A recent blogpost by cross-border payments firm Currencycloud has outlined its predictions for the FinTech trends to look out for in 2022.
For 2021, Currencycloud had predicted that digital banking trends would shape last year, as well as the rise of LendTechs for SMEs and an increased prevalence of FinTechs that specialise in helping consumers with their financial health. The company had also anticipated the continuing rise of banking-as-a-service (BaaS) as a force that could usher in more ‘digital native’ banks.
What trends does Currencycloud see as hot-button for this coming year? The first trend that was underlined the was increased importance of user experience. Currencycloud brought up recent research by Savanta that found 60% of industry experts cited ‘improving customer experience’ was among the top three benefits of embedded finance.
The firm remarked, “Thanks to BaaS enabling emerging brands to embed financial products, users now expect a frictionless, secure experience and show loyalty to those that provide it. As outlined in our case study, Revolut adopted a customer-first strategy from the get-go, it still plays a part in their phenomenal success. Exceeding customer expectations will be key to the success of any Fintech in an increasingly crowded market.”
Increased opportunities for nimbler FinTechs is highlighted as part of the second trend, with companies that are able to develop products that appeal to a wider audience are likely to eat away at their less appealing competitors. Currencycloud highlighted previous research conducted by itself that interviewed 10,000 people and found 55% would consider a specialist service over traditional banks for investments, compared to 52% for wealth management and 52% for financial advice.
Furthermore, big market players will continue to expand in 2022 – with German digital bank N26 recently securing its banking licence in Brazil and Spanish bank BBVA already leveraging apps to access and operate in the emerging markets of Latin America. The rise of 5G will also see the world’s two billion unbanked people get more access to financial services through mobile phones in 2022, Currencycloud said.
The ever-increasing rise of sustainability is a trend which spreads across various industries, however, the rise of Green FinTechs is expected to take hold in 2022, according to Currencycloud.
The company said, “In 2022, the FinTechs who focus on ethical and environmentally-focused products or back environmental, social and corporate governance investments will not only be aligned with a wider consumer mindset but will be more likely to thrive.”
Currencycloud added that established FinTechs like Starling bank, Tulipshare and Stripe – who give investors an opportunity to impact corporate ESG policies – will continue to be relevant this year.
The fourth trend underlined by Currencycloud for 2022 is that legislation will spur the rise of embedded finance. The company highlighted how to the 2019 PSD2 and open banking has acted as ‘rocket fuel to the engine of FinTech’ and gave rise to 247 new banks in the EU and 61 new banks in the UK in just eight years.
Currencycloud remarked, “PSD2 levels the playing field for all payment providers, new and existing, supporting digital transactions by increasing consumer data rights and reducing online fraud. This legislation paves the way for an acceleration in the adoption of embedded finance across Europe in 2022 as consumer confidence increases.”
Finding its way into the list for the second year in a row is the trend of LendTechs for SMEs, with Currencycloud predicting many new arrivals will enter the LendTech market in 2022
The firm said, “Because they provide cash flow at the point of need for SMEs, LendTechs – like their BNPL counterparts in retail – are responding to a genuine financial problem in real-time, and as such will continue to grow as business owner behaviour aligns with consumer behaviour.”
The full blogpost can be read here.
