The end of the year is coming, so on the one hand is the time to sum up the past months, but on the other hand, it is a good moment to forecast what to pay attention to in the next, coming year. Although technology in the financial field is not changing so rapidly in comparison to others, there are still new solutions and trends to consider. What technology trends will emerge in the fintech industry in 2022? Let’s find out:
1. Hyper Automation
Hyper automation is not just a technology trend, it touches business processes in a big way.
The increasing emphasis on growth, digitization and operational excellence
have highlighted the need for better, more widespread automation.
Hyper-automation is a business approach to identify, verify and automate as many business and IT processes as possible. It requires Orchestrated use of multiple tools and technology platforms, including RPA, low-code platforms and process mining tools.
It is an extension of existing business process automation beyond the boundaries of individual processes. By combining AI tools with RPA, hyper-automation enables automation of virtually any repetitive task performed by business users.
It even takes it to the next level and automates automation – dynamically discovering business processes and creating bots to automate them. Hyperautomation was identified by Gartner as one of the top 10 strategic technology trends of the year.
With an array of tools such as Robotic Process Automation (RPA), machine learning (ML) and artificial intelligence (AI) working together in harmony to automate complex business processes – including where domain experts were once needed – hyperautomation is the way to go for true digital transformation.
2. Buy-Now-Pay Later Goes Mainstream
With the rise in popularity of online shopping and new generations coming online, the adoption of new payment options is happening faster than ever before. Take, for example, buy now, pay later solutions like Klarna and Afterpay, where consumers can now even convert their homes into a ‘virtual changing room’ by trying before they buy.
The BNPL industry has modernized layaway and installment payments to offer consumers flexible payment options for their purchases. Compared to credit cards, intended to be used repeatedly, BNPL solutions are applied to individual transactions—appealing to consumers who want to make less of a financial commitment, even on lower ticket items.
The pandemic’s impact and BNPL’s overall rise in popularity will lead the industry to rack up $680 billion in transaction volume worldwide in 2025.
While some BNPL solutions are available in-store, they are native to ecommerce checkout, making them more widely available when shopping online. And with ecommerce sales climbing an estimated 44.4% year-over-year (YoY) in Q2 2020, more consumers may choose to use BNPL solutions more regularly, if they haven’t already.
3. DeFi
The essence of decentralized finance is that it is a set of tools and applications functioning in the blockchain network and allowing the user to use a number of financial services that we know from the traditional financial sector, but mostly implemented without the involvement of a central institution (e.g. bank).
As indicated by Fintech Poland, decentralized finances have a huge growth potential. In less than a year and a half (from July 2020 to October 2021) DeFi market capitalization increased from 3 billion dollars to over 200 billion. Adding to these numbers is the potential of the crypto-asset market – today there are already 330 million crypto-asset users worldwide, and the value of transactions on the Etherum blockchain reached $2.5 trillion in the second quarter of 2021.
DeFi seems to be one of the most innovative and fastest growing areas of modern finance. The development of decentralized finance changes the foundations on which the banking system was based for years – it neutralizes the role of financial institutions, balances the level of control of system participants, gives wide access to capital and new users.
4. Cloud for banking
Data, its storage, processing and analysis is the most sensitive part of banking, which is being addressed by the most trusted cloud solution providers and companies implementing them in organizations. Replacing on-site infrastructure with cloud solutions is a natural direction of technological development for banks, which responds to their most important needs.
Implementation of cloud solutions in the case of financial institutions means a significant reduction in expenses on data storage and archiving. Cloud also allows to offload central systems and faster changes to the process or product that is built on it. The biggest challenges can be seen at the interface between new technologies and traditional solutions. This is not only the reorganization of the entire IT, integration of new cloud infrastructure with central systems, but also changes in the operating model.
5. Cross-Platform Services
Digital finance transactions frequently cross over to various other industries such as retail, healthcare, and utilities. On point, the emergence of third-party payment providers such as PayPal and AliPay largely attribute their success to making the most of this phenomenon.
Due to the commonly lengthier transfer process and tediousness of going back and forth between banking apps and other business sites, many consumers are turning to third-party providers who most likely have already made themselves available in growing digital spaces such as e-commerce. In terms of proportion, the global tally of online banking direct payments are 5.3% lower compared to third party payments accounting 39.7%.
By embedding payment services such as developing mobile pay or hybrid wallets available for cross-platform transactions, your business can turn the situation around. Evidence of this can be observed in the growing popularity of Payment Mini Program Integrations within WeChat in China. By integrating services such as payments or transfers as a bite-sized app or service in the multi-purpose WeChat app, many finance vendors have not only increased awareness but also significantly raised their total revenue outside of interbank and intra fintech transfers. This goes to show that in the advent of digitisation spanning industries serviced by the financial sector, visibility will be the key to sustaining business.