When change is the only constant in our rapidly shifting industry, making the correct predictions can mean the difference between identifying the next big opportunity and stumbling out of the gate.
Our predicted fintech trends in 2022 and beyond
The pace of change in fintech over the past decade has been staggering; in a mobile-first ecosystem where customers are digitally native, and online behaviours are the norm, once innovative solutions like Apple Pay or Google Pay are no longer differentiators; they’re table stakes.
GPS have helped power this revolution, identifying and helping financial services providers to capitalise on fintech trends and stay ahead of the curve. Looking forward to 2022 and beyond, we explore what fintechs, banks and financial services want moving forward, and which trends will shape the future of our financial services industries.
Achieving global growth with trusted partners
The worldwide fintech scene has continued to grow and expand at a significant rate, with global investment topping $44 billion in 2020, a 14% increase on 2019, spurred on by countries throughout diverse markets including the US, UK, EMEA and APAC. The global fintech market is expected to grow at a compound annual growth rate of 23.58% from 2021 to 2025 and the global financial services market is projected to reach $26.5 trillion by 2022.
The industry’s shift towards digital and cloud-based solutions, facilitated through partnerships with specialist providers, ushered in an era of global expansion for fintechs, in which we’ve seen an attitudinal change to the idea of cross-border growth.
These technological capabilities, paired with progressive regulation around international data sharing (for example, ISO 20022), has meant that fintechs’ growth strategies no longer revolve around specific geographies.
Instead, they expect to deliver a global proposition, and are looking to build this from the outset. Local regulation will be the main challenge fintechs have to overcome as they expand internationally.
Despite advances in technology and global initiatives, local laws held at a jurisdiction-by-jurisdiction level will still present a barrier to cross-border expansion for fintechs. In response, it’s vital that growing businesses seek out trusted partners with proven global experience to help them navigate these hurdles and continue on their growth journeys.
The blurring lines of corporate and consumer
One of the biggest changes spurred on by the pandemic was its impact on how and when we work. Some were fortunate in being able to shift to remote working and flexible hours, but large parts of the global economy have been drastically affected by local lockdowns and travel restrictions, leading to redundancies, government furlough schemes and other measures. As a result, the burgeoning gig economy has boomed, seeing as much as 33% growth in markets such as the US.
Fintechs are starting to wise up to this expanding demographic and will be investing heavily in services and platforms to better support microbusinesses – and their owners – moving forward. The past several years have seen countless innovations in customer account management and mobile apps, from real-time spending notifications to biometric authentication.
Caught between consumers and enterprise businesses however, SMEs have long been underserved in this space. What we’re likely to see moving forward are more products that recognise the potential of the ‘one-man band’, combining the ease and user experience of customer-facing software, with better access to B2B products such as lending and accounting.
Alternative payment methods (APMs); the next generation of payments
As consumers have become increasingly digital savvy, and purchasing patterns have shifted towards ecommerce, adoption of alternative payment methods (APMs) has only continued to increase. One of the biggest examples of this to come out of the pandemic was Buy Now, Pay Later (BNPL).
Popularised by embedded fintech brands such as Zilch, BNPL offers users rapid access to low-interest credit options to better manage their finances. Concurrently, mainstream awareness and use of crypto-currencies also spiked during the pandemic, with figures suggesting there are as many as 79 million crypto-wallet users globally as of November 2021.
Mobile FX will represent the next great frontier of APMs. Travel restrictions have changed since the start of the pandemic - from borders opening up, to restrictions being imposed again, since the beginning of the pandemic customers have become used to the speed, convenience and safety of digital payments, whether that’s managing their money through an app, or paying for goods using a contactless device.
By comparison, the process for physically converting currency seems both time-consuming and cumbersome. Despite these challenges, cash still remains the primary means of spending abroad, pointing to a lack of viable options in this space. In response, fintechs will focus on building out their FX proposition to offer more flexibility, better rates and greater transparency, opening up new revenue streams in the process.
Environmental, social and corporate governance (ESG) topping the agenda
As consumers have become more engaged with the brands they follow, championing social good as part of your corporate values has never been more important, particularly with younger audiences. Gen Z – naturally the most digitally-native demographic – place the utmost importance on corporate social responsibility (CSR), with 94% saying they believe companies should address environmental or social issues.
The pandemic saw numerous cases of fintechs coming together with public organisations for the greater good, whether that included creating cards for those who were shielding to providing platforms for digital relief disbursement. As a result, we’ll continue to see more fintechs spearhead CSR initiatives in the coming years, with a key focus on areas such as sustainability for example through the issuing of recyclable cards, or initiatives to fund green startups and financial inclusion.
The bright future of fintech
As with all fintech predictions, the rapid pace of change means that the future of the industry remains unclear; the very solutions that we see as market leading now might well be commonplace in 12 months’ time. What we can say with great certainty, however, is that the future is looking bright for a sector filled with innovation, talent and potential.
By building close partnerships with the right players, fintechs and banks can capitalise on this potential, expanding internationally and serving the needs of new demographics. Global Processing Services are proven enablers, and we’ve been delivering our expertise to our customers for decades. We're the trusted authority because we’ve been at the side of our customers including Revolut, Starling Bank, WeLab and Zilch, as they’ve been on their phenomenal growth journeys.
In our position at the heart of the payments ecosystem, our experts are excited to continue helping fintech challengers, technology leaders and financial institutions, not only keep up with changing demands, but stay ahead of them, so our customers can thrive as the financial services’ arena inevitably evolves.