As we enter Spring in 2022 and the end of the first trading quarter, it is becoming apparent that there are some compelling trends emerging in the fintech space. In this post we are going to take a look at a few of them.
2022 Trends In Fintech To Watch
1. Blockchain
Blockchain is a fairly sophisticated form of peer to peer technology which was originally developed to facilitate the BitCoin crypto currency. To try to describe it simply, blockchain works via a vast network of peer users (ie, non-centralised, regular Joes) verifying and recording transactions “on the blockchain”.
BitCoin itself has soared to a lucrative value over the last few years and after being dismissed as a joke or scam for a long time, is now flirting with mainstream acceptance. However, the blockchain tech behind BitCoin is fast gaining attention in its own right as a growing number of fin-tech’s have begun appropriating it for other uses.
Blockchain is now being used to record financial transactions (in “real” money rather than crypto), to communicate sensitive personal data, and is even being used for voting.
Perhaps more controversially, Blockchain is also being used for the sale and transfer of Non-Fungible Tokens (NFT’s).
2. Buy Now, Pay Later (BNPL)
The concept of being able to walk out of the store with goods we haven’t actually paid for is nothing new. Indeed, ‘credit’ is well familiar to us all, and has been successfully trapping millions of regretful consumers in long term debt traps for generations now.
BNPL is a development on the concept of credit. However, rather than having to apply for a credit or score card, the transaction is ultimately underwritten by P2P fin-tech agencies like Klarna or Paypal and consumers can quickly and easily apply for it at the checkout stage.
The concept is proving a big hit with millenials and really took off during the COVID pandemic when consumers found themselves with an excess of time to spend shopping online, but perhaps without the paycheck to fund it. However, whilst the rise of BNPL is good news for fin-tech lenders, consumer advice groups are already cautioning a “BNPL timebomb” which could see millennials saddled with unserviceable debt.
3. Back To The Broker
Whilst blockchain is a new innovation and BNPL is a fresh twist on a familiar theme, the third fin-tech trend of 2022 is an out and out old skool, retro revamp. Despite the exciting fin-tech landscape, it seems that the trusty (even boring?) old online broker sector is also trending in 2022.
They say every dog has its day and online brokers were all the rage in the mid 00’s. However, they did lose some ground in recent years as apps and platforms like Wise for currency or Robin Hood for stocks, threatened to render them redundant.
Currency brokers in particular are increasingly reporting that clients lost to the online, DIY platforms are now coming back to them. This is understandable. Whilst money transfer platforms like Wise do offer multi currency accounts excellent rates on transfers, they also lack the personal touch. For SMEs making substantial money transfers and currency exchanges, having a dedicated broker advising them on the best times and methods for money transfers can save them a lot of money.
The online currency broker marketplace is an old one and there are a lot of companies filing it. As such, choosing the right one can be overwhelming and tough. However, ADVFN finance named Key Currency their Best Currency Exchange Service in 2021, while TorFX, a Cornwall-based broker, was selected as the best by Moneyfacts magazine.
4. IPO’s
Without any doubt, one of the most intriguing developments in the fin-tech sector is how many start-ups are now readying themselves to hit the stock market. One prominent example is Revolut. The London-Lithuania based e-bank was only founded in 2015 but is now looking to float on the stock exchange by the end of 2022.
Likewise, the US based online bank Chime is set to go public this year with an estimated IPO of $45 billion. It is uncertain how having to answer to shareholders will affect these fin-tech giants and there is also a risk that they could be bought out, and tamed, by the established banks.
Still, it is quite a clear sign that the sector is well and truly coming of age.
5. Contactless Pay Apps
Ok so this trend really got going back in 2020 but continues to gain momentum and so is worth inclusion here as well. As the COVID pandemic hit in Spring 2020, hygiene worried consumers became almost allergic to money for the first time in history. As such contactless pay apps like Apple Pay, Google Pay and Paytm soared to mainstream use.
Whilst smartphone and iOS pay apps have been all the rage in hipster cafes for years now, the pandemic was the tipping point and they continue to rise in popularity as we enter 2022.
Final Thoughts on 2022’s Fin-Tech Trends
So there we have it. There is no denying that 2022 is going to be an exciting year for fin-tech. Innovations continue to come thick and fast from the new kids on the block, and the giants like Revolut and Chime are on the cusp of becoming household names.
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