It's funny how often we're asked about the upcoming trends for 2022. Will digital transformation still be massive? What's going to happen with global payments etc.? We don't know exactly; it's not like we have a crystal ball in the office, and it wouldn't be very digital and data-driven if we did. Instead, we speak to lots of peers and stakeholders about trends and industry shifts, and we've summarized just a few in this article.
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A couple of weeks ago, we wrote a blog on the fintech trends of 2021. Many of these are worth mentioning again, as trends such as BNPL and AI will continue to be important in 2022.
So, why are cross border transactions so clunky? It's very simple; cross border transactions exist mainly in obsolete systems, with different data in each of the jurisdictions, and a low level of competition in the field, among other reasons. In 2020 the G20 promised to focus on making these transactions more effective and to set up a plan and roadmap engaging with many stakeholders. Central banks will need to improve their payment systems within this plan, while new actors in the private sector will have to adapt to them. Hopefully, by 2022 we'll see this plan in action and ultimately the transformation of cross border payment systems.
Blockchain is another major topic for financial institutions, as it looks set to enable faster and more secure transactions. This technology adoption is in the early stages, and central banks like China are slowly embracing digital currencies. We’ll hear a lot about blockchain in 2022 and the years to come. The Europe Business Review even mentions that 66% of banks expect blockchain solutions in production within the next three years.
Helped by the pandemic, funding in wealthtech reached more than US$20B in 2021. It went mainstream, too, as younger generations discovered it via new finance and investing apps. The great democratization of trading, as an example, has had a tremendous impact on the sector, and in 2022 we will see it grow further. In particular, platforms such as Robinhood will enable armchair traders to impact entire market segments.
The RegTech sector, in particular, is likely to experience significant investment in 2022. Here, companies improve data protection and cybersecurity by combining technology and local regulations. The sector also provides services such as hybrid cloud computing, cryptography, cloud security, mobile security, advanced authentication, and biometrics. By using this kind of technology, regulators have more modern and accurate tools to prevent fraudulent behaviours and AML. Fintech companies also benefit from these solutions during their KYC process, allowing them to have faster and easier customer onboarding.
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