In Q1 and Q2 of 2020, Fintechs on average reported growth (University of Cambridge, 2020). The pandemic prompted this growth, with individuals and businesses seeking online banking solutions. The industry has responded with innovative solutions that are easy to access, while still conforming with rigorous compliance and regulatory requirements.

However, innovation costs money. Investment in Fintech flagged slightly at the midpoint of the pandemic in 2020 as uncertainty clouded global economic forecasts. Yet, it soon became clear that people were relying on online solutions to purchase everything from groceries to homewares.

Digital wallet use surged to 83% and the industry was forecast to be worth more than US$10 trillion a year by 2025 (TelecomTV, 2021). In 2020, there were 779 billion digital transactions conducted worldwide, which is expected to grow by 13% up to 2025 according to various sources. Cash payments are becoming less common, particularly in regions with extended lockdowns in place.

The 10 trends that are likely to continue to dominate the fintech industry in 2022 are:

  • Blockchain
  • Digital-only banking
  • Increased regulation
  • China’s Fintech investment
  • AI adoption
  • Increased collaborations
  • Smart contracts
  • Payment innovations
  • Fintechs worldwide
  • The future


Blockchain, often conflated with cryptocurrency, has the ability to shift security and responsibility. It has the potential to boost the global economy to US$1.76 trillion over the coming decade with China (US$440bn) and the US (US$407bn) expected to see the highest returns (PwC, 2020).

The banking sector has claimed the highest market value of the blockchain industry, with cryptocurrency and blockchain applications to banking claiming a 29.7% share of the industry, followed by process manufacturing (11.4%), discrete manufacturing (10.9%), and professional services (6.6%) (IDC, 2020). There are now more than 40 million digital wallets worldwide (Statista, 2021). There has been a rush in the past few years from only 11 million in 2016 to in 2021, massive adoption and popular knowledge of cryptocurrency and the industry itself.

While cryptocurrencies are gaining wider acceptance as legitimate assets, many countries are also putting in place blocks to use and trade the decentralized coins, but encouraging the adoption of blockchain technology for other functions. Blockchain has served millions of people worldwide to help them become banked, give them access to recognized and indisputable land ownership, and has been beneficial to supply chain operations in various industries. For these reasons, blockchain adoption, more than crypto adoption, looks set to continue and is likely to dominate by 2025, according to some reports.

Digital-only banking

Digital-only banking has been available in some countries for almost 20 years. It seems it is finally starting to become more common worldwide as the pandemic pushes people to use online services more.

Digital-only banks cost less to operate, reducing fees and costs for customers, and are accessible to customers 24/7 without massive investment from the bank. Online banks can provide people with the services they need without customers having to wait in lines, fill in needless forms and face the scrutiny of personal judgments from bank tellers and bank managers. Online banking removes prejudice.

Digital-only banks offer credit services, normal account-keeping services, online bill payment, transfers, as well as a multitude of other services, especially when a big bank is a power behind the online services.

One of the criticisms of online banking is security. However, the number of successful hacking attacks on digital-only banks is far lower than the number of successful robberies carried out at brick-and-mortar banks. Online security is far superior to a physical bank, and hacking of a physical bank or online-only bank would be conducted the same way, so the argument that physical banks are more secure is untrue.

As older generations who have been reluctant to transition to online-only banking are fewer in number, uptake of digital banking has increased and physical branches are becoming a thing of the past. Visits to banks have dropped by nearly 40% in recent years.

Increased regulation

The financial sector is one of the most regulated industries in the world. Blockchain, if adopted by governments, would change the way regulation works. It would make verification of ledgers, payments, ID, and other details faster, more efficient, and accurate. Blockchain cannot be manipulated and provides many answers to questions about how to manage security online.

Regulation of online transactions has improved markedly in the past few years, with the adoption of data protection for online users mandatory in the EU, and better transparency forced upon large organizations, such as Facebook and Twitter, pushed for in many regions of the world. In regards to digital banking, this regulatory trend aimed at improved KYC and AML policies is not only improving the transfer of funds internationally for legitimate businesses, but it is also making money laundering far more difficult to achieve.

Fintech has been leading the way for cybersecurity. Often it is the smaller players and star ups that create new security features that are later purchased by larger companies for mass adoption. It is this innovation by entrepreneurs who are answering the call of regular digital banking customers that is driving innovation in the industry and pushing regulators to catch up.

China’s Fintech Investment

China has more internet users (800 million, 98.6% of them using mobile) than any other nation. For that reason, plus the vested interests of the CCP, Fintech development in China has accelerated. China has produced eight fintech ‘unicorns,’ collectively worth US$214.6bn since 2008.

According to reporters, Chinese fintech aims to maximize the economic potential of China’s banked and to integrate the country’s remaining unbanked. Much of the change that has pushed China to the front can be attributed to Alibaba founder Jack Ma. He has used technology to help the nation ‘skip’ a step. The country has traditionally had millions of unbanked, which is now changing with internet access made almost ubiquitous in the region, and digital banks, operated by government agencies, offering banking services to these people with greater ease than ever before.

AI adoption

AI is fast becoming more widely accepted as a tool for business development. AI is projected to reduce bank operating costs by 22% by 2030, which translates as business-cost savings of about US$1bn, for banks. AI will mean a reduction in the need for people to perform menial and repetitive tasks, with higher skilled roles in more demand. While AI, such as chatbots, can be used in place of customer service agents, there is and always will be the need for human interaction. AI poses no threat to jobs, only to the expectations of workers. People will need to work on higher-level tasks that require critical thinking. There will be a need for more people in technical roles as well, with expertise in tech an expected norm for future workers.

AI will elevate digital banking by enabling many services to be automated. Security processes, transactions, and other basic functions will be handled by AI more often, streamlining digital banking and making things easier and more cost-effective for digital banks.

Increased collaborations

Big banks have been watching Fintechs and startups for years. They have been buying the best performers and paying for new ideas. Big banks took a little time to start taking Fintech seriously in many parts of the world, but the pandemic has been the push that banks and governments needed to recognize that digital banking is the only reasonable solution for the future.

PwC predicts that 82% of current financial service providers will increase partnerships within the next five years. Much of this collaboration is in areas such as security, online-only features like paywave technology, and digital wallets. These collaborations will benefit customers as well as providers, however, if there is no push for transparency, customers might be unaware of which businesses are collaborating.

Smart contracts

Smart contracts are agreements that are signed using cryptographic keys as a digital signature. The contracts are sent to the blockchain, making them tamper-proof. They are guaranteed to execute in a precise, predictable manner.

Smart contracts make use of encryption technology and secure details in a way that no analog system can. Smart contracts can be wholly completed online without the need for a wet signature. The use of digital signatures and personal ID features is becoming faster, more secure, and more common. Most people are familiar with biometric authentication on their mobiles, with fingerprinting and eye scans used to unlock phones.

Smart contracts are extremely robust in terms of trust and execution. The adoption of smart contracts is increasing in industries such as banking, insurance, real estate, supply chain, IoT, gaming, and healthcare.

Payment innovations

Payment innovations in Fintech have many applications such as digital wallets, contactless payments, mobile payments, smart speakers, identity verification technologies, AI, and machine learning.

The biggest trend in payment innovations last year was the increase in mobile payments as payments shifted online as people were in lockdown around the world due to the pandemic. (PaymentsJournal, 2020). By 2025, in-store transactions are also projected to rise to more than 2.7 billion by 2022 to a value of more than US$5.4 trillion by 2025. It is expected that younger people who are familiar and comfortable with digital payments and online transactions will continue to disrupt the payments marketplace and produce more innovations that secure the future of digital payments.

Fintechs worldwide

A study by CB Insights revealed a 2% and 13% drop in year-over-year funding and activity for Fintechs, despite the growth of the industry (CB Insights, 2021). This is because many startups that burst onto the scene early have been bought by larger players, either adapting the tech for their own brands or further developing those startups with investment. This doesn’t mean that there isn’t room for innovative companies in the industry looking to bring innovation to digital markets. A study in February found the number of Fintech startups has increased in North America (up 1830); Europe, the Middle East, and Africa (up 1926); and in the Asia Pacific region (up 1364) compared with 2020 figures.

While investment in Fintech is booming as a whole, it is predominantly in existing companies and those acquired by larger companies.

The future

Fintech promises tremendous benefits. For individuals, greater choice and autonomy can lead to greater wealth through opportunity alone. For the millions of unbanked in the world, digital options give them the opportunity to access banking services and secure contracts, such as deeds to land.

For businesses, digital options have allowed for growth during the pandemic, secure options for contract negotiations and closing, as well as a variety of ways to obtain and process customer payments.

Fintech advancement is expected to come mainly from China and India. The two tech-savvy nations are providing avenues for digital entrepreneurs to expand and offering ways for new tech to fulfill customer demands.