Emerging Trends to Revolutionize the Fintech Industry

The top upcoming Fintech trends of 2022 with Nik Sathe for better financial services

The fintech sector's growth sustained phenomenally over the past decade but the last 2 years have arguably brought stronger tailwinds for the industry. The digital surge and evolution of consumer behaviour owing to the pandemic have resulted in a significant uptick in demand and innovation. As digital-first products and companies make waves, customers' expectations for innovative financial services continue to soar. A recent report predicts that the Indian fintech market will grow to $84 billion by 2025[i]. To stay ahead of the curve, it has become increasingly important for fintech players to align their innovation strategy with the technological shifts and consumer trends. Reflecting on the important shifts in the last two years, here is what we can expect for fintech in the coming years:

Checkout experience to come to the fore in overall Customer Experience (CX): Owing to the increased digital lifestyle, the need to provide seamless, fast, and secure digital payments have become table stakes for fintech players. The new regulatory move by the Reserve Bank of India (RBI) vis-à-vis Card-on-File (CoF) tokenization[ii] will revolutionize digital payments across India's e-platforms in 2022. Besides addressing the need to build a safe, secure, and seamless environment for digital payments, tokenization opens the door to a convenient checkout experience by enabling 'one-click payment' services for customers. Payment and checkout experiences are set to be an integral part of the overall customer experience not only digital but also the physical world. To adapt to the evolving consumer expectations, retailers must inject innovation into their omnichannel strategy that blends physical and online payment channels.

Unprecedented financial engagement across all generations: The surge in digital adoption and the need for contactless services enabled different generations to embrace and get comfortable with eBanking and mobile payments over the last two years. As per a recent report, mobile payments in India surpassed credit cards in 2021[iii], pointing to the trend toward increased adoption of mobile payment methods. As the younger generation grows and builds their financial power, this trend will see no downfall. The concept of cash, physical cards, etc. would turn completely foreign to most of the population in the coming year, thereby accentuating the demand for diversifying and expanding the current mobile payments platform into a powerful one.

'Collaboration' is becoming the new 'competition': Fintech, earlier perceived as a competition to the established financial systems, has now become a potential partner and enabler for banks and other financial institutions to address the evolving financial service needs, both at the consumer and commercial level. Moreover, the blending of traditional institutions with fintech has led to the emergence of different hybrids, including RegTech, InsurTech, etc. to improvise their infrastructure.

To carve out an edge in the fintech sector, fintech must utilise partnerships to meet its strategic objectives. Be it to serve new customers or access top talent, industry collaboration has become critical to staying ahead in a crowded market. With market fluidity and increased emphasis on technology, this trend is expected to be driven further in this sector.

As cross-border commerce rebounds, opportunities for fintech rise: Interconnectedness of global economies has surged the demand for fast, secure, and efficient cross-border payment systems. The current complexity and existing challenges of international transactions due to the involvement of different layers, jurisdictions, systems, regulations, etc. make this one of the most relevant trends for the fintech industry. Owing to the leap in transaction volumes between countries, corporates, companies, marketplaces, or individuals, this market of global cross-border payments is expected to reach USD 156 trillion in 2022[iv]. A new world of cross-border commerce has taken over where consumers expect easy and simple payment solutions. This opens a great window for fintech players to deliver faster, cost-effective, and more secure cross-border payments by prioritizing purposeful innovation, exploring meaningful partnerships, and adopting emerging technology.

Author:

Nik Sathe, Chief Technology Officer at Blackhawk Network