With the crowded market, growing uncertainty and rising, simultaneous user adoption, investment and development decisions are hard. On one hand, we have recession and glooming crisis on the horizon. On the other hand, people are turning to FinTech for addressing their pain points, comfort, ease-of-use. Let’s see what statistics say about the industry. What trends are emerging and how can you use them for your benefit?
We will break down the article into few sections to help you navigate the landscape. We will talk about the industry size, FinTech adoption rates, expert opinions, and investments. Please keep in mind that this is not a full-fledged industry report but rather a summary. Nonetheless, it will prove valuable in the months to come.
FinTech trends 2022 – how big is the FinTech industry?
According to Deloitte, the projected value of the FinTech industry will reach $179 billions in 2022. It’s worth noticing that global industry revenue has nearly doubled since 2017. Five years ago, it was worth $90.5 billions. Now the number is closer has grown by an incredible 97%.
FinTech trends 2022 – how big is the FinTech industry?
- increased number of people using FinTech as their primary source to handle finances
- increased digitization and the use of technology
- the proliferation of FinTech companies and their audience reach
- the rise of digital financial services (also provided by high-street banks)
These factors spawn three major types of FinTech services that are available to the masses:
- software-enabled services. These types of firms focus on creating innovative applications and services. A good example is Amazon Web Services or Stripe.
- financial services. These are for companies that reinvent their business model. A good example is a traditional bank that want to elevate its game and introduce services currently unavailable to its customers.
- platform providers. These companies act as a bridge between customers and other products or services. They can offer products helpful in building larger applications or host additional services to support the main product.
Interestingly enough, 88% of businesses believe they will lose a significant portion of their customer bases to FinTechs. As it happens, this is a survey made by PwC in… 2017. How accurate these predictions turned out to be… It perfectly corresponds with Deloitte’s report.
Important trend came out of half of ASEAN (Association of Southeast Asian Nations) countries. Ministers of Finance from Philipines, Malaysia, Thailand, Indonesia and Singapour have just announced a system of mobile payments. It’s targeting tourists in the area and is based on local currencies. This is yet another example of FinTech that crosses the borders – in this case, literally.
One last thing – companies themselves. Last year, there were 26.000 FinTech startups in the world. That’s a huge increase from only 12.000 in 2019. The market is booming.
What are the FinTech adoption rates?
According to Statista, and as of 2022, approximately 65.3% of the US population uses digital banking. At the same time, 90% of Chinese citizens use fintech banking, payment, and financial management solutions (China Briefing). In fact, Chinese vision for FinTech is based on few pillars:
- advanced development of digital infrastructure
- deeper engagement on application of key technologies
- improved FinTech governance (partially to build or restore Western partnerships)
- emphasis on innovation-driven development
- rural revitalization
- carbon neutrality
China wants FinTech to be “digitalized, intelligent, green, and fair”. It’s interesting, since we have already written about a strong green FinTech trend. We expect this to only deepen. Especially when Chinese economy is expected to surpass U.S in 2030. China needs innovation and further integration within international structures; FinTech can definitely help with that. Not to mention serving a huge internal market.
What’s interesting is adoption dynamics. China has 92% adoption rate in banking and payment while UK has only 41%, with US with 49% to follow. Financial management is at its 91% in China, while UK has only 37%, and US 49%. Even insurance gap is huge – respectively 62%, 24% and 31%. It means, despite some comments, FinTech is still in its infancy stage. At lease in some countries and fields.
What does experts say?
Let’s start with green FinTech. As Richard Peers, the founder of ResponsibleRisk said in our interview last year:
We are taking things away from the planet while we are delivering economic growth.
FinTechs, at least some and at some point, will turn green. It’s not about carbon neutrality per se; it’s about delivering value while eliminating unnecessary burn of resources.
Another aspect – personalization, which lies at the core of the FinTech industry. In its latest report, Capgemini says that banks must embrace data-centric approach to better serves customers. The key is personalization, which we have also covered multiple times on this blog. Personalization puts the steering wheel in the hands of the customer while the system still operates under the guidance of the car’s computer. In other words, you can still have your application and make sure customers find what they are looking for.
By leveraging platform-based models, companies can not only put a new engine into the car but also optimize growth. Which in times of an economic turbulence is a key focus for many. That’s why research and development should be at the very core of software development, with digital transformation to follow. And if you have smaller needs, you can always think about team augmentation services. These are the FinTech trends for 2022.