The development of the FinTech industry depends on the technologies underlying financial products and services. Let’s take a look at the forecasts of leading technology companies (McKinsey, Accenture, Deloitte) about the development of the industry and FinTech trends in 2022.
1- Embedded finance
Embedded finance, as the name suggests, empowers companies to offer consumers credit without having to leave their platform. As explained by Forbes: “Embedded finance is a rather large sector and includes payments, card payments, lending, investments, insurance and banking. Embedded investments make investing even more accessible through easy and inexpensive access to funds and stocks.Another key part of embedded finance that’s on its way to becoming mainstream in 2022 is the buy-now-pay-later option.
In 2020, 8% of global ecommerce purchases are made through a “Buy Now, Pay Later” (BNPL) service. That figure is forecasted to double by 2023.
As mentioned by Financeonline, “Fast, truly global in reach, and with low processing fees, blockchain remains on the path of totally changing the face of financial transactions worldwide. It has the potential to boost the global economy to $1.76 trillion over the next decade with the two top nations—China ($440bn) and the US ($407bn)—benefiting the most from the technology (PwC, 2020). When it comes to the sector that has the highest distribution of blockchain market value, the banking industry rules with a 29.7% share.
According to McKinsey, every year, AI generates up to $1 trillion of added value for the global banking industry. From traditional institutions deploying “robo advisors” to advanced algorithms assessing a credit applicant’s risk, fintech companies will likely continue to expand their use of AI and machine learning in 2022.
With its ability to work with unstructured data, AI is well poised to deal with the growing incidence of cybercrimes, financial fraud threats among them. AI is already a hit with the best customer service software using chatbots and other smart systems.
RegTech comprises the power of AI, big data, and even blockchain to reduce financial risk, increase regulatory compliance, and eliminate fraud and laundering. RegTech is already having a significant impact on regulatory compliance. The RegTech industry promises to disrupt the regulatory landscape by providing advanced tech solutions to the growing compliance demands within the financial sector.
Given the relevance of RegTech, it is not surprising that Grand View Research predicts a 52% growth in the technology market by 2025. By then, the value of the compliance software solution will be $55.28 billion.