4 Trends That Will Shape Finance In 2022
With the Covid-19 pandemic continuing to alter the way we live our lives, 2021 has taught all of us a lot about handling the unexpected. Banks, credit unions, and other financial services have had to adapt as rapidly to the “new normal” as the rest of us, accelerating many major changes within the sector.
As we head into 2022, companies are preparing by pivoting their focus toward digital transformation to boost value for their customers and their bottom line.
Here are 4 trends to look out for in 2022.
1. Contactless services
The challenges created by the coronavirus pandemic have caused a major shift in consumer behaviour. Suddenly needing to adhere to social distancing guidelines and other rules, companies shifted their operations with rapid speed. According to The Visa Back To Business Report, nearly 33% of businesses now only accept contactless payments, while 48% of customers said they would not shop at a store that only offers payment methods that involve contact with a cashier or a shared machine such as a card reader. This shift toward contactless services is set to stick around in 2022 and the years beyond as the pandemic continues and customers become increasingly accustomed to simpler and faster ways of paying. As such, businesses that want to keep up will have to make the shift in line with the rest.
2. Digital Society
Society is becoming increasingly digital, with almost 15 billion mobile devices operating worldwide in 2021. While a decade ago cash made up 60% of payments, 2017 saw debit cards overtake cash for the first time. Covid-19 has undoubtedly pushed an increasing number of people toward digital payments options, but even before the pandemic, cash was set to make up just 10% of payments by 2028.
Digital wallets are also playing a major role in the increasing popularity of digital payments. According to an annual Worldpay Global Payments Report, digital wallets are set to represent half of global e-commerce sales by 2023, meaning we will likely see their popularity grow in 2022.
3. Automated Processes
It’s no secret that manual services are often time-consuming and not always the most efficient option for businesses. While automation can carry a hefty upfront cost, in recent years, many companies have started to invest in automating business processes in finance from payments, to lending, to front-end services, and back-end core functions. According to predictions by Gartner, the worldwide market for technology that enables hyper-automation is set to reach $596.6 billion in 2022, up from $481.6 billion in 2020.
Automation not only boosts efficiency for businesses but also improves client satisfaction by accelerating the pace of communication. Furthermore, in the long run, automation is also likely to reduce a company’s operational costs.
Currently, blockchain is often discussed in terms of its connection to cryptocurrencies. However, in 2022, we will likely see much more of blockchain’s true potential. Blockchain, fundamentally, is a secure system that allows for transactions, financial and otherwise, to be carried out. Such technology can be used by banks to handle remittances for lower costs and greater productivity, upping the efficiency of transactions without compromising security. As a second example, blockchain technology can also be used to support peer-to-peer lending solutions. PwC projects that, by 2025, the P2P lending industry will reach $150 billion.
Thanks to the pandemic and technological advances, major shifts are coming for finance. These 4 trends are set to have a significant impact on the sector in 2022 and will likely set the standard for many more years to come.