Top 10 FinTech 2022 predictions

2021 has been a year of transformation for fintech. What looked like a corner of the tech industry ten years ago is now the largest funded category in the world: fintech has received over $ 130 billion in capital representing 20% ​​of all invested capital. in 2021. Exits were also on the increase: there was a threefold increase in the number of companies listed on the stock market compared to 2020.

The natural question is therefore what will 2022 bring us?

I asked readers of this column and friends in the fintech industry for their predictions. Responses covered a variety of topics, including changes in financial access, new product creations and new industry dynamics. And of course Web3.

I’ve shared them below, along with one of me on the future globalization of the fintech movement.

The march for better financial access will continue

Fintech continues to have a huge opportunity to drive financial inclusion and impact the daily lives of consumers.

In countries where there is a banking oligopoly (Canada, Mexico, others), competition and innovation are inherently suppressed. Oligopolies will innovate among themselves to support their own market position, but any innovation that threatens that position can be ignored or countered. It is often not in the best interest of citizens who want better convenience, better choice, rates, terms, loans, etc. This creates a rich opportunity for neobanks and others to deliver better products to consumers to manage their financial well-being and grow. These products will be a game-changer in these markets and gain or gain the support of the public and regulators when the benefits to citizens are evident.

– Andrew Harrison, Managing Partner, Section 32

We will finally have a way to move money in Africa which is as ubiquitous and as fast as WhatsApp and almost as cheap.

– Sid Mofya, Executive Director, Draper Venture Network

New, more specialized products will be created

The first generation of fintech products were general solutions. A range of more specialized tools is on the way.

“Toast for Long Tail SMBs”: We’ll see vertical specific software and payment solutions for everything from trucking to barbers.

– Sarah Morgenstern, Corporate Partner, Flourish Ventures

Startups will invest in interoperable customer identities underpinned by Open Banking and crypto use cases. The enthusiasm around the potential of social authentication defended by Facebook ten years ago will manifest itself again, but this time by fintech players. Customers want their financial identity transferred transparently and securely over the web. 1-click payment tools and crypto wallets will be important battlegrounds to watch.

– Austin Arensberg, Senior Director, Okta Ventures

Industry will see greater consolidation and collaboration

With the amount of venture capital entering the industry, there is more competition for the attention of clients. At the same time, in many places the growth slows down at a later stage. In this new environment, M&A will become a key strategic option.

Mergers and acquisitions will be the mainstay of board discussions and strategic growth opportunities next year. As we’ve seen in previous cycles, as organic growth slows down, inorganic growth is increasingly becoming a focal point for management teams, especially those with capital (and seeing massive TAMs). . Scale is still key to ‘winning’ a market, so hopefully more companies see the path to 1 + 1 = 3 ++.

– Matt Streisfeld, partner at Oak HC / FT

There will be consolidation of growth stage fintechs as market leaders look to mergers and acquisitions to accelerate growth and expand markets, while some later stage companies struggle to meet revenue targets for justify high valuations and look to the M&A markets for soft landings.

– Mark Batsiyan, co-founder and partner at Inspired Capital

At the same time, legacy financial institutions are looking to expand their solution set and modernize their technology stack. We could see more open innovation and industrial collaboration.

As digitization continues to grow exponentially, we will see deeper and deeper collaboration between fintechs and businesses that now move towards completely symbiotic relationships. Rather than being seen as ‘disruptors’ or competitors, business leaders now see fintechs as key strategic partners on the path to digital transformation that will create more flexible and innovative business models, at scale, for both parties.

– Denis Barrier, Co-Founder and CEO, Cathay Innovation (the venture capital fund in which I work).

Web3 will go up

There is a consensus web3 is on the rise and will create rich new opportunities.

This will be the year that many incumbent financial institutions (certainly not all) take digital assets seriously enough to start spending money on capability. In most cases this will mean compliance, monitoring and accounting software, but it will also include commercial contracts for white label offerings from third party vendors (e.g. Nydig, Paxos, ZeroHash, etc.).

– Dan Rosen, Founder and General Partner, Commerce Ventures

“In 2022, innovations in the web3 wallet ecosystem will force traditional financial services companies (like banks, credit unions, etc.) to come up with new options on where and how customers store their money digitally. The line between investment and savings will continue to blur.

– Ambar Bhattacharyya, Managing Director, Maverick Ventures

Financial and insurance technologies will increasingly mix blockchain and “web3”. [For example] a number of new DeFi entrants are likely to take the opportunity to dislodge neobanks and challengers insurers with more differentiated blockchain-based products. This opens up an opportunity even wider than the simple decentralization of cash flow, as a deeper reconfiguration of credit scoring, identity verification and fraud prevention could be fueled by the web3.

– Gen Tsuchikawa, Chief Investment Officer, Sony Innovation Fund

Farewell thought and final prediction

Looking back on these predictions, it’s clear that there is both an ocean of opportunity for the industry and challenges ahead. New product categories should emerge. At the same time, slowing growth rates may show some consolidation.

As a venture capitalist, I am cursed for being eternally optimistic. And so unsurprisingly, my own prediction is for the continued global opportunity for fintech. For context, in 2021 we saw the rise of fintech unicorns around the world. Most of these actions have taken place in emerging markets. At the start of 2021, Africa had a unicorn. Today, it has 7. The six additions were in fintech. LatAM saw Nubank’s historic IPO. Europe has been the source of some of the most important funding.

So this is it : I expect that we will continue to see an acceleration of fintech players around the world, leveraging the innovation supply chain, and by creation of industries. I believe that we are still in the early stages of this movement, especially in the ecosystems of more nascent startups.

What else would you predict?

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