2022: A tipping point for fintech
Over the last two years there has been a rapid acceleration in people’s adoption and appetite for certain technologies as a result of the pandemic.
Consumers, many with completely overhauled lifestyles due to lockdowns and routine changes, have become far more tech savvy and aware of their financial prospects.
Their expectations of what tech should do for them, especially in financial services, has developed at an alarming rate, and 2022 is set to be a blockbuster year for fintech as the world reemerges with new expectations and new lessons learned.
With the dust beginning to settle from one of the most turbulent periods in living memory, there will be a number of key themes driving fintech’s roadmap for growth.
The super app race in Europe will heat up
One way in which we can expect 2022 to kick off is with the race for Europe’s first super app. Looking at the success WeChat and CashApp have had in Asia and the US respectively, we can expect to see more and more businesses turn their attention to replicating these sensational growth strategies.
In what is an enormous opportunity to capture a major share of the market, fintechs across Europe will be formalising a long-term strategy to attempt to position themselves to take the mantle in the long run. The super app race is crucial, as we are currently facing a wide spectrum of fragmented services that are leading to painful user experiences.
Next year we should see major progress being made by European fintechs to solve this issue by bringing together social media, social commerce, banking, payments and more into single applications.
This will be a mammoth task, and may be a race won after a number of years, but the opportunity is there for fintechs thanks to open banking and PSD2, which have given European fintech founders a platform to build big. The next 12 months will be an important time for the innovators to get ahead of the pack.
From open banking to embedded finance
Built on the strong foundations of open banking, next year will be defined by solutions and experience, highlighting progression in the approach and big-picture thinking taking place across fintech.
Solutions and experience are the two elements that will really move the needle for consumers and will be the areas that fintechs will have to focus on next to continue to capture audiences amid heightened competition. A great idea is nothing until it is seamlessly inserted into a consumer’s personal technology.
In 2022, we will see embedded finance at the forefront of technological innovation. It will add a huge amount of value to the financial ecosystem in a multitude of ways. One will be through the post-transactional experience in payments, where sellers can interact with customers, fans or subscribers in the same place that the real-time payment was made, meaning a more meaningful connection can be formed.
For consumers, this will mean having the ability to do more with their transactions, whether that’s sharing with friends, splitting payments or unlocking responsible consumer lending opportunities. This is just a taste of the long-term impact embedded finance can make, opening up a whole new dimension for payments.
The rapid rise of the creator economy in the UK
Connected to embedded finance is the increase of the digital entrepreneurial spirit. In recent years, we have seen the rapid rise of the creator economy in the US which is now being matched by similar, significant growth in the UK, triggered by the pandemic.
Today, there are millions of digital-first social entrepreneurs, such as those using the likes of Depop and Etsy to sell their products, or gamers streaming on Twitch and creators on TikTok or Patreon. These online entrepreneurs aren’t typically earning a bit of extra cash on the side, they are running businesses with significant customer bases or connecting with thousands of loyal followers in their fanbase.
Next year we should be set for significant investment across the creator economy. Fintechs will build new solutions based around these digital-first entrepreneurs, adding value and personalised experiences where they can interact with their audiences in new and creative ways to ultimately capitalise on the market and attract the consumers of today.
New business models and new audiences
To date, fintechs have followed relatively traditional growth strategies. However, next year we will start to see new models emerge, some of which started to materialise in the market this year. This will include the development of new ownership structures that enable influencers to play a major role in fintech – not just from an awareness perspective, but in their ability to build brands and design new products
Influencers are fundamentally the best placed individuals in terms of insight across online communities and what the entrepreneurs of tomorrow need. They also wield the trust of consumers, which promotes a higher engagement rate and take-up of services.
Partnering with influencers also presents an opportunity to reach new, hyper-targeted audiences, which could transform the growth of a fintech brand.
A tipping point for fintech
After years of infrastructural development, behaviour change and innovation, it feels like 2022 will be the biggest year for the fintech sector yet.
While we can be sure of continued M&A and disruption from new market entrants, the wider industry now seems primed to enter the next phase of its life cycle, and this should be welcomed by all companies, large or small.
If decision makers are ready to adapt and catch the wave of these powerful trends, they will be in pole position to benefit from fintech’s most exciting landscape yet.