FinTech is a combination of the words “financial” and “technology,” and it refers to the application of technology to financial services to make them faster, easier, and more secure. Fintech has integrated into a wide range of industries, from mobile banking and investments to online shopping. It has the ability to expedite processes that once took days, weeks, or even months.
Fintech has grown exponentially throughout 2021, with various companies reaching an all-time high by raising $125B. In the first half of 2022, Fintech start-ups raised $32.4B globally. It’s still expected to grow rapidly, and research predicts that the global Fintech market value will grow to approximately $324B by 2026.
Here are some Fintech trends to keep an eye on in 2022:
2022 is predicted to be a landmark year for blockchain technology. Blockchain offers unprecedented security to both sides of the transaction, especially in terms of identity management. Assisted by blockchain transfers, payments and investments can become faster and error-free. Blockchain technology is also referred to as “electronic ledger,” and it helps keep an automatic record of transaction data. It also protects from fraudsters because every transaction is recorded and cannot be changed.
Biometric Security Systems
Users consider the protection of sensitive data and financial accounts a top priority. According to emerging trends, Fintech is becoming a priority industry for biometric authentication technology. As per new research, the global biometrics market is expected to grow from $36.6 billion in 2020 to $68.6 billion in 2025. Biometric authentication provides users and institutions with the assurance that their data is protected. There is a trend in the growth of contactless biometric solutions, which will overtake touch-based biometric security systems. One major reason for this shift is due to the Covid-19 pandemic. People are avoiding payments with cash and all payment methods that involve touch-based technology such as passwords, PINs, or fingerprint authentication.
With Fintech advancements, virtual payment options in the form of digital wallets are surging in popularity. Gen Z and Millennials are digital-savvy consumers and heavily use e-wallets like PayPal, Apple Pay, and Google Pay. Digital wallets are gradually transforming into “super apps,” with Fintech integrating with the success of messenger apps like WhatsApp to provide payment services.
E-commerce players have partnered with fintech firms to create custom wallets and payment gateways. Digital wallets are used to make a wide range of payments, from investments and stock market trading to paying for groceries, movie tickets, and online gaming with in-app wallet options. With e-commerce giants like Amazon initiating Amazon Pay, gaming apps, and online casinos integrating mobile wallets, as successfully implemented by NJ online casinos for seamless transactions, digital wallets are a thriving trend that is here to stay.
Fintech and Cryptocurrency
Cryptocurrencies are built on distributed, decentralized ledgers which makes their transaction records easily verifiable. Companies within the banking and Fintech industries are exploring ways through which they can benefit from the electronic ledger technology that powers cryptocurrencies. It is predicted that cryptocurrency will play a significant role in shaping emerging Fintech innovation by unlocking new markets and boosting efficiency and convenience. With many central banks considering developing their digital currencies and traditional banking giants investing huge amounts in crypto, the futures of cryptocurrency and Fintech are increasingly interrelated.
BNPL or Buy Now Pay Later is rapidly establishing itself as a prominent Fintech lending trend. BNPL services offer the same benefit as using credit cards, minus the commitment and interest fees. Experts predict growth in the BNPL sector, and global giants are already joining the fintech bandwagon. For instance, we recently saw Amazon partnering with Affirm to offer BNPL services to consumers, splitting purchases of $50 or more into smaller monthly payments. Frances Schwiep, a partner at Two Sigma Ventures, commented, “BNPL will become a more popular POS option in 2022, not only across brick-and-mortar stores but also in sectors like healthcare, where installment payments already exist but have not yet crossed the chasm to digital“.