The year 2021 has greatly affected the fintech market. The year was a turning point for financial technology and the financial services sector as a whole. As consumers, we have all become participants in the significant lifestyle changes caused by the pandemic, and companies around the world have been forced to adapt to this new behavior.
It would be unwise to make any bold predictions for fintech 2022, which should happen, without first examining the evidence of what has happened in the financial technology market in recent months. To study the market reaction, the fintech company Yobota recently conducted an independent study and surveyed more than 250 British banking and financial services executives.
The survey examined their experience of using digital innovations and examined their strategic plans for the coming year.
Where will financial technologies move in 2022 and what innovations we will see this year :
Active development of BaaS and BNPL services
Banking as a service (BaaS) has become firmly established and has already become mainstream in 2021. Under the pressure of an increasingly digital market, local customers frustrated by fragmented or inconvenient customer interaction routes, banks, financial technology, and brands are joining forces to drive the future of banking.
This year, the fintech service "buy now, pay later" (BNPL) has attracted all the attention, but this is only the tip of the iceberg when it comes to the potential of embedded financing. However, this is one of the clearest examples of how innovators can use fintech to improve the online experience.
Looking ahead, 44% of banking and financial companies plan to invest in BNPL or other embedded financial solutions in 2022. Although until now, it has been mostly retail customers who have experimented with this newfound ability to shift their payments, I expect the BNPL business market to flourish soon.
In particular, for startups that often pay large bills at a time and on a one-time basis, BNPL solutions that can help them better manage their cash flow and overcome difficulties with obtaining a loan will be welcome. The most famous BNPL companies are Klarna and Curve.
Meanwhile, almost three out of five (58%) of the surveyed enterprises plan to invest in BaaS solutions. Taking a closer look at this rapidly developing sector, we will undoubtedly see an increase in the number of recognizable client brands seeking to integrate financial services into their offerings with the support of financial organizations and financial technologies.
Expect to see some new and affordable opportunities for customers, with built-in financing going far beyond the reach of traditional financial services. Embedded banking systems know no boundaries: retailers, airlines, automakers, hospitality establishments, etc.
BaaS will step in to bridge the gap between consumers and the businesses they interact with, making it easier for non-banking companies to integrate financial services directly into their offerings and deliver interesting offerings to established customer bases.
Building a better, eco-friendly future in fintech
The financial sector has recently been looking with increasing urgency for creative ways to ensure sustainability and integration, having sufficient momentum to continue working in the new year. 69% of banks and financial security firms surveyed have already proposed new environmentally friendly tools for 2022, and another 64% said that their organization intends to invest in products that stimulate access to financial services.
A good example here is a Starling Bank. Independent service quality survey results show that this bank is one of the leading fintech companies in the UK. Starling Bank is ranchless, paperless, and operating on renewable energy. Starling was also the first bank in the UK to launch debit cards made from recycled plastic. Additionally that, Starling Bank joined the Tech Zero taskforce to help to cut carbon emissions.
There is also a product called Treelion. Code & Pepper writes that Treelion has a blockchain-based solution that brings a decentralized network to launch and manage green digital products of all kinds. The product is dedicated to the enablement of green economy capital flows and the creation of large-scale green digital ecosystems.
Recent events show that customers are increasingly taking a central place in the banking sector, and players in this area are looking for ways to improve the lives of their end-users.
Expect the industry to pay more attention to its environmental and social obligations and work even harder to create offers that will bring real value — greener loans, in-app carbon tracking features, or more affordable and affordable financial products.
The transition from an open banking system to open financing
Much of the above has become possible thanks to the development of open banking. Our research has shown that the vast majority (63%) of UK banking institutions and financial institutions plan to use open banking opportunities in the next 12 months, indicating that open banking — or, more precisely, open financing — will go beyond its current limitations.
What does this mean for customers? Many have already felt the benefits of open banking, especially those who have used more personalized products and individual financial advice as a result. As the number of supporters of open financing increases, instant payments, borderless trading, and individual customer ordering will become a reality.
In the coming year, moving financial data will become even easier where necessary, provide end-users with greater autonomy, and provide fintech and financial institutions with enhanced opportunities to provide interesting offers to customers.
There is no progress without partnership
As consumers explore new financial instruments that promise to simplify and improve their lives, the key players involved in providing embedded financial and other solutions must maintain trust and transparency at the core of their offerings.
Partnerships are already playing a crucial role in bringing together best-in-class technologies with extensive banking experience. However, as the financial services industry becomes increasingly interdependent, fintech companies must ensure to customers that these services meet the highest technological standards and standards.
Therefore, fintech companies cannot develop in the above areas without strong partnerships. The conducted research indicates a desire for cooperation: more than three-quarters of respondents (78%) said that closer cooperation between banks and technology players is necessary.
As the world of financial technology becomes more interconnected, we will undoubtedly see how these partnerships contribute to the creation of even more solutions that inspire customers and help them achieve their financial goals.