and it means that this trend is going to continue.
Also, according to some reports, we may see a rise in the acceptance of cryptocurrencies next year.
Information is an extremely valuable resource in the 21st century. The amount of information on the web increases each year and various methods are used to process these data arrays. Machine learning (ML) is one of the fundamental areas of artificial intelligence, the idea of which is to find a pattern in the available data, and then to spread it to new objects. In other words, it is a certain set or sample of values, which is used to "train" the algorithm, in order to further apply it for solving various types of problems, for example, forecasting and classification. So it may be useful for fintech companies in many fields, charting with fraud prevention and detection and ending with investment predictions. So this trend is expected to continue in 2022.
Another trend is algorithm-based services that make decisions and act on behalf of the client in order to simplify financial management. This technology is based on automation, which includes artificial intelligence and machine learning algorithms. This also allows to collect more data as well as to make more accurate predictions in terms of risk assessment. It will help to detect and prevent fraudulent transactions in real-time and reduce the human factor impact greatly.
It's no surprise that many experts forecast the continued success of embedded finance in 2022. The rising demand for it has been a long time coming; so many financial institutions are increasingly offering banking as a service (BaaS). In order to make it real, online companies need new technologies and SDKs being available due to the fact that usually such services are distributed via opened APIs, also this trend would require strong anti-fraud and risk management measures to be taken.
Many experts say that a few previous years we have witnessed a lot of innovations in terms of fintech digital transformation. Indeed, remote work, new digital platforms, and user experience somewhat confused a lot of users and led to certain limitations and problems. However, it seems that 2022 is going to be more stable in terms of normal business activities. Innovation for innovation's sake no longer makes so much sense, a certain balance has been established and so we are going to see many changes in fintech in the nearest future.
Manish Thakwani, Head of Business Development (India), JuicyScore
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