Top Trends to Witness in the Fintech Sector in 2022

By 2022, the fintech market value is expected to reach a valuation of $309.98 billion, which is twice more than its value in 2018.

By Amit Nigam,

The world is swiftly shifting to the online realm; digital platforms have seen tremendous growth in the past two years. With rapidly evolving users, it has become a necessity to make banking services more user-friendly. Thus, fintech was born. In 2022, the fintech sector is slated to see a drastic change in terms of the new normal. By 2022, the fintech market value is expected to reach a valuation of $309.98 billion, which is twice more than its value in 2018. The vast number of digital innovations in payment and banking technology, whether consumer to consumer or merchant to consumer, are seemingly redefining financial processes.

Here are a few trends to watch out for in 2022:

AI and ML

Artificial Intelligence (AI) and Machine Learning (ML) have boosted the banking sector. They have enabled the banks to process a large amount of data set and reach conclusions due to their ability to analyze real-time patterns, helping with quick decision-making. They are improving the effectiveness and at the same time working efficiently. This has made different processes in banking time saving and also cost-effective. AI increases employee productivity by 59% in the banking sector. It has reduced loan defaults and has made transactions safer, all for a better customer experience. By 2030, banks will be able to reduce costs by 22% saving nearly 1 trillion. Many fintech firms are continuously researching the areas of AI that will be helpful for banks and their fraud detection processes, customer service, credit service and loan decisions.

Cloud Banking

Banking processes are far more convenient and less prone to errors if there is a cloud-based infrastructure. For seamless global payment, P2P transfers, and contactless payments; cloud banking is the perfect option. The rise of artificial intelligence and machine learning has brought unprecedented benefits for those in the financial industry.

Blockchain

This term is frequently used in connection to cryptocurrencies. However, the banking industry is also implementing it for the improvement of workflow dynamics. Blockchain technology will provide a highly secure transaction on both ends. This will be greatly helpful to prevent fraud and help in easy compliance of audits and regulatory requirements. With the help of blockchain transfers, payments and investments can become faster and error-free. It is said that blockchain will impact the packaging sector with the highest intensity in the year 2022. Needless to say, blockchain and the security it provides are here to stay.

E-commerce

The online shopping market has substantially increased in the last two years; there is a high demand for hassle-free digital payment options. Therefore, a majority of the e-commerce players have partnered with fintech firms to create custom gateways and portals to ensure that the customers do not leave the site due to payment options. The smooth check-out process has become a crucial part of e-commerce sales as methods for a swift and effective payment process are essential to enhance conversion rates. According to a recent study, there is an increase of 5% in the global cross-border payment flow. Because of e-commerce, international transactions offer enormous growth potential for even small businesses as most people expect easy and simple payment solutions.

Rise of Digital/Neo Banks

Breaking the chain of traditional markets, neo or digital banks have taken the monopoly of the few big names in the banking world by making banking convenient and accessible. The overall role of bank branches will continue to reduce as most of the transactions would be carried out online. These banks would be a cheaper alternative to the traditional banks without having the need of physical branches.

With advancements in artificial intelligence, biometrics, cyber security, and online banking, consumers can now access a wide range of personal financial services and information within seconds on their devices. While in India, 100% digitalization of banks is not currently permissible due to the RBI guidelines, fintech companies have functioned as Neo Banks based on the traditional banking services, such as YONO by SBI, Kotak 118, RazorpayX, and NiYO. Globally Neo Banking has registered a CAGR of 50.6% between 2016-2020. With India’s smartphone import (and usage) rapidly growing, there is a phenomenal scope for Neo-banking to evolve.

Customer Service

The main aim of the financial sector has been to provide customer-centric solutions. User experience is a critical parameter, and for the new generation of customers, speed and ease of access without compromising security are essential. This generation loathes going to the bank, filling out documents, printing, and signing them. The main aim will be to entirely automate the financial processes and get rid of manual processes completely.

Summing Up

The trends are ever-evolving, and the banking industry is one of the essential industries. Such rapid digitalization ensures that banking and financial services are not disrupted even during challenging times, such as Covid-19. Hence, these digital factors will highlight growth for the entire fintech sector.

(The author is COO & Managing Director at BANKIT. Views expressed are personal and not necessarily that of FinancialExpress.com)



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