The disruptive nature of FinTech is one of the most exciting aspects of the industry. FinTech companies are constantly innovating and developing new ways to make financial services more efficient, convenient, and affordable. With that in mind, along with discussing eight of the most prominent FinTech trends we will see throughout the rest of 2022, this article will also tell you how you can learn more by registering for FinTech courses to help you & your business.
Before we explore eight particular FinTech trends, let’s talk about what gives FinTech its disruptive potential.
The Disruptive Potential of FinTech
FinTech’s potential for disruption comes from its application of technology to financial services and how it is changing the norm in how these services are offered. Notably, FinTech companies can provide financial services in ways that are more convenient, efficient, and affordable than traditional financial institutions.
One of the most disruptive aspects of FinTech is its ability to reach underserved populations. For example, FinTech companies now offer banking services to people who don’t have access to traditional banks. In addition, these companies use innovative technologies, such as mobile apps and artificial intelligence, to provide their services.
Another example of FinTech’s ability to reach underserved populations is in the area of small business lending. FinTech companies now use alternative data, such as social media data, to make lending decisions. This allows them to provide financing to small businesses that wouldn’t be able to get it from traditional lenders.
8 Disruptive FinTech Trends for 2022
FinTech’s ability to reach underserved populations is just one of the many ways it’s disrupting the financial services industry. So, let’s now explore eight specific FinTech trends we will see throughout the rest of 2022.
1. Biometric authentication will become the norm
In 2022, we’ll see a continued increase in the use of biometric authentication for financial services. This trend is driven by the need for more secure authentication methods and the desire for more convenience.
Biometric authentication is more secure than traditional methods, such as passwords, because it uses physical or behavioral characteristics unique to each individual. This makes it much harder for someone to impersonate another person.
Biometric authentication is also more convenient than traditional methods because users do not have to remember anything. Instead, they can simply use their fingerprint, iris scan, or face recognition to authenticate themselves.
FinTech companies will continue adopting biometric authentication in the months and years. Further, we will see traditional financial institutions, such as banks and credit card companies, start to offer biometric authentication options to their customers.
2. Machine learning will be used to detect fraud
Fraud detection is another area where FinTech companies use innovative technologies, such as machine learning to improve the efficiency and effectiveness of financial services.
Machine learning is artificial intelligence that allows computers to learn from data. This helps FinTech solutions find fraud patterns that would be difficult for humans to detect.
FinTech companies will continue using machine learning to detect fraud in the coming years. Furthermore, we will also see traditional financial institutions adopt machine learning for fraud detection.
3. Alternative data will be used for credit scoring
In the past, credit scoring was based solely on traditional data, such as credit card and loan history. However, in recent years, FinTech companies have begun to use alternative data for credit scoring.
Alternative data is any type of data that can be used to assess someone’s creditworthiness but isn’t typically used for this purpose. For example, FinTech companies may use social media data, utility bill payments, or rental history to assess someone’s creditworthiness.
Using alternative data allows FinTech companies to reach underserved populations, such as people with limited credit histories. It also helps them provide more accurate and tailored credit scores.
4. Peer-to-peer payments will become more popular
Peer-to-peer (P2P) payments are a FinTech trend recently gaining traction. P2P payments allow users to send and receive money without going through a financial institution. In addition, with P2P payments, there are no or lower fees, and the process is typically swift.
5. Cryptocurrencies will become more mainstream
Cryptocurrencies, including Bitcoin, are digital or virtual currencies that use cryptography to secure transactions. In addition, cryptocurrencies are decentralized, meaning they’re not subject to government or financial institution control.
In recent years, cryptocurrencies have become popular, and their value has risen. As cryptocurrencies become more mainstream, FinTech companies will continue to adopt them as an extra layer of their business. As a result, they may also offer cryptocurrency-based products and services.
6. Initial coin offerings will be regulated
An initial coin offering (ICO) is a type of crowdfunding that’s typically used to finance blockchain-based projects. During an ICO, a FinTech company sells digital tokens in exchange for investment capital.
ICOs have become a popular way for FinTech companies to raise capital. However, they have also been associated with fraud and scams. As a result, we see increased regulation of ICOs. In the future, we expect FinTech companies to continue using ICOs to raise capital, but we’ll also see more regulation of this financing method.
7. Contactless payments will become the norm
Contactless payment is a type of electronic payment that doesn’t require physical contact between the payer and the payee. With contactless payments, users can make payments by waving their smartphone or card near a contactless payment terminal.
Contactless payments are fast, convenient, and secure. They are also becoming more popular as people look for ways to reduce the spread of germs. In the coming year, we expect FinTech companies to continue adopting contactless payments. We also expect traditional financial institutions to start offering contactless payment options.
8. Blockchain will transform the banking sector
Finally, we expect to see blockchain continue to transform the banking sector. Blockchain is a distributed database that facilitates secure, transparent, and tamper-proof transactions.
We have already seen blockchain being used in FinTech to create new products and services, such as cryptocurrency exchanges and digital wallets. In the future, we expect blockchain to streamline other banking processes, such as onboarding new customers and processing loans.
Blockchain will also help FinTech companies comply with regulations, such as know-your-customer (KYC) requirements. In addition, by storing customer data on a blockchain, FinTech companies will be able to share this data with banks and other financial institutions securely and efficiently.
Learn More in FinTech Courses
If you are eager to learn more about FinTech, consider registering for FinTech courses where you can gain the skills and knowledge needed to succeed in this rapidly changing industry.