5 Tech Trends in Finance That Will Take Over in 2022
We are nearing the end of 2021 and ready to welcome 2022. Just like any other year, your business might have experienced its share of ups and downs. At present, we are seeing a lot of businesses turn to tech solutions to revamp their core processes and enhance their productivity.
The finance sector has readily embraced new technologies. However, in comparison to some other industries, the adoption rate has been relatively slower. This does not mean why we cannot introspect the new tech trends in finance that could take over in 2022.
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Tech trends in the financial services industry
1. Hyper automation
As organizations continue to aim for agility and reduce errors caused by manual tasks, hyper-automation has become increasingly popular. According to Analytics Insights, 34% of companies are turning to hyper-automation to boost their employee productivity [1].
Besides, the digital revolution coupled with an emphasis on growth has presented a strong case for automation.
Hyper-automation is an approach that involves identifying, verifying, and automating business and IT processes. It requires a host of enterprise-grade platforms, such as no-code platforms, process mining tools, and robotic process automation (RPA).
Hyper-automation is an extension of business process automation beyond the realms of individual processes. By integrating artificial intelligence-driven tools with RPA, you can automate recurring and mundane repetitive business tasks.
As bizarre as it may sound, hyper-automation also automates automation. How? It identifies business processes dynamically and creates bots to automate them.
At present, machine learning, artificial intelligence, and RPA tools are working together in sync to automate complicated business processes.
There are many automation and financial reporting tools that can help financial institutions streamline their operations.
2. DeFi
Unless you are living under a rock, you may have heard about decentralized finance. At present, decentralized finance enjoys a 5% share in the crypto market [2].
A range of applications and tools that operate in a blockchain network is at the core of decentralized finance. Besides, these tools are also allowing users to use a wide range of traditional financial services without the interference of a central institution.
Fintech Poland suggests that Defi has an immense potential to grow in the upcoming years. According to Fintech Poland, DeFi’s market capitalization has reached a whopping $200 billion from $3 billion in less than a year.
Besides this, many believe that Defi is sitting on a gold mine due to tons of unexplored opportunities in the crypto-asset market. Currently, there are around 330 million crypto-asset users across the globe and the total value of Ethereum transactions crossed $2.5 trillion in the second quarter of 2021. [3]
While there is considerable uncertainty around the Defi space, it is one of the most exciting and fastest-growing branches of modern finance. As decentralized finance gains popularity, it is tipped to shake the foundations on which the traditional financial institutions are based.
3. Buy-now-pay-later (BNPL)
The rise of online shopping coupled with the influx of a new generation of internet users has led to the adoption of new payment options. For instance, BNPL platforms such as Klarna and Afterpay were unheard of a couple of decades ago.
However, tapping onto the current consumer behavior and digitalization, an array of BNPL companies have emerged in recent years. These companies in many ways are revolutionizing online shopping.
Although credit card companies, loans, and other mediums for installment payments exist, BNPL adds a modern twist to it. How?
Unlike credit cards that are designed to be used repetitively, BNPL solutions are restricted to individual transactions. This approach has a higher appeal among consumers who are not willing to make long-term financial commitments.
The arrival of the pandemic has fueled the growth of BNPL and as per projections, the industry is expected to cross the $680 billion mark in terms of transaction volume in 2025 [4].
4. Cross-platform services
Digital financial transactions cross into different industries such as healthcare, utilities, and retail to name a few. The rise of third-party payment solutions such as AliPay and PayPal can be primarily attributed to this trend.
Today, consumers are looking for solutions and platforms that facilitate accelerated money transfer. Consumers are turning their back to lengthier and time-consuming back and forth between business sites and banking applications. This is why third-party service providers are foraying into digital spaces such as e-commerce.
When businesses embed payment services such as hybrid wallets and mobile payment options for cross-platform transactions, they are likely to have more control over their finances.
The growing popularity of Payment Mini Program Integrations is a testament to the claim made earlier. Numerous financial vendors have increased their revenue outside of intra fintech and interbank transfers – a trend that will continue with digitalization in the financial sector.
5. Cloud banking
The banking industry has not shied away from integrating new technologies to streamline its operations. Data is arguably one of the most sensitive components of banking. This is why the world’s most trusted cloud solution providers are handling such activities for banking institutions.
The past few years have seen the pendulum swing in favor of cloud solutions as they continue to replace on-site infrastructure. We predict this is an inevitable direction for tech development in the banking industry.
When cloud solutions replace traditional data storage alternatives, it reduces additional expenses on data storage and archiving. One of the biggest barriers involved in the large-scale adoption of the cloud is the interface between traditional solutions and technologies.
Parting words
The arrival of new technologies is expected to change the face of the financial industry in the upcoming years. As more and more financial institutions lean on tech innovations to rise through the competition, we are likely to see a whole new world of finance in the upcoming years.
As cloud computing takes center stage in many industries, it is just a matter of time it takes over the financial world.
SEE ALSO: 5 Benefits of an Accounting Software for Small Businesses
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Sources:
[1] Hewitt. J (2021) “
[2] Zhang. N (2021) “How decentralized finance works, and why it’s taking on Wall Street” CNBC [online] Available from: https://www.cnbc.com/2021/09/17/how-decentralized-finance-works-and-why-its-taking-on-wall-street.html [accessed December 2021]
[3] [4] Dutkiewicz. N (2021) “5 Financial Industry trends in 2022” BOSFintech [online] Available from: https://bosfintech.com/5-financial-industry-trends-in-2022/ [accessed December 2021]
