Our fintech predictions for 2022

 Gus Mallett photo
Gus Mallett Content Writer
3min read

It’s 2022! And we’ve got a sneaking suspicion this year is gonna be one to remember.

I don’t know about you, but to get into what I call the ‘New Year Headspace’, I like to listen to peoples’ predictions. Luckily for me, 11:FS Director of Research Benjamin Ensor and Ventures Product Manager Gwera Kiwana sat down with 11:FS Foundry Senior Engineer Alex Hooper to share their thoughts on all things fintech. Listen to it here.

If you’d prefer a rundown of the key moments, read on…

Last year’s predictions

At 11:FS, we like to think of ourselves as fintech soothsayers. And about this time last year, we predicted that banks would have no choice but to go all in on digital. Did we get it right?

It was a pretty good guess. We saw a lot of branch closures across the board and brand touchpoints became fewer and further between. In the US alone, over 4000 closed while an additional 1000 opened. 736 called it quits in the UK with another 220 for the scrapheap in 2022.

We saw a lot of branch closures across the board and brand touchpoints became fewer and further between.

Becoming truly digital is, of course, more than just changing how you interact with your customer. Kudos to JPMorgan for migrating their core banking systems to the cloud. But there’s still plenty of work to be done in this space.

We also identified a gap in the market for tailored advice that looks at customers' holistic financial situations and gives bespoke recommendations. Did we see any propositions like that coming to market?

Not really. Maybe Open Banking will get us there one day. But at the moment this kind of embedded finance is the stuff of legend. It’s hard to point fingers though. COVID has put innovation on the back burner with a lot of companies focused on keeping the lights on.

Looking ahead to 2022

With that done and dusted, we turned our attention to the months ahead. Gwera kicked things off.

Gwera’s prediction

2022 will be the year of the rise of the Global South. Fintech is no longer an import and homegrown giants started roaring into life last year. Expect more investment and more infrastructure as the movement gathers steam.

2022 will be the year of the rise of the Global South.

Fintech investment in Latin America has more than tripled since 2020. Nubank raised $2.6bn last year to become the most valuable financial company in the region. In Q3 alone, African fintech firms raised $906 million. The continent now boasts five fintech unicorns - Flutterwave, OPay and Wave reached the landmark in the last year alone.

Where did all this investment come from? I’m glad you asked. New York-based Tiger Global led a $170 million round for Flutterwave and sank a further $15 million into Nigerian Mono and $3 million into Zambian Union54. Google, meanwhile, has pledged $50 million to support African fintechs.

You heard it here first - infrastructure, payments and Open Banking players will have a good year.

Alex’s prediction

Variable recurring payments (VRPs) will win over the Open Banking sceptics. In the dark about VRPs? Well, they allow customers to safely connect authorised payment providers to their bank account to make payments on the customer’s behalf. This offers more control and transparency than direct debits and card payments.

Variable recurring payments (VRPs) will win over the Open Banking sceptics.

They also enable sweeping. And not of the chimney kind. Sweeping refers to the automated movement of funds between two accounts in a customer’s name. You could move money from a current account to a savings account, for example.

Not only are VRPs more cost-effective than direct debits, they’re also faster and less error-prone. What about use cases? Let’s say you have money left in your account at the end of the month. Lucky so-and-so. You’ll be offered the chance to sweep that extra money to pay off any outstanding debt.

Watch this space.

Benjamin’s prediction

There’s gonna be a big increase in fintechs targeting very specific demographics with products and services. In part, the growth will come from companies that already serve particular affinity groups. But expect to see plenty of new startups coming into this space.

There’s gonna be a big increase in fintechs targeting very specific demographics with products and services.

Greenwood, Nerve and Daylight are just a few of the digital banks that made headlines with their propositions last year.

While the services on offer aren’t exactly breaking the mould, their fantastic marketing is winning eyeballs in all the right places. And helping to serve the underbanked and unbanked. We love to see it!

So that’s our thinking for 2022. Let’s check in and see how we got on a year from now. Till then.

 Gus Mallett
About the author

Gus Mallett

Gus is the content writer in the Growth team, responsible for editing and writing a range of internal and external content. He has a background in writing and US news and culture.

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