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Six Fintech Trends To Watch In 2022


Andy Zhao, Ark7.

Despite pandemic-induced delays, 2021 was still a strong year for growth in the financial technology, or fintech, industry. As the world gets used to the “new normal” way of life, what can we expect going forward in fintech?

According to CB Insights’ latest “State of Fintech” report, the third quarter of 2021 was the second-highest on record for fintech financing with an impressive 147% increase year-over-year.

So, what does 2022 hold for fintech? Let’s find out.

1. Embedded finance continues to soar.

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Embedded finance, as the name suggests, empowers companies to offer consumers credit without having to leave their platform.

If you’ve ever been shopping online for a high-cost item like furniture, and you’ve seen something like “pay as little as $100/month or 0% APR with Affirm,” you’ve seen—and maybe even taken part in—embedded finance.

Embedded finance is a rather large sector and includes payments, card payments, lending, investments, insurance and banking. Embedded investments make investing even more accessible through easy and inexpensive access to funds and stocks.

Another key part of embedded finance that’s on its way to becoming mainstream in 2022 is the buy-now-pay-later option. On Black Friday, PayPal facilitated around 750,000 BNPL transactions—a 400% increase from 2020.

Seventy-two percent of BNPL app users said using the services caused their credit scores to drop. The biggest appeal to the BNPL market comes from the millennial and Gen-Z demographics.

The rise in popularity of BNPL coupled with the financial impacts of the pandemic are likely to cause the BNPL industry to accumulate $680 billion in transactions in 2025.

2. Web3 will become more mainstream.

The buzz continues to build around Web3 as consumers and corporations alike look forward to more ownership over their digital goods. Web3 wants to change that by decentralizing the internet and rebuilding it on the blockchain. Defi enables peer-to-peer transactions and does not rely on any financial intermediaries, such as banks.

In 2022, I expect leaders in the Web3 space to start delivering solutions to the challenges of consumer protection, accessibility and usability. This could instill much more confidence in the public, making them more likely to adopt it at scale.

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3. 2022 could be the year of blockchain.

As crypto, the Metaverse and virtual reality start taking shape in everyday life, 2022 is expected to be a milestone year for blockchain technology as Web3 becomes safer and more accessible.

Deloitte’s 2021 Global Blockchain Survey found that 76% of surveyed executives “believe digital assets will serve as a strong alternative to, or outright replacement for, fiat currencies in the next 5–10 years.”

Financial institutions are drawn to the blockchain’s unprecedented security offered to both sides of the transaction, especially in terms of identity management. Blockchain is also being used increasingly to fight fraud.

The benefits of blockchain and the growth of cryptocurrency could also lead to a growing demand for blockchain-as-a-service (BaaS) as companies look for innovative ways to digitize and streamline all areas of their operations.

4. Cross-border e-commerce is on the rise.

The pandemic continued to create seismic changes in 2021, and those effects will likely be felt well into 2022, including how people shop. A recent Accenture study (registration required) found the total cross-border payment flow worldwide is growing about 5% per year and is slated to top $156 trillion by 2022.

In the wake of the pandemic-induced e-commerce explosion, international transactions now offer enormous growth potential for small and medium-sized businesses that used to only cater to their “hometowns.” The caveat is that these consumers expect easy and simple payment options—no matter how many worlds away they’re making the order from.

Demand is already skyrocketing for payment settlement, which gives businesses a powerful advantage while also reducing the risk of payment failure. As this trend becomes more popular domestically, you can probably expect real-time payment capabilities in 2022.

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5. The dawning of the “super app” is here.

In 2022, be prepared to take the adage “there’s an app for that” to the next level. So-called “super apps” offer vast and diverse suites of services and products from one platform. These services include transportation (like Lyft), retail (like Amazon), food delivery (like DoorDash), banking, entertainment and more.

Customers can purchase products and services with their super apps, and they can also schedule appointments, make reservations and even send packages to wherever they choose.

Super apps like WeChat and Alipay already dominate the Asian market, but I expect to see the trend take shape in Western countries in 2022 as a handful of fintech companies in the United States bring a diverse range of services to consumers through a single app.

PayPal is one of the popular American platforms aiming to become a market leader in the super app space. In February 2021, the company’s CEO acknowledged PayPal’s ambitions to build a super app offering a “connected ecosystem where you can streamline and control data and information between apps.”

6. The infusion of artificial intelligence and machine learning starts.

From traditional institutions deploying “robo advisors” to advanced algorithms assessing a credit applicant’s risk, fintech companies will likely continue to expand their use of AI and machine learning in 2022.

AI helps predict consumer behavior and enables targeted product recommendations to improve the customer journey and upsell customers automatically. During the Covid-19 pandemic, nearly half of survey respondents report making “significant changes” to how they bank.

AI also saves time and effort for businesses by handling customer FAQs through chatbots, which frees up employee time to focus on higher-level tasks and customer service needs.

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These top six fintech trends to watch for in 2022 all have one thing in common: they make the lives of consumers and businesses much easier. Although there will likely be some growing pains in adopting these technologies at scale, in the long run, the results will permanently redefine our relationship with finance.


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