2022: The Year to Lead with Fintech Ecosystems

January 6, 2022

Fintech ecosystems are set to grow with a number of trends emerging in 2022.

2022 is set to be a big year for fintech ecosystems, with a predicted US$3bn in investment capital funding to be generated by 465 fintech firms by the end of the year. At their core, fintech ecosystems are a complex network of interacting fintech start-ups and scale-ups, financial institutions, regulators, governments, investors, and talent institutions who share an interest in advancing the financial services industry through technological innovation. Though still largely in its infancy, the ecosystem concept is showing significant potential to disrupt banking and offer innovative services. 

Read on to discover the latest fintech ecosystem trends set to gain traction in 2022. 

Open banking has laid foundations for the growth of payment services

Open banking is continuing to gain traction. More than 2.5 million UK consumers and businesses now use open banking-enabled products to manage their finances, access credit and make payments. Furthermore, the concept of open banking has taken hold among governmental and supranational banking regulators over the past decade, with the UK’s Open Banking Implementation Entity (OBIE) marking its third year of open banking being a regulatory requirement for financial providers. 

The primary aim of implementing open banking is to increase choice and competition for both consumers and small businesses. This has been a key foundational step in enabling innovative fintech firms to integrate services for data networking between financial institutions and non-financial organisations. The development of the PSD2 (Second Payment Services Directive), administered by the EU in late 2018, is fostering a highly integrated European payment and information-sharing ecosystem set to expand with more fintech-enabled services in 2022. 

Notably, Swedish payments processor Klarna has successfully combined consumers’ current account data with CRA (credit reference agency) data to build an in-depth profile of applicants’ financial situation. By implementing this strategy, Klarna has “incorporated open banking data to improve access to credit, enabling new products to be brought to market on the customer insights gained.” 

2022 will likely see more financial providers following in Klarna’s footsteps by leveraging their own open banking connectivity and focusing their efforts on delivering select capabilities as a service such as payments integrations with third parties.

Digital-only banks cash in on gamification

Digital-only banks are gaining serious attention in the fintech ecosystem and pose a threat to traditional legacy banks. They largely appeal to a younger clientele who require simple financial management. The coronavirus pandemic caused significant growth in digital-only banking platform usage, with the percentage of digital wallet usage rising to 83%. There is now an increased need for the ability to bank remotely through mobile apps and banking apps are now offering additional services via their platforms.

For instance, gamification is a rapidly growing trend in digital-only banking. It is the strategic process of using game psychology in a non-game context to motivate behaviours that support business goals. A number of digital banks have taken the initiative to implement in-app gamified offerings. An example is Ukrainian “Monobank” which teamed up with developers to release their in-app game “space invaders” which offers customers a fun, retro-inspired gaming experience as they manage their funds. 

Digital-first banks are set to adopt increased gamification in their banking apps going forward into 2022, with banking apps such as Greenlight, Current, and Step already gaining prominence in the digital-only banking sphere as they collectively raise over $500 million with a focus on attracting teenage customers. 

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