Any sort of technology is a major factor for change. And this is particularly true in these perilous times. The worldwide pandemic has accelerated the growth of several industries, including financial services and the associated technology, FinTech.
FinTech is a term that is derived from the terms "financial" and "technology.", and that refers to the use of technology in financial services. Algorithms introduced by modern financial technology are fundamentally transforming conventional financial services such as crypto payments, money transfers, credit, fundraising, and asset management. They are intended to improve the productivity, efficiency, and security of financial services, with a special emphasis on interactions with consumers, workers, and business partners.
"The present purchases the future," as the eminent English critic Samuel Johnson put it shortly. Thus, to prepare for the future and to become knowledgeable about the key FinTech trends for the year 2022, equip yourself with the material below, which will attempt to summarize and describe them.
The epidemic sparked a tremendous push by the world's largest institutions to become increasingly digital in response to market demands, which were fueled by lockdowns and limitations. Banks were able to deploy digital operations reasonably fast and efficiently, thereby mitigating the pandemic's effects.
Additionally, traditional banks have grown far more receptive to the massive advantages of cloud computing and the prospects that open banking will bring in 2022. However, it is through partnerships with the proper FinTech companies that banks can really succeed digitally. By doing so, banks have access to a pre-built digital solution and gain access to specialized personnel without having to go through the typically time-consuming and costly recruiting process.
With banks facing a huge staffing crisis, the potential to collaborate with new FinTechs makes commercial sense in order to adapt to the market, expand digitally, and control internal expenses, even employing a decentralized finance model with smart contracts.
The phrase "metaverse," which was traditionally associated with science fiction, has a good possibility of becoming a reality in the not-too-distant future. A rush of enthusiasm erupted around this notion after Mark Zuckerberg's announcement that the worldwide social network Facebook will undergo substantial modifications. Specifically, it is changing its name to "Meta" and actively supports the development of a digital area - metaverse — in which users may work, collaborate, study, play, shop, and communicate through virtual reality glasses, headsets, and other devices. This virtual realm is intended to be built via the use of emerging technology (augmented reality, artificial intelligence, machine learning, blockchain, cryptocurrency, NFT, and more).
A meta-world is intended to progressively integrate the actual and virtual worlds, allowing users to acquire or create objects in one and share them in the other. There is no way around the lack of funding in this formed virtual+real cosmos, and it will be feasible to get it through digital currencies - cryptocurrencies. The latter are likewise thriving, and their position will only increase with the rise of the metaverse. They will be utilized to make the aforementioned acquisitions and to compensate personnel operating in the immensity of the meta-universe.
We are all aware that Covid resulted in a significant rise in home deliveries, which in turn led to a commensurate growth in international e-commerce. This resulted in enormous development potential for SMEs worldwide. According to Accenture's report, overall cross-border payment flows are now expanding at a rate of around 5% each year and are expected to approach $156 trillion by 2022.
However, although consumers are progressively provided with straightforward payment options for buying items from across the world, many SMEs continue to struggle with international payments. When it comes to forex, they've been dubbed 'the squeezed middle.' This is because there is currently no worldwide payment option available to SME customers, forcing them to rely on often-expensive enterprise-focused solutions.
The lengthy set of requirements inhibits businesses from getting underwriting or invoice finance services. In reality, this implies that SME owners encounter obstacles when raising working cash and maintaining operations.
Fortunately, new options are developing, including Blockchain-as-a-Service platforms that provide forex solutions, such as OpenPayd, Curve, Stripe, and Airwallex. The year 2022 is projected to witness an increase in the use of these platforms, as well as the entry of new participants.
Already, financial institutions are actively using Artificial Intelligence and Machine Learning to monitor the behavior of clients, partners, rivals, and the financial industry as a whole. Additionally, they are effectively used to automate manual procedures, provide customer service (chatbots), reduce human error, and enable widespread digitization of operational processes.
These technologies will only reinforce their position in 2022; moreover, according to research by Autonomous, broad use of AI in the next decade would result in a 22 percent reduction in operational expenses for financial institutions. As a result, analysts anticipate that banks would benefit from adopting AI and machine learning to extend their banking offerings, improve their operational efficiency and cost-effectiveness, and provide better value to a broader client base.
Banking-as-a-Service (BaaS) platforms and services have evolved as a cost-effective and efficient method of offering financial services based on open banking principles in recent years. Banks must adapt to a service-oriented and modular architecture approach when delivering new and innovative digital services. BaaS is a significant component of the digital transformation roadmaps of conventional banks and financial institutions. Expect to see a surge in collaboration between traditional financial institutions and FinTechs, for instance, cryptocurrency exchange business, the usage of BaaS services to bring new technology in-house and improve their own offerings.
Over the next 12 months, as technology and markets mature, these basic themes will foster more innovation and the creation of new business models in financial services. They enable banks and FinTechs to collaborate and expand their products internationally in areas such as payments, loans, digital banking, and rapid credit.
To stay on the cutting edge of success, it's critical to prudently track emerging business trends, not the least of which is financial technology. FinTech trends are an area that is continually "in motion"; they are constantly evolving and developing. Consistent with the financial technology trends outlined above, the financial services industry will become more transparent, safe, and accessible to users in 2022.
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