6 FinTech trends that will dominate the industry in 2022
2022 may have started as the year of blockchain technologies and NFTs, but since March, the crypto market has seen a major dip.
However, despite the cooling of crypto, some trends have continued to flourish throughout the middle of the year. This article will discuss the six FinTech trends we believe will boom in 2022.
In the beginning, there was Web 1.0. This was a time, starting in 1994 when content on the internet was non-interactive and read-only. Starting in 2004, Web 2.0 introduced interactivity into websites and the internet. Now, 18 years later, Web 3.0 has begun its introduction.
Web3 combines four technologies to make it its own thing:
- Decentralization through blockchain
- Peer-to-peer exchanging (reduction of 3rd parties)
- Artificial intelligence
- Machine learning
An example of a Web 3.0 application is Wolfram Alpha. Wolfram is a computational-intelligence calculator that can solve extremely difficult problems ranging from elementary math problems to personal health. There are hundreds of calculations that this software can do, and it can give you all sorts of interesting data.
Typing in "Facebook" under the stock data section will supply you with all the info you would be interested in as a mid-level trader. Under the finance section alone, there are over 36 computations that can be made and discovered. Apps like this continue to pop up all over the internet, so keep your eyes peeled.
Cross-border e-commerce has grown significantly in the last 2 years due to COVID-19, but it has blasted into another growth period with the introduction of Web 3.0.
The integration of peer-to-peer decentralized crypto exchanges has allowed people worldwide to buy and sell even more products. Avoiding the tariff and fees of governments or 3rd party companies has increased each seller’s profits, thus incentivizing growth.
In 2022, cross-border e-commerce has grown to 22 percent of the entire e-commerce sector. This number is set to grow to 38 percent by 2023, or around $2.1 trillion. Even with peer-to-peer exchanges growing, the current continued calculable growth is due to Amazon reselling, Wish.com, and Alibaba.
Open Banking APIs
The best way to blow up an industry is by making the tech available for anyone to use. Banks are now starting to open their software to developers to make their products on.
APIs or application programming interfaces refer to two different codes that interact and share data with each other. You can think of them as a digital hand-off between friends. These APIs have opened up opportunities for developers to access payment networks and integrate banks into platforms.
Stripe is a good example of payment network access allowing developers to integrate subscriptions, payments, and other purchases directly into their programs. Bank integrations have taken the form of direct transactions like those found in PayPal or Robinhood. Barclay’s is one of the first banks to integrate other banking info into one app and allow users a one-stop shop for all their banking needs, including paying their insurance bills on time.
Fingerprint scanners have been around for decades now, protecting our personal information.One technology that has been gaining momentum in recent months is Voice Biometrics. Like that scene in the movie Incredible, when a posh superhero outfit designer says, "Edna Mode" and opens a door, this technology will figuratively open many to come.
Uses of this biometric identification are being tested in customer service calls by banks to make the flow of information faster. No longer will you have to state highly sensitive personal information over the phone and risk someone overhearing it. Using phonetic and morphological features of each person’s vocal apparatus creates unique identifiers that allow for secure authentication with just the sound of your voice.
Like other ways to verify your identity, voice biometrics offers a much higher level of security than typical knowledge-based authentication (passwords).
Digital Only Banks
Similar to ghost restaurants, digital-only banks do not have a physical location, and there are many financial benefits that banks get by turning completely virtual. Companies like SoFi, Ally, and Synchrony Financial have been taking the banking world by storm, becoming some of the most valuable financial institutions on the NYSC.
The benefits of virtual-only banks don’t just come in the form of being able to access your institute anywhere. The advantages also manifest as increased savings rates, low monthly fees, higher CD rates, and business banking benefits. By not having to pay for so many expenses, the company can pass on better deals for you and offer many more rewards than traditional banks.
Because of this, many traditionally physically located financial institutions are now transitioning to more online banking. According to the Federal Reserve, in 2020, the U.S. saw 3,700 locations permanently close their doors, a 23 percent increase compared to the 3000 average closing yearly between 2008 and 2017.
Robotic Process Automation
Robotic process automation (RBA) is just as futuristic as it sounds. It may not involve physical robots, but the jobs it can perform are still the same. It is a classic case where replacing humans with software has become much more profitable and beneficial to the banks implementing them.
Instead of having a human manually process a decision and then send it back for approval, these tasks can be augmented entirely by a computer’s job. Cost reduction by robotic replacement can vary between 30 percent-70 percent and reduce processing times by 60. RPAs are used for various tasks like accounts payable, mortgage processing, fraud detection, etc.
With the world having been in a non-stop crisis mode for the last 2.5 years, it looks like innovation will continue to thrive. Problems are the mother of innovation, and as long as turbulence continues in our world, massive changes will be seen across all industries. With a recession on the horizon, who knows what financial products are yet to come.
Lee Li is a project manager and B2B copywriter with a decade of experience in the Chinese fintech startup space as a PM for TaoBao, MeitTuan, and DouYin (now TikTok).