The fintech sector is growing at a shocking rate. The market was worth over $112 billion last year. By 2028, it should be worth over $332 billion.
Some entrepreneurs might think this is the best time ever to invest in fintech. While the market is growing and creating more opportunities for fintech entrepreneurs, the stakes are also higher than ever.
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Client requests naturally grow with the development of technology. Therefore, companies developing fintech software prefer to provide customers with the necessary and, most importantly, in-demand services. They are using big data technology to offer even bigger benefits to their fintech customers.
Last year there was a shift that set the course for solving problems in fintech that need to be solved in the foreseeable future. In this article, we will look at the main trends in the field of fintech development services for 2022.
Top 5 Finetech Development Trends
Now let’s consider the 5 most popular fintech development trends in the world in 2022.
Business automation and artificial intelligence
The use of artificial intelligence technologies allows for improving the quality of service and minimizing costs. In particular, financial companies that are actively implementing AI technology solutions in their activities reduce the cost of attracting hired personnel through the use of robot consultants and voice assistants.
Artificial intelligence is widely used in the field of providing solutions for investors and traders – almost all modern tools (algorithms, robots for formulating strategies, trading systems, digital brokers) used on the stock exchange are based on artificial intelligence.
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More and more fintech startups are focusing not only on the B2B but also on the B2C segment, which is facilitated by the growth of the overall financial literacy of the target audience and the increase in the number of private investors.
The massive digitalization of financial transactions stimulates the active growth of companies developing in the field of virtual banking or neo-banking and the provision of accounting services in a remote format.
KYC and AML systems, BNPL services
The direction associated with the development of KYC, AML, and BNPL systems is another fintech trend in 2022.
KYC and AML services are aimed at improving the security of transactions. KYC (“know your customer”), designed to verify the data of individuals, is especially relevant in the areas of lending and foreign exchange trading.
AML (anti-money laundering) is a sought-after fintech tool designed to combat money laundering and the financing of banned organizations.
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Drivers for the mass integration of KYC and AML into the payment system are the growth of the digital asset industry and the trend of cryptocurrency systems moving from complete anonymity to the use of personal data that needs a proper level of protection.
The reason for the growing relevance of BNPL services (“buy now, pay later”), which provide trading platforms with the opportunity to sell goods in installments without interest and loans, was the active development of the digital trade segment.
The integration of BNPL into the financial system allows online stores to:
- get rid of intermediaries in the face of banking organizations;
- increase the level of customer loyalty;
- increase the number of sales.
The BNPL market, currently positioned as an alternative to traditional lending, will develop in the direction of online payments and will grow 10-15 times by 2025.
Decentralized finance
The term decentralized finance refers to a movement that aims to create an open and accessible ecosystem of financial services that is accessible to every user and can operate without the influence of government agencies.
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With decentralized finance, users will maintain control over their assets by interacting with the ecosystem through peer-to-peer, decentralized applications (dapps).
Benefits of Decentralized Finance:
- Transparency. Blockchain technologies allow creating transparency for clients, banks and other institutions.
- Instant transfers. Thanks to blockchain technologies, you can make money transfers literally instantly.
- Smart contracts. For complex financial transactions, smart contracts will improve business processes, as they are automatically triggered when certain conditions are met.
- The blockchain records and stores information about each transaction with a clear real-time audit trail. Thus, there is much less room for errors or interventions.
- Cost optimization. Blockchain can significantly reduce transaction costs for the financial sector as it eliminates the need for intermediaries such as savings banks and clearing houses.
Big Data
Speaking of global fintech trends, one cannot fail to mention Big Data. Big Data in finance refers to huge arrays of structured and unstructured data that can be used by banks and financial institutions to predict consumer behavior and develop strategies. Fintech in particular is being heavily affected by big data.
The financial sector receives, processes, and generates huge amounts of data every second. Among them are distinguished:
- Structured data.
- Unstructured data.
Structured data is information that is stored internally in a company to provide key data for decision-making at the right time. Unstructured data is accumulating from various sources in an ever-increasing amount, providing significant analytical power.
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Current technologies make it possible to use big data in order to assess risks as well as customer behavior.
Benefits of Big Data:
- Customer focus. Big Data, as one of the fintech trends, allows you to more accurately segment customers according to their profiles to provide optimal solutions.
- Data security. While fraud is a common problem in the digital banking sector, Big Data can help fintech develop accurate fraud detection systems by detecting suspicious activity.
- Risk assessment. Improved risk assessment allows fintech companies to manage their finances with confidence and offer their customers lucrative commissions.
- Improvement of user experience. Depending on user behavior, companies can identify customer needs and offer solutions faster and more accurately.
Cyber security
Financial service providers, including banks, credit card companies, and investment organizations collect and process the personal data of customers. This data includes home address, social security number, passport details, bank details, phone number, email address, and income information.
In the event of a leak, all this data could end up in the hands of cybercriminals, fraught with severe consequences for financial institutions and their customers. By far, the most global fintech trend for 2022 is cybersecurity.
Thus, the financial services industry needs more skilled cybersecurity professionals. This is important for all areas of business, but financial services companies are often a top priority and should be especially vigilant when it comes to cybersecurity. Financial institutions that store customer personal data are subject to an increasing number of cybersecurity rules and regulations.
Companies are keen to invest heavily and collaborate to improve cybersecurity preparedness, responsiveness, and resiliency across the sector.
Remember, there are two types of financial services companies – those who have been victims of cyberattacks, and those who have yet to face them.
Summary
The financial market will continue to evolve, providing a huge space for startups to develop technologically advanced financial solutions. Every year, fintech attracts more and more attention from investors – in the near future, the amount of funding for the sector will increase along with the expansion of the market for fintech solutions. Therefore, you should find the company that will provide the highest quality fintech development services for the development of small, medium, and large business.