Changing landscapes: Recognising fintech’s potential in 2022.

Dima Kats, CEO at Clear Junction.  

The restrictions put in place to slow down covid-19 in the UK have almost drawn to a close, but their lasting effects have likely shaped the economy for a long time. There have been plenty of industries that faced economic hardship during the pandemic, but there have also been more than a few market sectors that were well equipped to take advantage of the logistical challenges coronavirus presented, and fintech proved one of the primary beneficiaries. Fintech and the wider payments sector are still relatively new markets and in 2021 they received significant investment. Last year saw phenomenal fundraising for the UK fintech sector, which collectively raised over £8.5 billion during the calendar year.

Fintech’s success during the past two years was borne out of necessity; It is quite difficult to pay someone in person when you’re not allowed to leave the house!

 

Commencing Crypto Capitalisation. 

Cryptocurrency trading and investments have become increasingly popular in recent years. With first-time investors and crypto enthusiasts lured in by the high value of bitcoin, financial organisations are becoming increasingly aware of crypto’s mainstream popularity. In 2022 the crypto landscape will be seen as less speculative, opening the broader financial market to cryptocurrencies users. Whilst crypto was ranked fifth with 28% of respondents who saw cryptocurrencies as a top concern in a survey conducted by PwC; banks are looking to increase their investment in fintech for that exact reason. In a study carried out by the Bank for International Settlements (BIS), 60% of central banks are beginning to consider Central Bank Digital Currencies (CBDC).

This more serious consideration of fintech can in part be attributed to the pandemic, as the world shifted to an entirely digital way of working. Now the foundations and thinking are in place; it is just a matter of putting the plans in place for the transition to be made.

 

Unlocking the value of upskilling your workforce.

There has been a sharp increase in demand for industry professionals, and the results of that will bear out in 2022. This has been down to people changing their jobs and retraining. We’re now seeing a better-skilled workforce throughout the payments industry, which will benefit businesses next year. We’ll be seeing organisations offer new and improved services to enhance the customer experience. With the pandemic forcing organisations and customers alike to be more economical, services concentrating on helping customers understand their spending habits and money management may receive more attention from banks.

Furthermore, the amount of venture capital increased substantially – as more than $288 billion was invested worldwide in the first half of 2021, up by just under $110 billion compared to the second half of 2020. These cash injections have resulted in more job vacancies and increased products and services offered by organisations. Large companies have continued to develop and expand because of this. With the easy access to cash, the industry has become very entrepreneurial, with leaders more likely to become less risk averse.

 

Reshaping payments through partnerships:

As the fintech industry grows, becomes more diverse and adapts to ever-changing regulations, there will be an increasing need for partnerships and collaboration to take advantage of the emerging opportunities.

One direction we’ll be seeing partnerships emerge will be in the form of open banking. Payments industry analysts predict that firms who adopt open banking early and secure partnerships will reap the rewards compared to their competitors, especially those who specialise in helping their clients fit into ESG guidelines more.

2022 will be the year when open finance starts reshaping financial services and the year that banks open up to the opportunities that open finance represents. Regulators in the EU and UK are proposing measures to heighten data sharing across a broader set of financial products. 2022 will see many banks experimenting and evolving their business models toward a more open and collaborative approach.

2021 was a turbulent but successful year for fintech, and 2022 will likely bring new significant opportunities to take advantage of. New niches in the fintech market are opening up, and as the economy diversifies, those opportunities will be more accessible. Sustainable fintech, capitalising on crypto and increased data transparency in the sector are just three of the major subjects of interest to keep a close eye on in 2022.

 

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