Technology Trends | Disruption Guide Fintech 2022

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Key tech trends in the financial sector

As fintech nearly doubled the amount of investment received in 2020 and produced 42 new unicorns, 2021 was undoubtedly a landmark year for the financial technology industry. Its reach and range of innovative solutions revolutionized finance in ways previously thought inconceivable, while also paving the path for the development of trends in the coming year. What are going to be key tech trends in the financial sector this year?

A 2021 recap

It might be said that fintech had everything it had needed to excel in 2021 – making last year’s trend predictions on point.

While digital transformation and proliferation of cutting-edge technologies preceded the coronavirus outbreak, there is no denying that the pandemic was the extra fuel fintech needed to live up to its potential.

The ways in which fintech has done so in 2021 are numerous. Let’s have a look at some key examples.

• The fast expansion of mobile-only challenger banks such as Revolut, Monzo and HelloBank, among others, who have continued to revolutionize both the banking experience and customer experience.
• Embracing a customer-centric approach and leveraging AI, data analytics and automation, fintech shook up customer experience to appeal to what Forrester calls the “new type of customer,” spawned by the pandemic.
• Buy-now-pay-later becomes 2021’s hottest trend amid a push for greater flexibility around payment options.
• The ensuing success of Finance-as-a-Service (FaaS) solutions and booming adoption of embedded banking APIs.
• Blockchain demonstrated its potential in relation to cryptocurrency and the exploding NFTs, while also pointing at a multitude of other use cases. As a result, a whopping $6.6bn USD was spent on blockchain solutions in 2021.

Most importantly, 2021 was a year when a great deal of money changed hands in fintech in pursuit of the next big thing. As a result, $210 billion was invested into fintech products, across 5,684 deals, according to "Pulse of Fintech".

Top Fintech Technology Trends

With 2021 being a watershed year for fintech, 2022 is likely to go even further. Let’s take a look at some of the trends that are likely to take the sector by storm over the next year.

Sustainability is the new black

As sustainability is becoming a universal concern for today’s consumers and regulators, the whole finance industry will find itself under increasing pressure to follow suit. At the end of last year, during COP26, world leaders and scientists concluded that the overlap between finance and sustainability couldn’t be ignored. In the meantime, the European Commission’s Corporate Sustainability Reporting directive has called on finance and insurance institutions to reveal how they’re handling environmental concerns.

Even incumbents such as HSBC, Bank of America and Deutsche Bank, among many others, have committed to net zero by 2050 at the latest.

Some other ways in which some financial institutions are demonstrating their commitment to going green are:

• Switching to renewable energy
• Abandoning contracts with fossil fuel companies
• Choosing to do business with sustainable companies, such as those holding the B Corporation™ certificate
• Using a percentage of profits to donate to green causes, for example, planting trees
• Offering smart technologies that allow consumers to monitor the carbon footprint of their financial transactions

For more detail, have a look at our article in which we examine how the financial industry can reduce its environmental impact.

The pressure to wave the green flag is undoubtedly more pronounced for fintechs, as not only are they often run by Millennials, but their customer base is also largely made up of both Millennials and Gen Z – the two generations most concerned with issues of sustainability. As such, we’re likely to see fintech put an even greater emphasis on being green in 2022 and onwards.

Banking for the underbanked

As mainstream banking becomes ever so competitive, investors flock to emerging markets for promising opportunities to put their money into. Take Africa, for example, where levels of funding in 2021 reached a record $5 billion, according to the Africa Investment Report 2021.

Sixty-two percent of the funding received by the continent has gone to fintechs such as OPay, Flutterwave and Wave, all of which joined the “unicorn” club in 2021. Considering the region had only one such unicorn in 2019 and now boasts seven, it’s likely that the number will continue to rise while investment begets investment.

As technological advancements forge ahead and financial backing continues to flow in, we can also expect Africa’s fintechs to expand across the continent and into new services. Given that, beyond Nigeria and South Africa, the region remains largely “under-banked and underserved,” the opportunities for acquisitions and consolidations of lower-capital banking groups from neighboring countries are many, according to Investment Monitor.

Other opportunities are found among underserved groups in traditionally strong financial markets such as migrants or small entrepreneurs. Back in the days, many powerful fintechs started off as apps targeted at students – a group usually overlooked by established institutions – ultimately yielding great results.

Embedded banking adoption soars

Embedded banking – namely, “the process of integrating financial solutions with a business’ platform or app through the use of APIs” – made great strides in recent years, foreshadowing yet another year of significant progress.

Originally taking on the realm of payments and addressing the hassle of having to navigate to external websites or enter our card details every time we make a purchase, fintech APIs have gone far beyond their original offerings.

What we’re facing now is a world where “every company is a fintech company”, as McKinsey puts it. The wide range of APIs allowing businesses to create added value for their customers without having to break the bank (pun somewhat intended) to build their own fintech infrastructure makes such a world highly likely.

The recent rise of super-apps such as WeChat in Asia where mobile-first affinity runs strong is testament to the potential and rapid growth of embedded banking. Apps such as China’s WeChat and AliPay, Careem in the Middle East or South Korea’s Kakao, offering a plethora of services ranging from making purchases, booking trips, ordering food or ride hailing, now boast hundreds of millions of users.

While such extensive use of fintech APIs is yet to be seen in Europe and the US, the pressure to catch up is real. According to Kearney, “mastering high-tech is becoming a matter of survival” while Europe’s political leaders are acutely aware of how critical it is for the continent to keep pace with technological advancements occurring in Asia. The year 2022, therefore, is likely to feature a lot of European and US businesses leveraging the working solutions present in Asian markets and making the most of all embedded banking has to offer.

A considerable part of that process is likely to revolve around insurtech. The insurance industry has, for a considerable time, resisted tech adoption and failed to switch from a product-centric mode to a customer-centric one. As such, there is a lot of room for improvement in insurance technology.

Building on its success in 2021, during which funding has skyrocketed, insuretech will continue to make headway, with ‘embedded insurance’ further reshaping insurance distribution. In essence, this will mean that any ecommerce player boasting a considerable customer base will be able to integrate insurance products in their offerings and make it a central part of their customer journey.

However, whilst the insurtech market is, on the surface, ripe for the taking, Florian Graillot, the Co-founder at astorya.cv raises an important point:

“Everyone is talking about it now. Insurers speak about ‘open insurance’ but the market is moving fast and only a few players are really able to make it at scale as you need both technology and insurance”.

DeFi gives investors more buck for their money

For a long time, the concept of DeFi (or decentralized finance) has been almost synonymous with cryptocurrency and “buying Bitcoin.” In 2022, we are well past that point. DeFi has created a parallel financial industry for companies offering marketplaces, lending services and asset management, amongst many others – and its scope of offerings is only set to grow further.

The creation of legal frameworks will also be a key focus for DeFi in 2022, allowing it to gain the legitimacy that it needs to attract more investors, particularly big financial institutions leveraging DeFi for private market investments. Countries that excel in this arena have a lot to gain from doing so – e.g. improved market efficiency, faster innovation and a “wealth of possibilities that go far beyond finance.”

The growth of DeFi itself will benefit from a number of conditions – financial or otherwise – which will allow it to skyrocket in 2022. Amanda Orson, the Head of North America at Curve explains how:

“Inflation’s impact on consumer spending will drive interest in financial education. The ‘flight to yield’ will continue to drive dollars from high yield saving accounts (or similar) to providers who offer high yield stablecoins. The combination of the great resignation [and] maturity of the FIRE movement increased consumer interest in passive income, savings, and retirement planning.”

The accessibility of decentralized finance coupled with the events of the past two decades, such as the 2008-9 financial crisis, which “steamrolled younger workers just as Millennials were entering prime working years” make DeFi an attractive option for this particular generation. According to research by Fintech magazine, passive income in the form of cryptocurrencies enjoys the most popularity among Millennials.

Disenchanted by both traditional finance and their jobs that leave them burnt out (see: the great resignation), Millennials and Gen Z will continue powering the financial revolution by experimenting with alternative finance options and pursuing them.

Slashing operational costs

Part of the competitive edge that fintech has over traditional banking institutions is to do with its considerably lower operational costs. After all, brick-and-mortar banks require far more real estate and employees to run as opposed to fintech that, due to their largely online existence, can cut back on such costs.

Even so, in order to be profitable, high-valued fintechs will need to find ways to cut operational costs. Neobanks struggle to make profits, similar to the BNPL industry which, despite being one of fintech’s hottest trends in 2021, has a mean industry profit margin of around -2.6%.

As it stands, none of the biggest BNPL providers, such as Klarna and Afterpay are profitable as of yet. While financial analysts predict the industry to achieve profitability by 2023-24 and competition is growing, it’s key for the players in the space to slash operational costs and avoid losing money before then.

On the other hand, established institutions are now scouting the fintech environment for solutions that have proven effective, and could save them money through AI and digital transformation.

Fintech Design Trends To Watch in 2022

According to data from the annual report by fintech startup Plaid, nearly 90% of Americans already use at least one financial technology solution, and this number is only expected to grow in the following years. Yet, developing fintech solutions design can be challenging – to say the least.

So, how to approach the process of designing a fintech app, and what are the top fintech design trends to incorporate in 2022?

Let’s take a look at the challenges and user expectations fintech designers need to face and which trends can guide them in the upcoming months.

The challenges behind fintech design

Consumers have gotten used to easy-to-understand, user-friendly interfaces that they got to know from other industries such as entertainment, retail, or tourism. These industries' move from offline to the digital world was relatively easy as they didn’t have to carry the burden and seriousness associated with the finance sector – their biggest issue was developing attractive and easy-to-use solutions.

The case is a bit different for fintech. The industry needs to face the challenge of building trust similar to what they had with face-to-face, personal relations offline. Aside from this, designers from fintech companies need to comply with a lot of rules, including strict policies and procedures, security constraints, and ever-changing law regulations that can vary depending on the country or region they’re deploying the solution in.

Not to mention that finances themselves can be a quite complex topic for an app, which makes the task of creating an easy-to-use, user-friendly and educational platform even more challenging.

Things to remember while designing for fintech

Before we take a look at fintech design trends, let’s establish a few “rules” that each UX, UI, and product designer should take into consideration while developing solutions for financial apps.

Always start with the user

Fintech is a vast category with users ranging from kids to seniors, from individuals to big companies, that come from both mature financial markets with very demanding segments, and emerging markets where millions haven’t used anything other than cash ever before. Prior to making design efforts, creators should take their time to do research and truly understand their target users.

Keep it as simple as possible

Our cognitive load is limited. Make sure you’re not overwhelming the user with too much information or too many features. Complicated layouts, confusing CTAs, and chaotic navigation can make it challenging to move around the application and frustrate the user — especially if the subject is as complex as finances are.

Consider all security aspects

When it comes to designing for fintech, one must consider security. The apps carry a lot of sensitive user data and are subject to strict financial regulations. Make sure the user feels safe and comfortable throughout the journey. If you need to create “obstacles” such as two-factor authentication, or short login sessions, ensure the user knows why those additional steps are needed and how they should behave while facing them.

Use the design to build trust

Fintech apps have one huge disadvantage when it comes to building trust — they’re not based on human-to-human interactions, which might make the recipients less trusting of them. Yet, trust can be built in different ways — and one of those ways is the design.

If you want the users to trust your solution, ensure you create a seamless experience with a transparent onboarding process and show the ways you’re making the solution safe for them. Here, apart from the visual elements of the design, it’s important to adopt UX writing techniques, which can help make communication easy to understand and more natural for the users.

Fintech design trends to watch

Learn these four basic rules of designing for fintech. How can designers introduce them into their work while keeping up with the industry trends? Take a look at the list of fintech design trends that our expert panel found worth following in 2022 and beyond.

Judging Panel Members

The Judging Panel comprised the following experts: Stephanie Bowker Head of Marketing at Spendesk, Nikolai Hack, Head of Strategy & Partnerships at Nucoro; Can Osman Yildirim, Growth Partner Development Manager at Amazon Web Services; Radosław Sałek, Senior Account Manager at Google Cloud; and Bartosz Białek, Product Design Manager at Netguru.

Please note that the voting took place in February 2022.

1. Acceleration of automation

Automation is the key to making things easier for both users and app developers — and 2022 will be all about automating processes, including the most monotonous and repetitive tasks performed by customer service employees. This will include the deployment of RPA-based and other intelligent automation solutions. When it comes to robotic process automation (RPA), the main goal will be to streamline workflows by automating some of the most tedious tasks within the company. Flobotics states that even as much as 80% of finance leaders have implemented or are planning to implement RPA in the future. Why?

By relieving the employees from repetitive assignments and enabling them to focus on important ones (such as customer care), RPA increases business productivity and helps improve customer satisfaction — which is the key to building trust and long-term relationships with the fintech app users.

Intelligent automation, on the other hand, will help with streamlining more complicated tasks such as approving the loan or scanning documentation, making apps perform even faster — which will be an excellent selling point for the ones that choose to automate their platforms, and a great addition to the RPA-based systems.

2. Conversational experience design

Conversational experience design is an approach to design that mimics natural human interactions with the use of chat, voice, or other technology. Its popularity is growing, and we’re not surprised.

While the conversation experience design aims to resemble a human-to-human interaction, in some ways, it might actually be even better. As much as 40% of digital consumers prefer to “talk” with chatbots instead of interacting with virtual agents. The reason behind it is simple — chatbots are on 24/7 and are a great way to find the answers to basic questions quickly and without the fear of being judged by an agent.

Conversational experience design is a great way for fintech companies to improve CX. It’s an opportunity to increase employees’ productivity at the hand of decreasing the number of chats and calls with the customers. What’s more, by opening new selling channels and enabling new forms of identifying user behavior trends, it’s also creating space for a potential boost in conversions.

3. Personalized interfaces

Imagine going to a coffee shop to get your usual morning espresso and being bombed with muffin and sandwich offerings instead. It’s not the greatest scenario, yet many users feel this way when they enter fintech apps — especially those that offer more than one specific service.

Personalized design allows the creation of interfaces that match not only the users’ device but also their needs, preferences, and intents throughout the whole journey.

Thanks to progressing AI and data analytics that have proven to work wonders for social media and entertainment platforms when it comes to maximizing engagement, dynamic personalization will be gaining ground in the following months in fintech as well, allowing for an even better and more tailored CX.

4. MXDP platforms

Multi-experience development (MXDP) platforms are the ultimate tools to accelerate the digital transformation processes.

The goal of multi-experience development is to streamline the digital experience of consumers using different devices, touchpoints, apps, or technologies. MXDP platforms enable businesses to develop and scale apps faster while ensuring a high level of user experience — whether it’s voice, gesture, or another type of human-to-machine/software interaction.

In the case of MXDP platforms, we can surely expect to see many more adaptations of conversational and immersive experience design, which will further stimulate the progression of yet another digital transformation.

5. Advanced data visualizations

Another crucial fintech design trend to follow in 2022 and beyond is advanced data visualization.

Finance apps are all about data, but numbers mean nothing if they aren’t properly displayed. Well-designed data visualization is a thing that can make or break a fintech app.

In the era of the quantified self movement, where consumers define themselves through numbers, a good graphical display of financial data might be just the thing to attract a customer and make the sale. Well-designed data visualization can also lead to a better understanding of one’s finances, which makes it a win-win for both — the user and the app owner.

Automatic categorization, monthly statistics, or a budget breakdown are much more understandable with the right design, and this is what many users search for when choosing fintech platforms over traditional finance companies.

6. Motion design and animation

Motion design, animations, and micro-interactions are a perfect way to create an interactive experience for fintech app users.

Motion design can greatly boost the platform’s attractiveness. Slight animations add lightness to otherwise coarse actions, set the user with the right visual rhythm, and make the overall use of apps more friendly.

Micro-interactions, which are very small and subtle types of animations that appear in e.g., CTAs or buttons, provide the user with much-needed feedback about their actions, making their experience more interactive and keeping them informed about the outcomes of those actions. Although micro-interactions might seem like a “nice to have”, these can actually be vital to achieving a truly good UI and UX design.

7. Adoption of gamified systems

Another interesting trend in fintech design is gamification. While managing personal finances is a rather serious matter, nothing stands against them becoming more interesting and engaging, at least.

Gamification in fintech can include a number of different solutions, e.g.:

• Collecting rewards, points, or badges and taking part in friendly competitions
• Facing challenges and setting financial goals to achieve in a given timeframe
• Introducing progress bars that help to closely monitor spendings or earnings
• Taking part in gamified educational content

Making finance fun is a wonderful strategy for building successful fintech solutions. Introducing one or more game-based features can help fintech companies increase engagement, ensure higher retention, and motivate users to recommend and choose certain solutions over others.

For Autodesk, using gamified systems resulted in an astounding 54% increase in trial usage and a 15% climb in buy clicks.

8. Use of authentic images

Authenticity is yet another very important factor when it comes to choosing fintech apps. There are, of course, many different ways to build brand credibility, but one of the most basic and almost effortless ones is through using authentic images.

Why is using stock photos passé?

Stock photos can be bought by anyone, and quite often, businesses from one industry buy a similar set of photos as their competition. They lack uniqueness and authenticity, which is crucial in building the trust that is so important in the fintech sector.

A few years ago, Marketing Experiments wanted to test that theory, so they set a real photo of their customer against their top-performing stock photo. The outcome? Users who saw the real customer were 35% more likely to sign up and convert. Since then, people have become even more alert when it comes to stock photography, especially given the growing number of online scams.

The takeaway here is simple — if your company wants to build trust, it should choose authentic images over stock ones.

9. Bright or very bright interfaces

When you take a look at the most popular fintech brands at the moment, you’ll see one thing that most of them have in common — bright, neon-like colors. Vibrant colors are in fashion, and not only thanks to the 90’s style comeback.

Vibrant interfaces and brand colors make a company stand out. Bright colors are easily seen and memorized compared to bleak, toned ones. Incorporating them into the logo and branded materials can be a good step towards building brand awareness and recognition.

Bright colors are also a great choice for highlighting certain parts of the design. Fintech designers can leverage them to increase readability and legibility, allowing users to process the most important information quicker. Vibrant colors will make elements stand out and therefore make them even harder to miss.

If used reasonably, bright colors can also be a way to address the accessibility issue. When developing the solution, designers should remember to apply a proper color contrast ratio between text and graphic elements (at least 4.5:1) and avoid using red on green and green on red – as it is the red/green colorblindness that is the most common.

Another important aspect of using bright colors is that they’re associated with a positive, light mood, which can be settling for the users looking for easy, simple, and, above all, modern finance solutions.

Bright tones are kind of the opposite of what was traditionally associated with the finance sector — a number of subdued colors that were supposed to build credibility and seriousness around the subject of finances. Yet, this can actually be just the thing that the industry needs right now — a modern approach that’s adapted to the digitally-native customer needs.

10. Inclusive design

Last but definitely not least, the one that’s actually much more than just a trend is inclusiveness. Inclusive design is important for many legal, business, and ethical reasons, and, yet, for many years accessibility wasn’t a priority for the designers.

Now, more than ever, fintech designers need to address their audience, who may cope with various health conditions that make using digital solutions more challenging. This, along with the COVID-19 pandemic outbreak that has pushed more seniors into mobile banking, makes it crucial for apps to be more accessible.Yet, inclusive design is much more than just adjusting the right fonts and contrast ratios. That’s why the best way to achieve accessibility is to design according to the WCAG (Web Content Accessibility Guidelines), which sets the universal standards for digital design and is a very good source of best practices for inclusive design.

Wrap up

Although the nature of fintech is unpredictable and thus renders it vulnerable to sudden changes, we can expect the world of financial technology to continue to expand its presence and scope. As the Global Head of Infrastructure at Danske Bank, Ken Robson, tells us:

“...the trends I see that have potential to shape the fintech industry in 2022 are embedded finance, Web 3.0 and the new economies such as the gig, the sharing and the platform economies.”

Some of the less fun scenarios are sudden market disruptions, mass cyberattacks sparked by emerging conflicts, and side effects of new regulations. However, given fintech’s recent growth, innovation and investor engagement, I prefer to remain optimistic. Even if things do go south, a more challenging year means we get to see more resilient fintechs in 2023. It’s more than likely the sector will enjoy another fruitful year.