As we welcome in 2022, Bond expects this new year to spawn a new wave of fintech innovation — continuing a revolution in financial technology that will finally work for real people, and not just the few lucky ones. Keeping an eye on the fintech industry is a lot like looking into a crystal ball, but our very own Roy Ng shares five predictions that touch many areas within fintech.
Crypto stabilizes, blockchain in
As we enter a higher interest rate environment, lower risk assets will produce more attractive yields than they have in the past several years. Investors large and small are likely to allocate capital away from crypto assets and towards lower risk, but now higher yielding assets, causing a rationalization in crypto valuations. However, at the same time, blockchain technology will become more widely accepted and the user experience will continue to improve. As it gets easier to bring assets on-chain, crypto volumes will grow steadily despite the changing rate environment. From identity management to trading, we will also see blockchain-powered platforms become more mainstream.
BNPL as a native feature, not another widget
BNPL (Buy Now Pay Later) is undoubtedly a preferred payment option for millions of consumers and the Pay-in-4 companies have done an incredible job expanding access to consumer credit. But embedded finance platforms can enable any brand to build its own fully integrated BNPL experience. Why should Adidas, for example, need to maintain integrations with Affirm, Klarna, Afterpay, and Paypal when they could launch their own “Adidas-Pay”? In 2022, we will see leading brands incorporate BNPL as a native feature of their checkout experience rather than continue to support the widget wars.
Startups baking in finance
In 2022, we expect at least 50% of newly-funded SaaS startups will have native fintech capabilities baked in. As companies gain traction by hyper-serving specific industries, such as barbershops or auto body shops, new entrants into enterprise software will embed financial services as part of their product offerings and business models. Bank accounts, insurance, lending, and more will be woven directly into these apps, allowing their customers to seamlessly transact with these financial products without interrupting their usual workflows.
Financial brands echoing lifestyle ethos
Just as consumer companies with a ‘story’ are gaining an outside influence, so too will financial brands. The eco-friendly shoe company All Birds recently saw a massive surge in its stock price after its IPO and we’ve also seen successes in brands such as Warby Parker, Rent the Runway, and Chobani. Similarly, fintech Aspiration went public based on its mission to prioritize sustainability in consumers’ spending habits. As people become comfortable buying physical goods that support their beliefs and causes, they will also seek out mission-driven fintechs to align with their personal beliefs and ethics. With bank branches becoming a thing of the past, what will separate financial institutions is their alignment with their target customers’ values, not the convenience and locations of their storefronts.
The end of “fintech”
The delineation between tech and fintech will blur. As consumers get more accustomed to financial transactions being woven into their software interactions, there will soon come a point where many companies will become fintechs, and financial services are baked into their user experiences. Fintech won’t be a standalone vertical. Imagine the possibilities as you are offered a loan from your local hardware store, a bank account from your favorite entertainment brand, or a credit card that pays you rewards toward your local sports team. As companies compete to be top-of-wallet, rewards will become more narrowly tailored and valuable to their target. Prices for services, especially for underserved communities, will drop as more alternatives become available — some for the first time.