It's fair to say that today fintech has become firmly entrenched within society and our economy. I like to say that it’s ‘crossed the chasm’: as founders, we spent the early days explaining to people what fintech was, what our product was, and why it was worth listening to us.

That chasm in the understanding of fintechs, other businesses and the public, was crossed some time ago. But that doesn’t mean the industry has finished evolving. Last year we saw extraordinary levels of investment into UK fintech companies break records. Here are three key trends that point to 2022 being another big year for fintech.

Embedded finance will be everywhere

2022 will be a big year for embedded finance, the term used to describe the act of companies (often non-financial ones) integrating financial products or services with their existing business. A bicycle retailer, for instance, may see bike sales as its main revenue source – but it could supplement this by offering bicycle insurance products as well.

But why will 2022 be such an important year? Two convergent trends point in this direction.

Firstly, we’ve seen fintech companies increasingly focus on developing services that are made available through APIs. An API is a code that lets two applications talk to one another, and in practice this allows businesses to easily integrate features like payments, credit, and insurance to existing applications or services their customers are already using – like making invoice payments through an accounting package, or trading stocks within your banking app. 

The second is the unprecedented digitalisation we’ve seen over the past couple of years. This means there are now many more companies with a strong digital platform onto which they can bolt-on financial products or services. 

If you also factor in the need for companies to identify new revenue streams in the wake of economic disruption, it’s easy to see why embedded finance is so attractive.  

‘The great unbundling’ is being flipped on its head

Over the past few years, companies from fintech subsectors like insurtech and wealthtech burst out of the gate in what you might call the great unbundling – niche providers offering a single, specialist service in insurance or wealth management, and not doing a whole lot else.  

Increasingly, we’re seeing that logic flipped. In effect, the great unbundling has become the great re-bundling. Now those same specialists are beginning to broaden their offering – like wealthtechs that have won customers with a core proposition now providing other banking services. 

Some forward-thinking industry commentators believe the future of financial services lies with companies that are best able to curate a selection of very high-quality services and APIs and offer them to customers – not necessarily the businesses who develop proprietary propositions.

This means many businesses that were once happy to sit alongside other niche providers are now vying for the same customers. Who wins will play a big part in deciding what the future of the fintech industry looks like.

Real-world DeFi applications emerge from crypto-mania  

Few will be surprised if crypto continues to be red hot this year, despite inevitable continued volatility. Perhaps the most interesting aspect of this will be companies, governments, and other groups introducing more practical use cases for crypto and other forms of decentralised finance, or DeFi.

We’ve already seen growing support for Bitcoin as legal tender in Latin America following its adoption by El Salvador, a move derided by some but ultimately carried out as a play to tackle import-driven fluctuations in domestic prices.

We’ve also seen the UK government continue to make noises around the development of a British CBDC – a ‘Britcoin’. A relatively unproven concept, CBDCs are nonetheless a tantalising prospect to many: central banks could gain a razor-sharp monetary policy tool, quite unlike anything they have today, with the potential to apply different interest rates across different parts of the economy. 

Of course, cryptocurrency is just one application of DeFi. By removing intermediaries and enabling finance to become an action taken up directly between two individuals, or indeed individual companies, DeFi could have massive implications for banks and other financial institutions, while potentially revolutionising everything from music royalties to contract law. 

When fintech does well, so does society

Thinking back to the past 24 months, I feel a bit cheeky making bold predictions for the next 12 – you never know what might happen next.

But if the past has taught us one thing it’s that the fintech sector has managed to prevail and even rise above the challenges. This year, we’re set to have another big year. And that’s something we should all celebrate. When the fintech industry does well – whether a company that helps money move more easily around the world, or one that helps prevent financial crime – society often benefits too.