Fintech trends: What trends will shape the fintech landscape in 2022?

From eye-watering funding rounds to the acceleration of digital payments and the rise of ecommerce - the fintech sector has continued to demonstrate its innovation and agility, even in the most challenging of times. With the new year just around the corner, this is an opportune time to take a moment to reflect on some of this year’s most prominent fintech trends, before sharing some predictions for what is to come in 2022.

2021 Fintech Trends: 

• Fintech funding: 2021 had some of the biggest fintech valuations to-date. From the likes of Klarna ($45.6b) to N26 ($9b) and even Airwallex ($5.5b), investment continued to pour into the space. According to Boston Consulting Group’s “State of FinTech” Q3 report, majority of investment can be segmented into two categories, payments and accounts products. These two categories each received more than $7.5b in investments and accounted for 45% of all investments in Q3.

• The rise of ecommerce and digital payments: The events of the pandemic have accelerated trends that were already in motion – with the way businesses interact and sell to consumers, cementing the ongoing demand for ecommerce and digital payments. Since e-commerce has gone more digital, the need for fast and reliable cross-border payments has become top of mind for merchant’s who are considering or already have a global presence. The pandemic really demonstrated the adaptability of some merchant’s who reacted quickly and shifted their business model to a digital-first approach as well as the payment revolution. 

2022 Fintech Predictions:

• Removing payment friction without compromising compliance and regulation: The consumerisation of B2B payments has not only sparked a conversation around the use of innovative tech to facilitate frictionless, real-time payments, but has also emphasized the important role compliance and regulation will play. The challenge for businesses will be around removing unnecessary friction - poor user experience, slow transfers, high FX fees, etc - and making it easier for businesses to grow without borders through deploying further innovation and new technologies, such as machine learning, to speed up B2B payments without compromising security or breaching regulatory guidelines. This will be a necessity for the long-term sustainability of both traditional players and disruptive fintech companies. 

• The year of embedded finance: Just like today’s consumers, businesses want (and need) a seamless payment experience. Embedded finance was designed to streamline the entire financial process for consumers, while also creating operational efficiency for businesses. By using embedded finance, businesses can create a holistic experience for the end user and customers can easily send and receive money in near real-time, without having to sacrifice a poor user experience.

• Open Banking, if not now, when?: Open banking has the potential to reshape the entire financial sector, but it still has a long way to go. In order to make open banking a success, traditional banks and innovative fintechs need to embrace the technology and future use cases to support increased customer expectations. In the year ahead, I think more fintechs, banks and regulators will be discussing the future of open banking and how to make it even more of a reality.