2022 may have started out as the year of blockchain technologies and NFTs, but since March the crypto market has seen a significant decline.
However, despite the cooling of the crypto, some trends continued to thrive throughout the mid-year. This article will discuss six FinTech trends that we believe will boom in 2022.
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In the beginning, there was Web 1.0. It was a time, starting in 1994, when content on the Internet was non-interactive and read-only. Starting in 2004, Web 2.0 introduced interactivity to websites and the Internet. Today, 18 years later, Web 3.0 has begun its introduction.
Web3 combines four technologies to make it its thing:
- Decentralization via blockchain
- Peer-to-peer exchange (reduction of third parties)
- Artificial intelligence
- machine learning
Wolfram Alpha is a sample Web 3.0 application. Wolfram is a computer intelligence calculator that can solve extremely difficult problems ranging from elementary math problems to personal health. There are hundreds of calculations this software can do, and it can give you all kinds of interesting data.
Typing “Facebook” in the stock data section will provide you with all the information that would interest you as a mid-level trader. In the finance section alone, more than 36 calculations can be performed and discovered. Apps like this keep popping up all over the internet, so keep your eyes peeled.
Cross-border e-commerce has grown significantly over the past 2 years due to COVID-19, but it has exploded into another period of growth with the introduction of Web 3.0.
The integration of decentralized peer-to-peer crypto exchanges has allowed people around the world to buy and sell even more products. Avoiding tariffs and fees from governments or third-party companies has increased profits for every seller, driving growth.
In 2022, cross-border e-commerce reached 22% of the entire e-commerce sector. This number is expected to rise to 38% by 2023, or about $2.1 trillion. Even with the growth of peer-to-peer exchanges, the current continuous computable growth is due to the reselling of Amazon, Wish.com and Alibaba.
Open banking APIs
The best way to explode an industry is to make technology accessible to everyone. Banks are now starting to open their software to developers to create their products.
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 transfer between friends. These APIs have opened up opportunities for developers to access payment networks and integrate banks into platforms.
Stripe is a good example of access to the payment network allowing developers to integrate subscriptions, payments and other purchases directly into their programs. Banking integrations have taken the form of direct transactions like those found in PayPal or Robinhood. Barclay’s is one of the first banks to integrate other banking information into a single app and offer users a one-stop shop for all their banking needs, including paying their insurance bills on time.
Fingerprint scanners have been around for decades, protecting our personal information. One technology that has gained momentum in recent months is voice biometrics. Like this scene in the movie Unbelievable, When a chic superhero outfit designer says “Edna Mode” and opens a door, this technology will figuratively open many to come.
Uses of this biometric identification are being tested in customer service calls by banks to speed up the flow of information. You will no longer have to give very sensitive personal information over the phone and risk someone overhearing it. Using the phonetic and morphological characteristics of each person’s voice apparatus creates unique identifiers that enable secure authentication with just the sound of your voice.
Like other means of verifying your identity, voice biometrics offer a much higher level of security than traditional knowledge-based authentication (passwords).
Digital banks only
Similar to ghost restaurants, digital-only banks have no physical location, and banks get many financial benefits from going completely virtual. Companies like SoFi, Ally, and Synchrony Financial have taken the banking world by storm, becoming one of the most valuable financial institutions in the NYSC.
The advantages of virtual-only banks are not limited to the possibility of accessing your institute anywhere. Benefits also manifest themselves in increased savings rates, low monthly fees, higher CD rates, and business banking benefits. By not having to pay as many expenses, the company can offer you better deals and offer much more rewards than traditional banks.
For this reason, many traditionally physically located financial institutions are shifting to more online banking. According to the Federal Reserve, in 2020 the United States saw 3,700 sites permanently close, a 23% increase from the average of 3,000 annual closures between 2008 and 2017.
Automation of robotic processes
Robotic process automation (RBA) is every bit as futuristic as it sounds. It may not involve physical robots, but the tasks it can perform are still the same. It’s a classic case where replacing humans with software has become much more cost-effective and beneficial for the banks that implement it.
Instead of having a human manually process a decision and then send it back for approval, these tasks can be completed entirely by the work of a computer. The reduction in costs by robotic replacement can vary between 30% and 70% and reduce processing times by 60%. RPAs are used for various tasks such as accounts payable, mortgage processing, fraud detection, etc.
With the world in uninterrupted crisis mode for 2.5 years, it looks like innovation will continue to thrive. Problems are the mother of innovation, and as long as turmoil 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.
Photo 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 for TaoBao, MeitTuan, and DouYin (now TikTok).