The year in review: an AZ for fintech in 2022

It’s been a busy year in the world of fintech – so busy that we didn’t know how best to summarize the highlights that the past 12 months have offered us. So, in the spirit of advent calendars and stockings-hanging-by-the-fire, we’ve put together an A-Z of the past year in fintech. All the biggest trends and buzzwords – 26 of them to be precise – have dominated the headlines this year.

ONE is for account-to-account, or A2A. As digital consumers seek increasingly seamless ways to pay, spend and transfer money, account-to-account solutions are gaining ground. Instead of relying on a payment method in the middle, funds are deposited directly into a merchant’s bank account. In September, we spoke to the CEO of Brite Payments to find out what’s behind the rise of A2A payments.

B is for BNPL, who has had a rotten year. The darling of the European buy-now-pay-later space, Klarna has laid off 10% of its workforce with $40 billion wiped from Klarna’s valuation. Other players have also had their troubles, as the potential launch of Apple Pay Later proves to be the proverbial shark in the water. Still, some innovative challengers have emerged – including Australian neobank Up, which pioneers save-now-pay-later.

C is for CBDCs – or the central bank’s digital currencies. At the risk of overloading you with acronyms, these are cryptocurrencies that are issued by a central bank. More than half of central banks are rumored to be experimenting with these programmable digital currencies, which come with inherent rules for their use, like coupons. However, there are privacy concerns about access to the transaction ledger they are based on.

D is for democratization, the trend driving the change in retail investment. Investing has become infinitely more accessible in recent years due to mobile apps and online platforms. Now some apps take it to the next level. These include ‘social investment’ app Shares, commission-free platform Lightyear and Arta, which lifts the lid on alternative assets such as private equity.

E is for built in everything, which is set to become the finance of the future. We’ve seen a real increase in companies developing embedded solutions – the concept where, rather than forcing consumers to come to you, you bring your products directly to consumers by building them into an existing channel (like an e-commerce checkout ) where they need them most. Embedded lending, embedded finance and embedded insurance have all taken off in the last 12 months.

F is for FTX, naturally. The fallout from the collapse of cryptocurrency exchange FTX has rocked the crypto world and prompted a wave of damaging accusations. The crypto space was already having a bad year when crypto holders, alarmed by rumors about FTX’s financial position, started withdrawing deposits. This left the exchange with a liquidity black hole, and after a potential bailout from Binance fell through, the firm — once valued at $32 billion — went under.

G is for great resignation, leading to a skills gap across the fintech sector. This grandiose term refers to the part of the workforce that has not returned to work, especially after covid-19. Fintech’s ongoing growth was partly responsible, making it difficult for companies to recruit as quickly as they grew, but a difficult year has dampened that. It is now estimated that the technology industry may lack 4 million workers by the year 2030.

H is for hybrid work models, another consequence of the pandemic, but one that has largely been seen as positive. More employers than ever understand the value of flexibility, especially when it comes to attracting talent, and realize that hybrid work is here to stay. But there are also disadvantages: hybrid working models have been cited as one of the reasons why the number of cyber attacks and incidents is increasing.

I is for inflation, one of the defining themes for 2022. High inflation, driven by rising food and energy prices, is just one of the underlying factors putting a squeeze on household and business budgets. Inflation has entered double figures in both the UK (11.1%) and Germany (10.1%), while other countries are also experiencing higher-than-usual inflation rates, including the US at 8.2%. In October, we took a look at how fintechs coped with the high inflation rate.

J is for ‘just wait and see’, which seems to be what every major company that previously planned for an IPO is now saying. Payments giant Stripe, digital bank Zopa and South Korean app Toss are among those whose public listings appear to have been delayed, while Klarna’s annus horribilis makes the prospect of an IPO less likely. After bruising layoffs, many firms appear to be focused on rebuilding rather than going public.

K is for children, the fintech consumers of the future. Promoting financial literacy has always been an important step in building the next generation of savers and investors, but 2022 has been another strong year for youth money apps. In July, GoHenry expanded into Europe with the acquisition of Pixpay; then, in October, Greenlight’s Timothy Sheehan was named in our Top 100 FinTech Leaders list.

L is for layoffs, the inevitable response of many of our biggest fintechs to rising inflation and the rising cost of doing business. According to redundancy tracker Layoffs.fyi, more than 21,000 people have lost their jobs in finance this calendar year, with another 8,000 layoffs in crypto. Some of the high-profile culls include Stripe’s layoff of 1,000 employees, as well as the roughly 700 layoffs each at Klarna and Robinhood.

M is for metaverse, which emerges as the single biggest disruptor in fintech. In a few years, we could all be banking and transacting in the metaverse – a generic term used to describe a virtual environment, accessible through various technologies, including VR headsets. It has caused banks and traditional financial institutions to invest in virtual real estate in the metaverse and orient their businesses towards potential mainstreaming.

N is for net zero, the desired goal for all responsible businesses in the fight against climate change. Within fintech, the largest source of emissions comes from so-called ‘financed emissions’ – or emissions linked to capital such as loans, investments and underwriting. Financial institutions are adapting to this by targeting net zero, but too many organizations are using carbon offsets as a convenient way to avoid having to deal with polluting behaviour.

O is for open bank. This refers to the practice of using APIs to give consumers the choice to share transaction data between banks, fintechs and trusted third parties. Open banking has unleashed new opportunities in fintech and in the last year it has gone from strength to strength. At FinTech LIVE London in November, a panel of guests from Yapily, Nordigen and OBIE discussed the seismic effect open banking has had.

P is for partnership, especially in crypto. Buoyed by fluctuating valuations and high-profile controversies, the crypto space has sought to regain confidence in the retail industry by engaging a number of celebrities. These include racing driver Daniel Ricciardo, who in May was named an ambassador for OKCoin; and Cristiano Ronaldo, whose November NFT launch with Binance saw an explosion of search traffic.

Q is for stand up, the practice of doing only the essentials of your job without going above and beyond, which rose to prominence this year. But quietly quitting speaks to a broader sense of general discontent, which has taken hold amid the cost-of-living challenges many face. Britain alone has seen rail workers, criminal lawyers, ambulance drivers, nurses and postal workers all walk out or threaten to walk out over pay and conditions.

R is for regulation, which comes to crypto. The fallout from the FTX case raises the prospect of greater oversight from regulators. This could take the form of greater protection for consumers, some of whom lost savings in FTX’s demise. But it could also take the form of antitrust measures as weaker players are shaken out of the volatile crypto landscape.

S is for SMEs, the lifeblood of most economies. Despite the challenging macroeconomic environment they face, many SMEs have shown resilience in the face of adversity. In turn, this underserved demographic is now being recognized by a new wave of fintech entrepreneurs who are developing solutions tailored for SMEs – from cyber insurance and blockchain to credit and payroll.

T is for the merger, which, despite how it sounds, is not a chart-topping indie boy band. The process saw Ethereum transition from its original “proof-of-work” blockchain to the more sustainable “proof-of-stake” blockchain. The result, say Ethereum developers, has the potential to be a defining moment in the development of blockchain technology and could lower Ethereum’s energy needs by 99.9%!

U is for unicorns, which continue to sprout horns despite the headwinds before them. According to Pitchbook, there have been no less than 77 new fintech unicorns since the beginning of 2022. Among those who reached the prestigious unicorn status this year were Vesttoo, TransferMate, Kushki, Stori, GoCardless, Clear Street and Younited.

V is for valuations fall, another defining characteristic of a bad year for fintech. The most important was USD 40 billion which was deleted from the value of Klarna. But it’s a trend affecting all areas of the fintech landscape, with payments giant Stripe admitting it “didn’t know” whether the firm still justified its lofty valuation. Many investors have pointed out that this, rather than a devaluation, is merely a rationalization of company valuations after several fierce years of inflated figures.

W is for women. With each passing year it feels like another year where we say we are getting closer to equality in the boardroom. Progress is slow if not steady, but that doesn’t mean we shouldn’t celebrate victories where they fall. A new report this year found that perceptions of diversity vary widely between men and women, with men more likely to believe the sector is gender diverse. To discover some of the women helping to reshape these perceptions, check out our inspiring Women in FinTech series.

X is for extensions, in a way. As the investment landscape becomes more barren, a growing number of fintechs are turning to series extensions to help them increase their funding trajectory. In fact, we’ve seen a disproportionate number of fintech players announce series expansions over the past year. This can be beneficial, as it allows a fundraiser to secure additional support over a longer period of time – but crucially at the same share price as it originally offered.

Y is for you – Yes you. You have the power, through the apps you use and the behavior you display, to completely transform the fintech industry even without being a part of it. In a saturated market, your use of a new platform or loyalty to an existing one can help define the future of money. And with the rise of biometric technologies, you could literally become the key for years to come unlocking devices, paying for goods and helping keep the financial industry more secure.

Z is for Zelenskyy, the Ukrainian president who was named Person of the Year this month for his efforts to defeat Russian aggression. In March, the entire business community rallied around Ukraine and expressed their shock at Russia’s invasion. The war has played a central role in many of the topics on this list – including inflation – but it has also had a more direct impact. For example, European insurers are now prevented from insuring vessels carrying Russian oil as part of a series of sanctions announced in June.