Five key fintech trends to watch in 2022

Five key fintech trends to watch in 2022

Consumer behaviour and early adoption of new technology are expected to transform the financial services market in the coming year. Banks must adapt.

Banks and fintechs are competing to innovate and shape the future of financial services. As new technologies emerge, traditional banks will be forced to adapt quickly in order to provide their customers with what they expect, resulting in the emergence of new business models throughout the financial services sector. Buckzy Payments, a leading real-time cross-border payments provider and global financial services marketplace, believes so.

According to Abdul Naushad, President and CEO of Buckzy, "consumers' continued adoption of new ways to access and use financial services necessitates a complete rethink from traditional financial providers." Because of new technology and broader societal trends, consumers are driving change on an unprecedented scale.

"It goes without saying that the pandemic has altered our way of life, work, and shopping." This, in turn, has an impact on both traditional banks and fintechs, who must find new ways to gain a competitive advantage. As we move into 2022 and beyond, we see five key trends driving that change."

The Rise of Digital/Neo Banks: Banking has traditionally been a monopoly with high entry barriers. However, regulatory relaxation in countries around the world has paved the way for neobanks to take the lead and attract customers with the promise of lower fees, convenient mobile banking, and an improved customer experience that eliminates in-store banking. As a result, the neobank sector was valued at $30 billion or more in 2020 and is expected to grow at a compound annual growth rate of 47.7 percent over the next eight years. With a combined purchasing power of $1.2 trillion, neobanks are also attracting unbanked customers. As more people go online, digital banking is expected to overtake in-store services.

Real-time cross-border payments: According to Levvel Research, approximately 40% of large enterprises in the United States have already adopted real-time payments, and this percentage is expected to rise. Approximately 50 real-time payment schemes are now operational in other countries and regions. Immediacy of payment settlement is in high demand because it provides a competitive advantage for businesses, reduces the risk of payment failure, and greatly improves cash flow efficiency. Expect real-time capabilities to extend to cross-border payments as domestic schemes become more established and popular.

Open Banking: Our reliance on digital payments and self-service banking during the pandemic confirmed the need for banks to become more digital. Open banking is a technology-driven API-enabled approach that enables banks and other providers to deliver financial services using aggregated and authenticated customer data. Several countries have already enacted regulations requiring banks to provide open banking in response to customer demand. ** Open banking standards are being incorporated into the products and services of fintechs all over the world. Banks that do not embrace open banking will limit their ability to better serve their clients while also limiting their opportunities for growth.

Artificial Intelligence (AI) and Machine Learning (ML): Machine learning applications enable the processing of large amounts of data sets and reaching valuable conclusions, which, through the use of its algorithms, can drive effectiveness and provide efficiencies, including time savings opportunities. It analyses patterns in real time, allowing for quick decision making. AI/ML is already being used in a variety of financial services applications, including fraud detection, lending approvals, and AML screening, as well as risk monitoring and investment forecasting. Machine Learning is constantly evolving, and Fintech will remain one of the primary industries to benefit from AI/power. ML's.

The Rise of Banking-as-a-Service: Banking-as-a-Service (BaaS) platforms and services have emerged in recent years as a cost-effective and efficient way of delivering financial services based on open banking concepts. In order to deliver new and innovative digital services, banks must adopt a service-oriented and composable/modular architectural approach. BaaS is a critical component on the digital transformation roadmap for traditional banks and financial institutions. Many more legacy financial institutions are expected to collaborate with fintechs by utilising BaaS services to bring innovative technology in-house and enhance their own offerings.

"Over the next 12 months, as technologies and markets mature, these core trends will create an environment for further innovation and the emergence of new business models in financial services." They create global opportunities for banks and fintechs to collaborate and expand their offerings in payments, lending, digital banking, instant credit, and other areas," Naushad concluded.