Fintech in 2022: what can we look forward to this year?

For some businesses that have been hit hard by new lockdowns and regulations, 2022 looks to be a tricky year. However, fintech is one industry that remains relatively unscathed.

Investment in the fintech sector reached $91.5 billion in 2021, which is double the figure from the preceding year. Just last year, we were able to raise $10 million to fund our own growth in Europe and Asia.

As we move into the next year, we look at some new fintech trends and innovations that we can expect to see.

Faster checkouts and less cash

The pandemic has accelerated the decline of cash and fuelled the rise of alternative payments and digital payments. Libby predicts that 2022 will continue our society's push towards a cashless society.

“The pandemic has had a huge effect on card payments technology in particular, almost fast-forwarding our advances towards a cashless society. We have only just scratched the surface when it comes to aPOS – application point of sale systems and improving the customer journey by streamlining checkout facilities. This I believe will be a huge area for growth during 2022. 

Payments using apps, both merchants based, and payment provider supplied will no doubt increase during the year ahead. As well as the more traditional methods of accepting card payments via apps/QR codes, there are some exciting challenger banks and fintech firms offering streamlined and fast check out systems putting the consumer at the forefront of operations. 

It’s an exciting time to be working within digital banking services and payment tech with new companies emerging regularly. When this is coupled with customers no longer carrying as much cash as they did two years ago, and the development of new technology, our progression surrounding the way we make payments is constantly developing.”  Libby James, co-founder of Merchant Advice Service, an independent site that helps business owners navigate the world of card payments and business banking.

Wider applications of blockchain technology

The start of 2022 has been a bad year for cryptocurrencies with the price of popular coins like bitcoin cratering because of political instability and mine shutdowns.

Despite this, many observers are predicting that the market will continue to expand. More financial institutions are now allowing customers to use cryptocurrencies to make purchases.

It looks like 2022 will also see even more companies developing the technology that underpins cryptocurrencies - blockchain.

The ability to record, encrypt and verify transactions means that blockchain can be used for a whole range of purposes including digital smart contracts, theft prevention and supply chain monitoring.

Blockchain has been used to develop the NFT marketplace which regularly hits the headlines as customers purchase extravagantly priced digital assets. 

However, the ability of blockchain to act as a decentralised and incorruptible digital ledger means that it can also be used to verify election results, check vaccine records and process property purchases.

We expect 2022 to see even more companies to harness the benefits of blockchain and create even more products to improve cybersecurity and customer experience.

Greener fintech

Research shows that most people have recognised that climate change represents the biggest threat to the world and the financial ecosystem.

Some banks and financial service companies have already begun looking at how they use their money and reduced their investments in fossil fuels.

“Climate fintech will continue its rapid emergence as consumers voice their preference for financial products that align with their values. While we'll see more integration of carbon footprint, carbon offsetting, and impact investing into digital payment offerings, we'll also see an influx of greenwashing as companies try to capitalize on this trend.” Elizabeth Landau, Co-Founder and COO of GreenPortfolio, a platform that helps investors manage their finances in a greener way.

As more and more people appreciate the importance of climate change, so will businesses and we can expect to see greener products and more sustainable investments.

Aspiration is fintech company that won’t invest customer money in fossil fuels, whilst another startup, Oxbury, allows customers to invest in sustainable British farming.

However, whether all banks and SMEs follow through with their promises remains to be seen. Although many promises have been made to go green, some banks are not actually following through with their promises.

Wallet ditching

Vincent Choi, CEO of Pomelo Pay says, “Another recent phenomenon in the fintech industry is the popularisation of the smartphone (eight in ten adults used such a device to access the internet in 2020, according to OfCom) which has ushered in what is called wallet ditching. 

Your phone, which is effectively a computer in your pocket allows you to upload your credit or debit card onto it. That means you don’t have to rummage around in your pockets, purse or bag for it. It also means the whole process swdcdof paying is even more frictionless.

One of the most exciting questions to ask with the above in consideration is what comes after the smartphone? Facebook, through its Reality Labs division, is one of the companies leading the charge in augmented and virtual reality technologies.

In the very near future, we may be paying via smart glasses and experiencing holographic menus, clothes or the like before we buy.”

Right now people can use their phones to manage their finances, pay for products and a whole number of other purposes.

For 2022 at least, it looks like even more people will leave their house for the day with just their smartphones and keys. It won’t be hard to imagine that in a few years all that people will need when they leave their house is a smartwatch.

Automated stores

2021 saw the announcement that Amazon would open its first cashier-less stores in the UK. In these stores, customers can shop and pay all by themselves without the assistance of any shop staff.

Many stores are already automated in some way. You can shop in Tesco or Sainsbury's, pick up your goods and pay for them at self-service tills using contactless payment methods.

However, the Amazon Go stores take this a step further. Once customers enter a store they are tracked through sensors and cameras. Products are recorded by the store and paid for automatically through the customer's account.

2022 may see the beginning of the end for cash registers and checkouts. If self-checkouts are the first step, invisible payments and autonomous shops are the next.

Sainsbury’s opened a checkout-free store in November, joining Aldi and Tesco in their digital transformations. We can expect even more retail stores to integrate this new technology and see even more applications for artificial intelligence.

The growth of social commerce

Social commerce refers to selling products directly on a social media platform, as opposed to buying products on a dedicated e-commerce website.

Compared to Asia, social commerce in the West looks like a relatively small market. However, rich customer data, reduced friction and hyper-targeted advertising all mean that this market will undoubtedly grow into the future.

“We are really excited about the market opportunity in the social commerce space. Social commerce generated an estimated $36 billion in revenue in 2021, which pales in comparison to China’s $360 billion social commerce market. We are thrilled to be one of the early players in this space and have the opportunity to expand the market outside of China. 

A big trend in 2022 will be how advertisers react to the new App Tracking Transparency rules. Collecting data on consumer preferences has gotten significantly harder, which means brands will not be able to place targeted ads as effectively and will have to reach users through other means, such as trusted influencers and word of mouth recommendations.

Social commerce is the next evolution of online shopping - meaning every purchase will have a social aspect to it, whether that’s communicating with an in-store expert, discovering popular items from influencers, or sourcing feedback from the wisdom of a crowd.” Brian McMahon, CEO at Pickle, an online shopping platform that connects shoppers with influencers, friends and similar users.

Increased use of buy now, pay later (BNPL) services

Coinciding with the pandemic has been the rise in BNPL as more people look for alternative ways to finance purchases.

Lenders like Klarna and Afterpay have exploded in popularity. Research suggests that the use of BNPL platforms will increase from £2.7 billion in transactions to £37 billion by 2026.

The majority of customers using BNPL platforms are young, which reflects this demographic’s reluctance to use credit cards. Amazon also recently announced that they will no longer accept Visa credit cards. So all signs suggest that BNPL will become an even more popular payment method with customers.

However, it won’t be smooth sailing for companies in this industry. There have been greater calls for more regulation. Although research is currently limited, some observers have pointed out the various risks customers face including the potential for high levels of debt and the lack of meaningful background checks.