What technologies will make the most noise in 2022 in fintech? Beware of white label software development and DeFi!
The fintech industry is accelerating its growth at breakneck speed. Banks are evolving to be digitally sound and service-oriented, and support for fintech has been a game-changer. Banks use algorithms and models to calculate statistical probabilities of financial services such as tracking and updating activities, titles, prices, etc. ; and for them, data and its accuracy are critical to growth-driven customer support. Continuing the rapid speed, the year 2022 expects a dynamic change in the global fintech market with exciting technological advancements.
The first of many significant advances in fintech is quantum computing. Some of the world’s financial institutions are already seeing significant advantages in quantum computing and they will be able to have good control in the market in the future. In this data-dependent world, more powerful computers are essential for calculating probabilities accurately, and this is where the importance of quantum computing lies. This is the technology used by tech giants like Google and IBM to deliver cloud business to big banks like JP Morgan, which are already investing in future financial applications of quantum computers to take advantage of the benefits of standard methods. .
Its use is very important in the capital markets, corporate finance, portfolio management and crypto related activities. Quantum computing is potentially revolutionizing, but there is still time to deploy this technology at scale, as financial institutions have only just started to gain prominence in developing quantum algorithms to meet the needs. from the moment.
Another fact that will be very dominant in 2022 is the trend towards cloud adaptation. Security is the number one concern of fintech service providers, as individuals and businesses alike need the ability to open and manage their finances. from a distance. Secure data management will help in scenarios like onboarding and identity verification processes, managing accounts, checking balance, analyzing spending habits, etc.
Encrypted data and zero trust verification processes have also increased the demand for cloud security support in recent years. Cloud technology helps businesses deliver the greatest security at a relatively fast pace and also enables large data to be collected and stored securely, making it accessible anytime. So, by all means, it is understood that adaptation to the cloud will be of more importance in 2022.
AI and ML platforms are continually being upgraded to deliver top-notch Fintech services. FinTech is one of the main industries to massively benefit from the power of AI / ML. Machine learning applications make it possible to process large amounts of data and draw valuable conclusions using powerful algorithms. As a result, it can now be more efficient and provide efficiency gains, including time-saving supports and services.
AI and ML are able to analyze complex models in real time to provide fraud detection, loan approvals, and AML filtering for risk monitoring and investment forecasting. FinTech is widely used in recurring payments, money transfers, or sending money through digital platforms like PayPal, etc. The strong possibility of including its voice assist capability is expected to grow and make its presence quite dominant in 2022.
Blockchain is arguably the most important financial innovation for digital transactions, as it supports distributed management and cannot be controlled by a specific individual, company, government, or bank. The growing acceptance of blockchain in a secure digital transaction is creating an impact, although it is still under scrutiny for the minimal security concerns it can create. Blockchain payment methods have grown in the retail and e-commerce industry during Covid-19, as more end users have switched to cryptocurrency over conventional payment options, and this is gradually improving. customer experience.
The next predominant fintech trend is the white label. Developing fintech applications and software is a complex and overwhelming task, especially for any business new to this industry. The development of white label software is helping them. White label products are made by a supplier to be rebranded before being sold. White label fintech solutions make it easy for businesses of all sizes to build a global payment gateway.
With the White Level, new businesses can afford these sophisticated solutions without breaking the bank or going broke or the implementation process of any financial institution. It helps create a large customer base for distributors and minimizes initial start-up costs for the reseller, which helps FinTech companies outsource financial applications to reach market in less time, conserve resources intact and maintain their relevance in a highly competitive market.
White label solutions (also known as private label solutions) are a very beneficial strategy as the e-commerce and banking sectors are growing at an exponential rate and these industries are becoming more open to partnerships with third parties.
Fintech companies depend on powerful tools and applications to stay relevant in their financial services and white labeling is one of the most important solutions for this. According to the FinTech State of the Nation report, the number of fintech companies in the UK is expected to double by 2030, indicating that white label partnerships are more likely to increase in the coming years.
Decentralized finance (DeFi)
Decentralized finance (DeFi) is a new game changer. Its advent is all the more remarkable given that the cryptography sector has very recently experienced a rapid boom in investments and a transition to the digital space. Cryptocurrency creates the possibility of peer-to-peer exchanges without the involvement of the bank. DeFi offers efficient user control without the complex transaction process compared to traditional centralized systems which have space and time issues to support cryptocurrency transactions.
DeFi consumers are freed from the dependence of a central authority like the bank and can drastically reduce third-party tariffs for effortless end-to-end transactions. DeFi is arguably the most fascinating concept in fintech that started out as an alternative financing tool to support cryptocurrency with self-executing smart contracts. 2022 will see finance much more decentralized and, banks and other financial companies will welcome it for all its possibilities.
These are some of the most important trends to watch out for and bring a positive and rapid upgrade in FinTech in 2022.
– Uday Chaudhari – Senior Director, Technology, Synechron.