The fintech sector has grown significantly in recent years, driven by increased demand for financial accessibility and convenience. As a result of this growth, the global fintech market is expected to reach $324 billion by 2026 with an annual growth rate of about 12%.
The increased use of mobile devices, combined with the COVID-19 pandemic, has highlighted how financial technology can significantly improve the customer experience by facilitating payments and banking. The operational advancements offered by artificial intelligence and open banking allow for greater agility, efficiency, and precision.
With these new developments, we decided to break down how we believe the fintech market will grow in 2022.
The trends that are reshaping the fintech market
Consumer demand for more efficient ways to access banking records and complete financial transactions outside of local branches drove the rise of digital banking.
According to CACI, the rise of digital banks will result in a 36% decrease in bank visits from 2017 to 2022. The advantages of this shift include real-time analytics, feasible cost management, quick balance review, and reset pins from home.
The need for convenience and faster service is expected to increase the use of digital banking among millennials and Gen Z, while the physical bank option will be preferred by older generations as we move into 2022.
The global AI in the fintech market is expected to reach $26.67 billion by 2026. Banks are currently fine-tuning their AI solution strategies, which will increase the widespread acceptance of AI in this industry. According to Autonomous research, AI is expected to reduce bank operating expenses by 22% by 2030.
Banks and fintech have benefited from AI and machine learning by allowing them to process massive amounts of data about their customers. This data and information are then compared to obtain results about appropriate services/products that customers desire, which has primarily aided in the development of customer relations. Adoption of AI also allows financial institutions to deal with rising financial fraud threats, cybercrime incidents, and other security-related issues.
With data and cyber security being critical components in the digital transformation process, the use of AI is expected to grow in 2022 and beyond.
Payment innovations in FinTech include mobile payments, mobile wallets, contactless payments, identity verification technologies, and AI and machine learning for security. Mobile payments have skyrocketed in 2021, set to hit $4.6 trillion by 2025.
Because of this more convenient and secure method of payment, cash is expected to be the least common payment method worldwide by 2022. This shift will also see an increase in cashier-less stores, buy now, pay later, and cross-border payments.
Open Banking is another remarkable technology that enables banks to understand their information in a systemized, secure manner, allowing data to be shared among financial institutions. Between 2020 and 2024, the number of open banking users worldwide is expected to grow at a nearly 50% annual rate, with Europe having the largest market.
Improving the customer experience is central to fintech goals, as evidenced by the increased appetite for Open Banking, in which consumers allow third-party providers to use financial information held by their bank to inform new products. This need will only increase as we move into 2022.
The global blockchain technology market is expected to be worth $3.67 billion in 2020. It is expected to grow at a compound annual growth rate of 82.4 percent between 2021 and 2028. (CAGR).
The growing acceptance of cryptocurrency around the world is one of the major factors driving market growth. Blockchain technology is now being used by commercial and central banks all over the world for payment processing and digital currency issuance. When compared to traditional systems, the technology enables less expensive and faster cross-border payments.
In 2022, the increased use of blockchain will result in the emergence of national cryptocurrencies, the implementation of NFTs, and the use of blockchain as a service.
These exciting developments in the fintech industry will continue to alter people’s perceptions of their finances. We at Storm2 are Fintech recruitment specialists that work with a variety of fintechs at the forefront of this shift, and we believe 2022 will be an exciting year for fintech. If you are a forward-thinking fintech looking for assistance with your expansion plans, get in touch, we have a team of specialised consultants who are well-versed in sourcing top talent.