6 FinTech trends that will dominate the industry in 2022

2022 may have started as the year of blockchain technologies and NFTs, but since March, the crypto market has seen a big drop.

But despite the cooling of crypto, some trends have continued to flourish through the middle of the year. This article will discuss the six FinTech trends we believe will boom in 2022.

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Web3

In the beginning it was Web 1.0. This was a time, starting in 1994, when content on the internet was non-interactive and read-only. From 2004, Web 2.0 introduced interactivity on websites and the Internet. Now, 18 years later, Web 3.0 has begun its introduction.

Web3 combines four technologies to make it its own thing:

• Decentralization through blockchain
• Peer-to-peer exchange (reduction of third parties)
• Artificial intelligence
• Machine learning

An example of a Web 3.0 application is Wolfram Alpha. Wolfram is a computational intelligence calculator that can solve extremely difficult problems ranging from basic math problems to personal health. There are hundreds of calculations that this software can do, and it can give you all kinds of interesting data.

If you enter “Facebook” under the stock data section, you will get all the information you will be interested in as an intermediate trader. Under the finance section alone, there are over 36 calculations that can be made and discovered. Apps like this keep popping up all over the internet, so keep your eyes peeled.

E-commerce across national borders

Cross-border e-commerce has grown significantly over the past 2 years due to COVID-19, but it has exploded into a new growth period with the introduction of Web 3.0.

The integration of peer-to-peer decentralized crypto exchanges has enabled people all over the world to buy and sell even more products. Avoiding tariffs and fees to governments or third-party companies has increased each seller’s profit, thus stimulating growth.

In 2022, cross-border e-commerce will have grown to 22 percent of the entire e-commerce sector. This figure is set to grow to 38 percent by 2023, or about $2.1 trillion. Even with peer-to-peer exchanges growing, the current continued calculable growth is due to Amazon reselling, Wish.com and Alibaba.

Open Banking APIs

The best way to disrupt an industry is to make the technology available for everyone to use. Banks are now starting to open up their software for developers to build their products on.

APIs or application programming interfaces refer to two different codes that interact and share data with each other. You can think of them as a digital hand-off between friends. These APIs have opened opportunities for developers to access payment networks and integrate banks into platforms.

Stripe is a good example of an access payment network that allows developers to integrate subscriptions, payments and other purchases directly into their applications. Banking integrations have taken the form of direct transactions such as those found in PayPal or Robinhood. Barclay’s is one of the first banks to integrate other banking information into one app, allowing users a one-stop shop for all their banking needs, including paying their insurance bills on time.

Voice biometrics

Fingerprint scanners have been around for decades now, protecting our personal information. A technology that has gained momentum in recent months is Voice Biometrics. Like that scene in the movie Incredible, when a sleek superhero costume designer says “Edna Mode” and opens a door, this technology will figuratively open many to come.

Use of this biometric identification is being tested in customer service calls by banks to speed up the flow of information. You no longer need to provide highly sensitive personal information over the phone and risk someone overhearing it. Using phonetic and morphological features of each person’s vocal apparatus, unique identifiers are created that enable secure authentication with just the sound of your voice.

Like other ways to verify your identity, voice biometrics offers a much higher level of security than conventional knowledge-based authentication (passwords).

Only digital banks

Like ghost restaurants, digital-only banks do not have a physical location, and there are many financial benefits that banks gain by making them completely virtual. Companies like SoFi, Ally and Synchrony Financial have taken the banking world by storm, becoming some of the most valuable financial institutions in the NYSC.

The benefits of virtual-only banking don’t just come in the form of being able to access your institution from anywhere. The benefits also show up as increased savings rates, low monthly fees, higher CD prices and business banking benefits. By not having to pay for so many expenses, the company can give you better deals and offer many more rewards than traditional banks.

Because of this, many traditionally physically located financial institutions are now switching to more online banking. According to the Federal Reserve, in 2020 the United States saw 3,700 locations close their doors permanently, a 23 percent increase compared to the average of 3,000 that closed annually between 2008 and 2017.

Robotic process automation

Robotic process automation (RBA) is just as futuristic as it sounds. It may not involve physical robots, but the jobs it can perform are still the same. It is a classic case where replacing people with software has become much more profitable and beneficial for the banks that implement them.

Instead of having a human process a decision manually and then send it back for approval, these tasks can be completely augmented by a computer’s job. Cost reduction with robot replacement can vary between 30 percent-70 percent and reduce processing time by 60. RPAs are used for various tasks such as accounts payable, mortgage processing, fraud detection, etc.

What will be next?

With the world in constant crisis mode for the past 2.5 years, it seems that innovation will continue to flourish. Problems are the mother of innovation, and as long as turbulence continues in our world, massive changes will be seen across all industries. With a recession on the horizon, who knows what financial products are yet to come.

Image credit: Rawpixel.com/Shutterstock

Lee Li is a project manager and B2B copywriter with a decade of experience in the Chinese fintech startup space as PM of TaoBao, MeitTuan and DouYin (now TikTok).