Top 10 FinTech trends for 2022? We asked industry experts 

By Gaia Lamperti

What a year has 2021 been for the FinTech industry globally! Investments in the space skyrocketed, as did consumer adoption of FinTech products, and the last 12 months have been studded with new partnerships, stellar funding rounds, and innovative features launches.

After such a year, what can we expect from the incoming 2022? IBS Intelligence asked 10 undisputed experts across various segments of the financial technology space, from Banking-as-a-Service to payments and cryptocurrencies. We collected their opinions and put together a guide on the trends that will shape next year in FinTech.

Re-thinking business models with Open Banking

Spreading from Europe and UK to many parts of the world and driven by regulatory and market forces, Open Banking will be a key trend for 2022 and beyond. Temenos, the leading banking software solutions company, strongly supports this view and believes it will lead industry players to re-think their business models to provide compelling new customer propositions and remain relevant in the new digital ecosystem.

“Banks will continue to use Open Banking to break into new markets, consolidate market share in mature markets, or defend against aggressive new entrants in others,” Kanika Hope, Chief Strategy Officer at Temenos explained to IBS Intelligence. “All players in the Open Banking ecosystem, whether banks, new BaaS providers or the FinTech or technology brands consuming BaaS, require a resilient, secure and scalable technology platform that is Cloud-native, API-first, built on microservices and enabled by AI.”

BaaS diversification

Among those new business models, Banking-as-a-platform will be gaining more and more traction. “2022 will see the beginning of the end for agency banking,” told us Charles McManus, CEO at ClearBank, the Cloud-based clearing bank that topped Deloitte’s ranking of the UK’s fastest-growing technology companies in 2021.

“Traditional financial services providers, frustrated with legacy banking infrastructure, will turn to BaaS providers to accelerate the modernisation of their products and services. And FinTechs looking to offer a wider range of regulated financial services will look to BaaS to avoid the cost and complexity of doing it themselves,” he added.

Financial services providers will demand a broader range of more sophisticated services such as access to FSCS regulated bank accounts, Confirmation of Payee, multi-currency, and crypto capabilities to fuel expansion and drive growth. “As Bank-as-a-Service grows, it will also diversify,” McManus concluded.

The rise of embedded finance

Further enabling the expansion and evolution of financial services’ customer-centric proposition will be the rise of embedded finance experiences. According to Nigel Verdon, CEO of embedded finance experience platform Railsbank, as 2022 progresses, brands will increasingly realise the possibilities of creating enhanced UX when financial services are seamlessly built-in in their platforms.

“Our research found that consumers are dissatisfied with what’s on offer and want more relevant and meaningful rewards and experiences,” Verdon explained to IBS Intelligence. “We can expect to see consumer brands tap into their customers’ interests or passions to offer relevant, alternative reward experiences, whether that be auto investing cash back into cryptocurrencies, auto donating to environmental charities or privileged access to events.”

“Next year we expect to see prestige brands rolling out new propositions with financial services seamlessly integrated into the experience, and it will revolutionise how consumers engage with brands,” he added. “The potential here is enormous and largely untapped.”

Turning to DevOps for data compliance

 “Connecting banks, third parties, and technology providers to enable them to share authorised data through Open Banking will bring more competition and innovation to the sector, as well as better products and services,” pointed out Steve Barrett, Senior Vice President, International Operations at industry-leading data company Delphix. 

But using data for innovation also opens challenges. “As data exists across many disparate systems, siloed throughout a business in different departments, it can be complicated to safely, efficiently and effectively deliver it to those who need it to glean any valuable insights or drive new projects,” Barrett commented. “Next year, financial services organisations will increasingly turn towards DevOps as a means of delivering compliant data at speed via an API-driven data platform. By combining data delivery and compliance across multi-generational systems, these platforms automate, scale and optimise testing while mitigating compliance risks.”

RegTech’s further penetration

It is impossible to mention compliance without addressing the growth in demand for regulatory technology over the course of the past 20 months. “The Reg Tech industry is at a tipping point right now, and I see this trend going to continue in the new year,” told us Evgeny Likhoded, CEO and Founder of Clausematch, the compliance software company used by the likes of Revolut and Barclays.

“A whole new set of challenges for compliance teams that emerges in this new digital environment is forming a natural landscape for automation and for propelling new collaboration methods,” Likhoded added. “Mid-tier market and small businesses that are growing and scaling fast are catching up with big players in compliance technologies adoption. There is no more room for denying technology, no room for fear in front of the Cloud and AI.”

DIY finance 2.0

Financial institutions have already stepped up their digital offering this year, but 2022 will see heightened consumer autonomy across personal finance management, Cloud-native, Core Banking platform Ohpen told IBS Intelligence.

“Recognising the benefits of helping customers to help themselves in a pandemic age, the savviest banks and financial services providers will offer more predictive analytics directly to consumers across front-end widgets on apps and web-based functionalities,” Matthijs Aler, CEO of Ohpen, shared. “This will empower consumers to better control their bills, debts, cash and loans autonomously, lowering credit risks for the financial services providers involved. Likewise, as data becomes more structured, explainable and aggregated, financial institutions will finally have a 360-view of their customers, enabling them to open up a new world of tailored propositions.”  

ID verification via sophisticated AI technologies

When it comes to accessing more advanced predictive analytics, finding patterns in complex data, picking up trigger points across consumers’ financial behaviour and enhancing security, Artificial Intelligence will play a vital role in the next few years.

“To deliver on the digital promise, whilst still ensuring that customers are receiving a human-like experience, many financial services organisations will turn to modern AI-powered technologies, such as biometrics,” explained Brett Beranek, VP & General Manager, Security and Biometrics at Nuance Communications. “Voice biometrics can use sophisticated algorithms to analyse more than 1,000 voice characteristics to authenticate a user and validate their identity.”

“As we transition into the post-pandemic world, consumer comfort, trust and preference for the use of modern technologies to engage with brands is at an all-time high. As a result, we can expect digital interaction to emerge as the new norm.”

Broadening the offering

Payment solutions and infrastructure company Currencycloud believes that the past few years’ “great unbundling” – niche providers offering a single, specialist service and not doing a whole lot else – has now turned into the “great re-bundling.”

“Many forward-thinking industry commentators believe the future of financial services lies with companies that are best able to curate a selection of very high-quality services and offer them to customers,” Stephen Lemon, Co-Founder, Vice President, Strategic Partnerships and Corporate Development at Currencycloud, told us.

“Many businesses that were once happy to sit alongside other niche providers are now vying for the same customers. Who wins 2022 will decide the future of the industry.”

New digital assets ambitions

Cryptocurrency institutional adoption has spiked in 2021, and thanks to innovation from industry leaders like Fireblocks, 2022 will provide incentives for more institutions to enter the market.

“The next wave of adoption will require the proven safety and soundness of market-leading custody solutions. However, new services and connection possibilities supplied by custodians will actually boost adoption among verticals other than financials,” Jason Allegrante, Chief Legal & Compliance Officer at Fireblocks, explained to IBS Intelligence. He expects significant tech companies like Tesla, Google, and Airbnb to announce plans to invest their own capital in crypto solutions over the next 12 months.

Even top tier banking sector has begun to reveal its hands in terms of its digital asset ambitions in 2021. “I’m looking forward to seeing those projects at BNY Mellon, Citibank, and State Street come to fruition in 2022, specifically for cryptocurrencies,” Richard Astle, Head Switzerland & Middle East at Fireblocks, added. “Contrary to a few years ago, there are now no liquidity or product constraints when looking over-the-counter with spot, futures, or derivative products available to be traded.”

The importance of fraud prevention

Finally, it will be also critical for the sector to recognise the inherent risks that accompany all these trends and have been increasing and evolving during the shift to the digital age. “Fraud is broadly on the rise but growing particularly quickly on the internet,” confirmed Tamás Kádár, Co-founder and CEO of SEON, the industry-leading fraud fighters.  

“FinTech providers and businesses who adopt their services can’t ignore this problem and must work alongside experts in the field to ensure they’re doing all they can to protect themselves,” Kádár said. “Online attacks are getting more sophisticated whilst also becoming cheaper to pull off. Rates of identity theft are constantly on the rise, and we don’t want to see new records reached again next year. To ensure this isn’t the case, we’re going to need to see individuals engage more with online fraud and security experts.”