In the past couple of years, we’ve observed significant industry changes unlike ever before. 2020 was a year of reactive action to a global pandemic as companies and businesses scrambled to adjust to what was known as the ‘new normal.’
2021 marked the acceleration of digital transformation, with over 97% of executives stating it increased the velocity of their tech adoption strategy. Now, as we move into Q1 of 2022, these changes will solidify into new best practices. So, what should we
take away to ensure our companies continue to meet market demand and thrive?
Fintech in 2022—takeaways from the past and the path to the financial future
Remote working, decentralization, and digitization—these are just some of the trends that are set to shape how we do business in 2022. But how will they look in practice? Here I’ll review some of the top financial industry shifts that companies need to know
for this year.
Brand and reputation are everything
One of the most exciting changes to come out of the last few challenging years is the drive towards more human-centered businesses. Studies show that current and future generations are more focused on sustainability than ever. So much so that 64% of Gen
Zers and 55% of Millennials are willing to spend more on sustainable services.
Reputation matters and the current generation of consumers are demanding the companies they use to take more responsibility for the services they offer.
At the moment, statistics suggest that financial providers aren’t doing as well in this aspect as they’d like to think. When surveyed, just 24% stated they would share their data with their bank, while 28% said their trust levels were decreasing. 39% wanted
more transparency and a significant 76% told of a crisis in consumer trust.
What this indicates is that greater innovation and the emergence of new fintechs with competitive offers have shaken the status quo of the finance industry. Consumers are demanding more, and not just in terms of product offerings, but in business practices
and transparency too.
AI and ML are continuing to gain traction
Bringing these demands to fruition will take some time and innovation. That’s where the next lesson comes in—how to engage AI and ML effectively to get tangible results? With the potential to deliver an annual value of $1.0 trillion, AI and ML adoption in
the finance industry is showing no signs of slowing down.
These aren’t just on-paper developments, either. When asked, 50% of survey respondents said that their companies are already adopting AI in one or more business areas. Conversely, a surprisingly low 34% state their senior management is committed to the strategy,
suggesting that not all executives are convinced of its viability.
If you’re in that 34%, it’s likely you already know the benefits and challenges of onboarding AI solutions. However, if you fall in the other 66%, let’s take at some of the most established AI practices today and what they mean for your business tomorrow.
Risk management tools—AI can empower smart risk management. Automating the data analytics process, you can unlock a wealth of insights into your business’ health and viability. Back by real data, you can lower risks and build a more effective
POS features—point of service lending is an emerging trend linked to embedded finance, more on that later. It uses AI technology to complete financial transactions at the point of service. For example, this may mean quick lending approvals
for buy now, pay later clients, or on the spot insurance quotes, or something similar aimed at streamlining the purchase process and boosting consumer satisfaction.
Personalized services—AI empowers businesses to analyze data faster than ever before and at much higher volumes. In turn, this means companies can utilize this data to personalize their offerings, either to individuals or specific groups.
For example, a company could reduce insurance premiums for careful drivers, or lending providers could provide lower rates for responsible clients.
Services will become more connected
That said, it’s not just about the technology’s capabilities. AI and ML are tools for realizing ongoing trends in the lending industry. One of the biggest ones in recent years is the concept of embedded finance, which is working to turn almost every business
into a fintech company by integrating lending and other financial technology into their web and mobile apps. Perhaps one of the best examples of this is Klarna, which has been successfully integrated into companies worldwide to deliver ‘buy now, pay later’
finance. Such technologies reduce churn rate, simplify processes, and work to build customer loyalty, which helps businesses thrive.
Similar changes are occurring in the banking world. As the competition between neo-banks and traditional lenders intensifies, open banking is expanding to increase fairness to their clients and ensure equality in service provision. Over 24 million people
today use open banking services, and this is set to grow within the next couple of years, indicating that the future is becoming more connected than ever before.
Post-COVID-19 recovery: lessons learned for 2022 and beyond
As we head into the post-coronavirus world, what we are seeing is closer cooperation between financial providers, businesses, and their clients. Embedded technologies are paving the way to a more connected reality. They will be a crucial point of focus for
investments this year and in the future for traditional financial providers, fintechs, and businesses.
For companies looking to the future, it’s essential that they concentrate not only on the technology they onboard, also known as digital transformation, for the sake of digital transformation but how these tools can create impactful solutions for their clients.
By taking a human-centered strategic approach, they can expect to benefit from consumer loyalty and ROI on tech investments in years to come.