There are a few reasons that the cost will go up, which we just touched on. Let us dig a little deeper into the main reasons why the cost of premiums is on the rise and why they will continue to rise for now.
1. Cost Of Claims
The biggest aspect of driving that causes the premium rates to increase are accidents. The more claims that a carrier has filed against them, the more money that they must pay out of their bank funds designed for the task. As with other businesses, the more money that is paid out the less the profit margins will be. To maintain their pay-out accounts the insurance companies will raise the premiums costs for all of us. This makes good business sense for them, but it is unwelcome news for us.
2. Inflation
Another main factor of increases is the rise of inflation throughout the economy. Prices around us are soaring through the roof right now. Housing is out of control. Car prices are very high, especially for used models, and the basic costs of living are on the rise. All this while the wages many people get for their jobs allow them to stay in the poverty levels of the nation, but it keeps them from being homeless. All these changes will spill over into the insurance industry. Their costs will increase, so our costs will increase even more.
3. State Variances
The cost of a policy will depend a lot on the state that you live in. Michigan is reportedly the highest, and Hawaii is the cheapest. Some of the best car insurance companies will offer the lowest rates that they can, but they must follow the legal limits that are set by the state. If your area requires a certain amount of liability coverage, you will have to pay for that amount as a rock bottom policy. If you want to know the specific amounts that the policies will increase in your state, go to the first link in this article. It will allow you to zero in on your specific area of the nation.
4. Vehicles
One of the biggest, and most detrimental, changes that we are all seeing are the vehicles that we drive. It is common knowledge that right now car makers are having trouble getting the parts that they need to keep their manufacturing lines open. This is sad news for us because it means that many items, such as the computer systems, are not available to order. If they can be found, they may take a long time to receive them, which leaves you without a car. For this reason, most claims on the newer cars will be for replacement, rather than fixing.
Final Thoughts
No matter what we all do, or how much people complain, the increase in auto insurance premiums will continue to rise. The changes throughout the nation affect everything within the country. Price increases are an aspect of life that we have all become accustomed to, but the last couple of years spoiled us. The discounts and money returned were nice, but we all knew that it would not last forever. As the future continues to creep up on us all, the insurance sectors will continue to increase prices until the world gets back to some semblance of normal. From there, time will deal with the tale.
As I write this we are already well into the new year and it’s becoming clear 2022 has a very different outlook from last year when the “everything rally” was fuelled by easy money, ongoing COVID recovery and mitigation spending programmes, the market’s belief central banks would act to avoid any market instability from derailing sentiment, and COVID uncertainty.
This year has opened with a much clearer perspective on how quickly central banks will act to address inflation, normalise rates and unwind the quantitative easing programmes that juiced markets with liquidity over the last decade. Welcome back to grown-up markets!
The critical uncertainties are how destabilisation rising/normalising rates become, how inflation – “transitory” or “persistent” – develops (and the danger it morphs into stagflation), and how quickly the global economy puts COVID-19 behind it to start growing again. That leaves geopolitical tensions over Ukraine and with China as the other known unknowns.
My tech valuation stupidity indicators – ARK, Bitcoin, Tesla - opened the year into negative numbers suggesting fundamental analysis is coming back into vogue.
In short, investors are going to have to think hard about what this market is telling them through 2022. The game is changing. One aspect I expect to change dramatically is “euphoric” market sentiment – the everything rally fuelled speculation to supercharged irrational levels. As a famous boxer never said: “I go into the fight prepared with a plan to get rich – which I stick with right up till I get punched hard in the face”.
Sentiment, especially towards get-rich tech scams, is changing. My tech valuation stupidity indicators – ARK, Bitcoin, Tesla - opened the year into negative numbers suggesting fundamental analysis is coming back into vogue. To be fair, Morgan Stanley disagrees with me on Tesla – predicting a rally to $1400 on the back of improving numbers and it’s already on the final lap of the EV marathon when everyone else is still tying their shoelaces… really? I predict everyone could be making decent EVs within a few years. But they won’t be… and to find out why, keep reading.
I would never grace my market haverings with the legitimacy of being “predictions” but let’s run through some ideas for the coming year.
Stocks
Inflation is nailed on – which is perversely good for stocks on a relative basis. The upside will come from higher corporate dividends as the globe recovers from COVID. Sound stocks which will continue to beat risk-adjusted bond returns. But it will be a selective market – distributable profits matter as rates rise, spelling a crisis for the tech sector where unprofitable firms telling the pursuit of size over returns will struggle. In a rising rate environment, fundamental value stocks will outperform. I’m also expecting an ESG backlash to benefit the detest oil majors as energy shortages in Q1 trigger a fundamental review of climate change transition, and the acknowledgement we can’t dump gas overnight and expect the global economy to keep working.
If we assume the global economy stages a covid recovery I’d expect a knew jerk Q1 market rally, before rising rates and lower liquidity sees a pretty flat second half.
Consumers
This is not going to be a good year for consumers - tax rises, massive increases in energy bills, inflation of food, accommodation, and modern necessities like Netflix will dramatically hit discretionary spending. Wages are likely to remain sticky for most workers, unless they are prepared to move into the more challenging sectors like service, entertainment and logistics where wages are rising. Issues like consumer exposure to interest-free debt (like Klarna) could prove “interesting” – if discretionary spending falls, then so will the amount of consumer free-cash to service debt.
Inflation
Forget transitory – that’s a 2021 expression. Supply chain bottlenecks triggered inflation – but they have themselves spawned significant consequences. We’re now seeing higher wages and supply chains evolving. Energy prices will hoick inflation. While 6-7% inflation rates will characterise the early part of the year we may see moderation to 4% later – but that will be remained sustained as the economy adjusts and finds a new equilibrium at a higher permanent inflation rate.
Bonds
The market now expects the Fed could hike four times this year. The Bank of England has already hit the button. Rising rates mean a bad year for bonds – but remember they are also the ultimate safe haven if markets snap. We’re likely to see an acceleration of corporate defaults which have been artificially low for over a decade due to ultra-low rates allowing unfit companies to survive – and that could get very messy due to terminally dismal liquidity in bond markets – which will set like concrete when the selling starts. Corporate spreads will widen – and the markets will have to relearn the fundamentals of credit strength.
Crypto vs Gold
No contest. Gold will win. Crypto enthusiasts can argue gold is as destructive to the environment as Bitcoin. Really. But it’s also real. Bitcoin isn’t.
Energy
2021 demonstrated the dangers of Energy Sovereignty. Without it, nations are vulnerable – as Europe is finding out. Ensuring sufficient stocks of energy – particularly oil and gas – will become paramount. ESG concerns will be dismissed as it becomes clear the optimal routes to Net Carbon Neutrality by 2050 depend on a phased approach with gas replacing coal before gas can be replaced itself. The likelihood is for oil and gas prices to remain elevated through 2022.
Renewables
Will 2022 be the year the world wakes up to the fact wind and solar might be marvellous in terms of fooling the people we’re greening the planet? They are the least efficient source of power, more expensive than expected to maintain, but can achieve easy funding at tight levels because every institutional investor wants to show off how green and ESG compliant they are by holding renewable assets. A better route to zero carbon involves a much wider range of non-CO2 emitting, but more “difficult” energy sources such as tidal, nuclear and clean gas, and mitigants like reforestation and better waste carbon sequestration. These are all achievable – but difficult. Nuclear fusion – will remain a tomorrow solution. I haven’t mentioned hydrogen – because it’s far more difficult than folk expect.
EVs
A world where Rivian made 1400 cars in 2021 but is worth more than the German auto sector has never made much sense. It makes even less when we appreciate that every single EV on the planet today is based on lithium batteries. Lithium is a nasty, dirty dangerous element that will kill us all if it leaks into the water table. Whatever Elon Musk says, it is very difficult to recycle. If we are going to make 35 million EVs by 2030, then we either mine every single atom of it on the planet or hope that a friendly asteroid comprising pristine lithium and cobalt makes a soft landing (as it didn’t happen in the film “Don’t Look Up”). Otherwise – we probably need a rethink on EV power – soon!
2021 has also been the year that brands have started to embrace embedded finance as a potential tool to solve the issues. Smaller-scale companies have been leading the charge, offering innovative products built around embedded finance, from crypto rewards to interest rates linked to physical health. As they have provided these proofs of concept, bigger and bigger fish have started to explore the possibilities available to them.
In 2022 we expect to see an explosion of new embedded finance use cases - from consumer, sports and healthcare brands. Our research shows that young people, or 51% of 18 - 24-year-olds, are open to accessing financial services from brands they love and trust and 42% are interested in a credit card from their favourite sports team. To date, we have mainly seen embedded finance delivered as a standalone product, but by building experiences. there are also possibilities to create enhanced customer experiences with financial services built seamlessly in.
The potential here is enormous and largely untapped, with different opportunities available to different sectors. For example, football teams have a really passionate fan base who regularly buy tickets and merchandise from their favourite club. Through embedded finance experiences clubs could expand their offerings, going beyond the current tickets and merchandise paradigm to also connect fans to hotel and travel deals for away matches. All of this can be handled in one app with seamlessly integrated payment and the opportunity for fans to accrue loyalty points redeemable against exclusive experiences. This both removes any friction points around access to financial services and payment while improving the loyalty strategy.
We know that loyalty is an important consumer consideration. Some 38% of consumers feel more loyal to a brand if they receive rewards, for example. However, there is also widespread dissatisfaction with loyalty schemes. It isn’t difficult to see the issue - most loyalty schemes only reward customers when they spend with a specific brand, which limits how often consumers can engage with the scheme.
With a loyalty scheme built around an embedded finance experience, brands can expand their loyalty schemes to encompass any purchase their customer makes, which means they can be part of their daily lives in a positive way while building a stronger relationship. For example, we are working with McLaren and QNTMPAY on creating a debit card with unique F1 based rewards, up to and including pit lane access on a race weekend.
What is particularly exciting about embedded finance experiences is that we are just starting to scratch the surface of what is possible. As customers become more familiar with the seamless journeys they can take, the demand for these experiences will increase and brands will be able to innovate further and push the envelope for what is possible. We can’t wait to see how these experiences are going to evolve over the next twelve months!
Digital assets are powered by blockchain technology, which is a distributed, immutable, and public ledger that contains a list of all transactions processed within a network. More specifically, blockchain is a chain of blocks or data structures where transaction data are permanently recorded. Blocks also have a record of some or all of the blockchain’s previous transactions. In summary, blockchain technology creates a secure and tamper-proof method of recording transactions.
However, this does not mean that it’s impossible for bad actors to infiltrate someone's wallet and steal their crypto holdings. Cryptocurrencies are built on public-key cryptography (PKC), a cryptographic system that uses public and private keys. Public keys allow users to receive cryptocurrency transactions—meaning it’s not dangerous to share these keys publicly. However, a private key is needed to unlock those transactions and prove that someone is the owner of the crypto received. Private keys should never be shared—ever.
Private keys are like a gateway to a wallet's crypto holdings—and the only security measure protecting users from thieves and malicious access to the wallet. Since the key is a highly sophisticated string of letters and words, it is highly improbable for a user to randomly guess it. However, if a bad actor gains access to a wallet's private keys, they can transfer all of the crypto inside the wallet. Therefore, crypto users need to scrupulously choose a safe place to store their private keys.
Among the different methods of storing cryptocurrencies, there are also different levels of vulnerability. Much of this depends on who has access to a user’s private keys.
Centralised Cryptocurrency Exchanges Are Prone To Hacks And Exploitation
The majority of crypto users prefer to store their crypto holdings on centralised crypto exchanges, and for good reasons. Crypto exchanges constitute the easiest and most user-friendly ways to buy cryptocurrencies. Many of these reliable crypto exchanges provide users with hundreds of trading pairs, the ability to cash out into fiat currency at any time, and the option to choose from a wide range of payment and withdrawal methods. Not to mention that centralised crypto exchanges have done a nice job of creating an easy-to-use and friendly platform—which can be rare in the digital asset space.
However, these exchanges are always prone to security breaches and hacks, as centralised crypto exchanges hold their users’ private keys. As a result, popular exchanges have billions of dollars worth of digital assets, which makes them an attractive option for hackers. Furthermore, at times, the trouble may also originate from within the exchange — i.e., the exchange may mismanage or even somehow lose the private keys.
Just recently, major crypto exchange Crypto.com was hacked for more than $34 million worth of digital assets. The incident affected 483 of the exchange's users, who were drained from their crypto assets without any authorisation. Crypto.com claims all of the affected users have been reimbursed, but the incident reminds everyone that centralised exchanges—despite their convenience—are not 100% secure when it comes to storing crypto assets.
The Many Ways To Store Cryptocurrencies
Mobile, desktop, web, and most exchange custody wallets are categorised as hot wallets. In simple words, hot wallets are online wallets that run on internet-connected devices like computers, phones, or tablets. Hot wallets are easy-to-use as they enable users to access their funds at any time and make transactions quickly, but they lack security. These wallets generate private keys on internet-connected devices, which creates a vulnerability.
Hot wallets are designed to be used for small amounts of digital assets or temporary purposes. These wallets can be compared to checking accounts, which are suitable for storing only spending money while the bulk of the money is expected to be stored in other forms, such as savings accounts. Examples of hot wallets include MetaMask, Coinbase Wallet, and Edge Wallet.
Another type of wallet is the cold wallet, also referred to as an offline wallet or cold storage. Unlike hot wallets, cold wallets are not connected to the internet which makes them much safer. These types of wallets usually come with software that enables users to view stats regarding their crypto holdings without the need for the internet.
An example of a cold wallet, and arguably the most secure type of crypto wallet, is a paper wallet. A paper wallet produces public and private keys that can be printed out on a piece of paper, without which no one can access digital assets stored in those addresses. Paper wallets are very rudimentary and have no corresponding user interface.
Hardware wallets are another type of cold wallet. In general, these are devices in the form of a USB drive that store private keys but are not connected to the internet. One major advantage of these wallets is that they are not affected by viruses that can easily compromise hot wallets and steal one's private keys. The two leading hardware wallet manufacturers are Trezor and Ledger.
It is worth noting that cold wallets require some level of technical knowledge to set up. Further, while all types of crypto wallets come with UI/UX hurdles, cold wallets are considered even more difficult to work with. Many users have lost funds due to errors and a lack of familiarity with cold storage.
Beware Of Crypto Scams
It is important to choose the right type of wallet in order to make sure bad actors don't stand a chance of stealing your crypto holdings. It is equally important to be aware of scammers and to not hand over your hard-earned, well-secured crypto assets to an illegitimate prospect.
The crypto industry's eye-popping growth has attracted a horde of scammers and defrauders who are constantly trying to discover new and creative ways to trick crypto users and steal their assets. While their techniques evolve every day, their principle is almost always the same: they promise considerable returns within a short amount of time.
Prevalent types of crypto scams include fake celebrity endorsements, fake giveaways, and rug pulls. Therefore, users need to stay attentive and do proper research before investing in a crypto platform.
According to a report by blockchain analytics firm Chainalysis, more than $7.7 billion worth of digital assets were stolen via scams in 2021. Notably, Finiko, a Ponzi scheme that posed as a legitimate BTC investment firm, accounted for more than $1.1 billion of that tally. Finiko attracted big investors by promising returns of up to 30% monthly.
Some traders prefer to avoid the custody of digital assets altogether by turning to various derivatives trading as a means of access to cryptocurrencies. There are several different ways this can be achieved, from futures to options, and even trading binary options contracts. However, all of these represent a sophisticated means of trading and should only be undertaken by experienced traders.
For those who prefer to buy, store, and trade cryptocurrencies directly, a general rule that can help avoid scams is to abstain from new and non-reputable crypto firms, particularly those that offer well-above-average returns. Furthermore, investors should always keep two golden rules in mind, to be safe: only invest what they can afford to lose, and, if it’s too good to be true, then it usually is.
The Main Financial Benefits Of Forex Trading
1. Trade From Any Location
Typically, all online trading can be conducted from any location and time if the trader has a reliable internet connection. It allows you to pick the place and time of your preference. Moreover, most exchange platforms have tools to help traders' initiate and execute actions automatically through their accounts. For example, you can customise your account to buy or sell currencies when they hit some value, thus making an easy profit.
2. The Potential For Big Profits
The possibility of making colossal trading profits is the primary reason many people opt to trade. You’ll need to diligently learn the skills and know what type of trade is more beneficial. For example, forex trading is the leading global financial market, which isn’t closely regulated compared to other digital channels such as commodities and bonds. The currency market is ever open, subjecting the rates to fluctuation, depending on the market dynamics. You’ll need to understand all the concepts if you want to win.
This requires you to carefully pick the Exchange Traded Fund (EFT) you purchase and the time to acquire it. You should scrutinise the Contract for Differences (CFDs) on the platforms. The CFD limits will help you decide on the positions (short or long) when buying and selling.
3. Minimal Capital Investment
You don’t have to spend a fortune to start online trading. Since the online trading market isn’t supervised institutionally, there is no consistency in trading rules, timeframe, or fees. Forex traders, for example, do not need cash reserves since they can open and close trades with significantly lower amounts, unlike other investors.
4. You Can Benefit From Uncertainties (Economic And Political)
Trading allows you to take advantage of the uncertainties in the economy and politics. One of the critical ingredients of success in digital trading is forecasting. While this skill can be hard to grasp, you can master it with dedication and effort. It lets you know what could happen and how the event may affect the market.
Some uncertainty levels are challenging but not impossible to predict. However, such uncertainties can present traders with exceptional skills in predicting golden opportunities to make a good fortune.
5. Trade Whenever You Are Ready
You can temporarily stop trading if you’re cash-strapped or have a tight schedule that can not allow you to trade effectively. Online trading does not require the traders to avail themselves at a specific time or for a particular duration—stop and start whenever convenient for you.
This flexibility also gives you the luxury of not buying or selling assets when you feel that you could make more if you wait. Besides, the trading markets are always open, meaning they are continually operating and have fluctuating rates depending on the dynamics.
How Can I Start Trading?
Do you have a credit card and have been planning on joining any trading programs but aren't sure if it's good for you? You only need to understand a few things to get started.
First, you must realise that this is a high-risk enterprise with the potential for highly significant returns. As a result, it is critical to select a skilled and reputable broker or a trusted app.
After you've created a solid working connection with your broker, they will assist you in establishing a demo trading account to help you get acquainted with the procedure. Fortunately, you will not pay any amount while using the demo account.
What If I Have No Capital To Start Trading?
Trading is, in many aspects, the ideal business. However, you must have some capital to begin. You may have the needed trading skills, but the gains you produce will never be good enough if you don't have a substantial quantity of trading capital. Fortunately, there are incredible platforms like Viva Payday Loans, which can offer you start-up capital for your trading. It offers payday loans online same day ranging from $100 to $5000, with repayment terms ranging from 2 to 24 months and interest rates ranging from 5.99 to 35.99%.
You Can Start Online Trading Today
Online trading is an ideal business that doesn’t need workers, supervisors, offices to rent, or products to sell. As an individual trader, your start-up and operating expenditures are minimal; you only need a computer, a workspace, and affordable trading software. With just a few requirements, the profit margins are significant when trading is performed wisely and efficiently. Furthermore, online trading comes with many benefits, such as the ability to trade from anywhere and at any time, the potential to quickly earn lots of cash, small capital, among other advantages.
B2B businesses are increasingly enticed by the appeal of B2B e-commerce platforms, which unlock powerful analytics, feed them real-time customer data, connect tools and sales channels, and even help to re-energise customer experience (CX).
Like just about every trend in the digitalisation space, B2B e-commerce shot up in the wake of COVID-19. At a time when many offices, wholesale stores, depots, and warehouses had to close, or severely limit the number of people allowed on site, B2B e-commerce helped keep other sales channels open. But B2B e-commerce isn’t just a pandemic fad that’s fading out as we return to “normal.” On the contrary, as 2022 continues, we’re likely to see even more B2B businesses moving to e-commerce platforms. Here’s what’s fueling that shift, and why it’s not likely to go away any time soon.
The rise of the ‘business consumer’
B2B buyers are also consumers, and the line between the two personas is becoming increasingly blurred. Today, everyone is used to the personalisation, fast response times, self-service ordering experience and ease of comparison that they enjoy when shopping online, and we want the same experience in our work lives.
It’s even more true for millennials, the first digital-native generation, who make up a greater percentage of B2B buyers every year. Research by Gartner found that 44% of millennial business buyers want a seller-free sales experience, compared with 33% of buyers from other cohorts.
That preference was only strengthened by the pandemic. After several months of shopping only, or primarily, online, B2B customers lack the patience for phone calls, RFPs, email threads, and in-person meetings.
With an e-commerce platform, B2B businesses can offer a personalised customer journey, range of payment methods, and transparent pricing and stock information that the business buyer of today and tomorrow craves.
The growth of omnichannel sales
Another way in which B2B sales trends are mirroring those of B2C is the growth of omnichannel sales, with McKinsey reporting that 83% of B2B leaders see omnichannel driving more leads and sales than traditional approaches. Buyers expect to be able to switch effortlessly between channels without anything disturbing their shopping experience, whether they’re buying a smartphone, office supplies or a CRM solution.
B2B e-commerce streamlines omnichannel sales, making it possible to connect and manage all your channels from a central operating hub. It also supports automation, so you can ensure that prices, stock levels, and delivery times are accurate, adjusted in real-time, and consistent across every channel, no matter how often they fluctuate.
The increasing complexity of B2B sales cycles
B2B sales journeys are growing more complex all the time, with different pricing structures and bundled features. Additionally, B2B buyers are following the trend of consumers and demanding more personalised solutions and product suggestions, which requires rich customer data, powerful analytics, and encyclopedic resources documenting every product feature and the pain point it comes to resolve.
It’s extremely difficult for human employees to meet these expectations, and even harder for them to do so within the short timeframe that buyers demand.
B2B e-commerce platforms can track customer behaviour, crunch data to understand customer needs, and integrate those insights with data about inventory levels and competitor pricing and offerings to produce timely, relevant customer recommendations even about complex bundled products with dynamic pricing.
The precarious supply chain
The supply chain crisis of 2020-21 may have been sparked by the pandemic, but it wasn’t created by it, and it’s not going away with the development of vaccines. Now that COVID-19 has thrown a spotlight over the systemic flaws in the system, they are impossible to ignore. What’s more, things might get worse. Successive variants continue to disrupt shipments in unexpected ways, and Forrester predicts that “shortage” will be the name of the game in 2022.
As components, raw materials, and finished products all risk being hard to find at crucial times, shipment routes have to change quickly. With market conditions fluctuating, B2B businesses will need to be able to react fast.
The superior data and analytics delivered by e-commerce platforms offer visibility into customer preferences and purchase history, supporting improved demand forecasting, while also giving insight into logistics performance so sellers can choose better shipping partners. It also gives B2B buyers transparency into stock levels, shipping times, and real-time pricing, helping avoid the frustration of having to make changes after placing an order.
The ‘great resignation’
Between the “great resignation,” an ongoing shortage of digital talent, and so many fatalities and long-term disabilities due to COVID-19, there are gaps in the workforce that are likely to continue to go unfilled for a long time to come. Just like many other verticals, B2B businesses are feeling their impact and need ways to plug the holes. B2B e-commerce is one such solution. By automating many time-consuming sales tasks, B2B companies can assign human employees to tasks that can't be replaced by automation or robotics. At the same time, automation helps to reduce the risk of manual errors and speed up transaction times.
B2B e-commerce platforms could save the day in 2022
With B2B businesses facing more, not fewer, challenges in 2022, the adoption of e-commerce platforms is only likely to accelerate. By helping enterprises cope with multichannel sales and marketing, a fractured supply chain, labour shortages, complex sales, and changing buyer expectations, e-commerce platforms are likely to play an ever more important role.
Assaf Tayar, Managing Director at BCG Platinion, explains what insurance trends you should be paying close attention to in 2022.
For businesses to set effective plans and goals, they must have a full understanding of their operating environment, trends and challenges. Of course, while the pandemic has been the obvious major source of disruption to the insurance industry, firms need to reflect more widely on how conditions have impacted their operations. In particular, the pandemic accelerated digital transformation across the world. For the insurance industry, the role of technology across all aspects of the business is essential, especially as more people take up flexible working or decide to work remotely for the foreseeable future. These new developments are forcing business leaders to re-evaluate how their business operations and user experience fit with what customers expect in a technologically advanced world.
In this piece, I share some of the insurance priorities to consider and even respond to this year.
1. Cloud will become essential
Today, more leaders in the insurance sector now understand the value of cloud computing. In fact, estimates predict that the cloud computing market size will reach $1.2 trillion by 2028. Keeping up means the industry will begin to take a cloud-native approach, like many other industries that are already using the technology as part of their business infrastructure and operations.
This will come as no surprise to anyone as most of today’s software solutions are cloud-native. Whether it’s to access the plethora of third-party solutions available, improve efficiencies or increase cost savings, this trend will continue to gain momentum. As such, we’ll continue to see insurance companies look for solutions that help them accelerate their cloud migration efforts.
2. InsurTech solutions will lead the way
Just as the banking industry was revolutionised by FinTechs, the insurance industry is joining the digital revolution. InsurTech, this year, will be key to modernising technology stacks to get the most value from IoT, data and cloud, meaning InsurTech will become the norm.
Yet this means SaaS-based solutions built on APIs will need to be put in place to deliver personalisation on a much greater scale. Due to the level of competition in the market, the modernisation of the insurance industry will continue to grow at a fast pace. The sector's maturity will depend on the richness of solutions InsurTech makes possible. With the most modern, effective systems, this growth will enable businesses to provide convenient and direct value propositions to both customers and clients.
3. A wider ecosystem will be API driven
More and more new platforms are being built daily and we’re already seeing the development of microinsurance products that can be plugged into different marketplaces. As a result, this drives product simplicity, as well as ensures focused customer engagement and services.
The acceleration of this trend will continue in 2022 and the insurance sector will take a larger role in this wider technology ecosystem. Next, the focus for business leaders will be to gain value from the technology, which will require better use of APIs and the development of partnerships with open architecture. For example, with health insurance like Vitality, premiums are flexible if customers make healthier lifestyle choices, like going to the gym regularly. It’s here that open APIs are vital to track and verify customers’ patterns, for example through connecting to customers' fitness apps. In some parts of Europe, this has already begun to happen and will become even more prominent in 2022.
4. Data management will be used at scale
According to the Global Consumer State of Mind Report 2021 by Trūata, 76% of global consumers believe that brands need to do more to protect their data. And the need to have effective and efficient solutions to cope with GDPR, cybersecurity and the like, when managing data has never been more crucial.
Insurance organisations will start to see huge benefits from using data platforms once they’ve moved their IT infrastructure to the cloud. Although there won’t be an explosion of new technologies in this area, we’ll see insurance companies deploying more effective solutions at scale and leveraging it to fulfil its true potential in 2022.
5. Cryptocurrency payments will continue to surge
Our financial ecosystem is currently undergoing an evolution and insurance organisations are developing and embedding into tech more than ever. Currently, some insurance players are building payment mechanisms by leveraging crypto solutions, while others offer cryptocurrency protection. For instance, in the US, auto insurance company Metromile announced it will soon let customers pay with cryptocurrency and even receive pay-outs in digital currency.
In 2022, there will be even more growth in technologies that enable alternative ways of making payments. We’ll start to see smaller players in InsurTech provide instant payments that don’t even exist right now. It will still take time for there to be a global cryptocurrency market, but blockchain will continue to provide new opportunities that will impact the insurance industry.
6. Working with other industries will remain important
Insurance has played an important part in several different industries, but this will increase in 2022 for the automotive and healthcare industries specifically.
In the automotive industry, many modern cars have various IoT sensors which collect data on how a car travels. The telematics of the data is embedded in the car, meaning data can be sent back to relevant organisations – such as an insurance company – if an accident were to occur. Over time, this technology and data will continue to grow and insurers will have a much more sophisticated approach. Here, AI will play a big role, and this will be driven by the insurance sector.
There’s also a huge opportunity in the healthcare industry. There is a growing ecosystem of services and devices available to help individuals live a healthy life and recent findings from CCS Insight suggest that Covid-19 led to a 20% growth in smartwatches. As more products enter the market, having the right solutions to store and process data and ensure it’s compliant, will be key.
In June 1919, two daring British aviators guided a modified Vickers WW1 bomber across the Atlantic to complete the first non-stop transatlantic flight in just under 72 hours. Fifty years later, in March 1969, André Turcat piloted the supersonic Concorde’s maiden Toulouse flight which lasted only 27 minutes— barely enough time for dear André to finish his Orangina.
While perhaps romanticising these two feats, they underscore a notable dynamic.
Increased levels of innovation during difficult times create an amplified economic impact and opportunity in the ensuing years. This impact may not be entirely appreciated, most especially as it relates to today.
Innovating the Tech and the Business Model too
Furthermore, an unprecedented level of tech innovation, coupled with a maniacal focus on business model innovation/rationalisation, should deliver an amplified economic, earnings and productivity impact for years to come.
A recent McKinsey report stated three out of four executives believe changes brought about from the pandemic will be a significant growth opportunity. And all executives agreed, Dolly Parton’s “Jingle Bells” rendition was “one of the greatest holiday songs ever.” Thanks for that, McKinsey!
While more efficient business models are lovely, for publicly-traded equities, some of this is already baked in, as equity valuations are pricier than a fully-refundable Concorde ticket from CDG to Rio.
Although this double scoop of innovation provides ample opportunity broadly, there is also an avalanche of irrationality and noise, especially within the uncharted crypto and NFT worlds.
To quote universally-cherished Laura Dern in genius David Lynch’s Wild at Heart: “This whole world is wild at heart and weird on top.”
So, we try to retain a soberish Warren Buffet/Cathie Woods style view on fundamentals, tangibles and execution.
Innovation to Mitigate the Flurry of 2022 Risks
As we look to deploy capital in 2022, we think this innovation-led and justified business model framework provides a grounded and reassuring logic for navigating the uncertain days ahead.
With a Royal Flush of risk (political + market + COVID + inflationary + interest rate), we are biased to deploying capital to private companies over public equities, early-stage businesses over mature, and innovators over brands. Our favourite sectors remain healthcare and technology with an affinity for companies that include unique and agile models, strong and bold operators, and underlying proprietary tech with clearly-defined adoption paths.
Last year, after investing in and later assuming the CFO role at Los Angeles-based startup Binj, a new platform that solves the “what to watch next problem”, these themes helped frame the way we operated and communicated. In telling our story and in preparing to launch the platform, we beefed up messaging around tangible strengths—a novel TV and movie discovery tool powered by a proprietary AI engine and new emotional-driven rating language—and how we would execute on thoughtfully building a community to navigate streaming content overload.
Going sector by sector, within the below, we’ve outlined our thoughts on some disjointed topics du jour and investment areas we like.
Economic Growth and Labour Reshuffle: We expect overall economic growth will be stronger than predicted with innovation’s fruit and the most dramatic reshuffling of the job market seen in a century fuelling new activity. We’re not putting a lot of weight on 2021’s final GDP % growth number though, given 2020 was oh so weak and there is a lot of noise in the numbers. Nonetheless, 2022 growth should continue at a similar cadence.
Interest Rates & Inflation: With almost every single holiday party and central bank meeting behind us, it is clear that inflation is even more serious than we previously thought. The Fed policy pivot and The Bank of England’s more dramatic and unexpected rate increase from 0.1% to 0.25% (the first increase in over three years) underscored this.
Global Equity Markets: With valuation multiples rich, equity markets will remain choppy and range-bound, especially with higher interest rates.
Deep Tech: Some of the greatest technologies have always existed courtesy of Mother Nature and some entrepreneurs are well-positioned to harness, mimic and unleash that which has always been present. Companies such as Silicon Valley-based Koniku blend the right ingredients of healthcare, technology, and biosecurity. A Shazaam for smells, the company’s central tech elegantly takes what already works amazingly well in the natural world (a dog’s sensory apparatus) and packages it into a small device that can seamlessly detect explosives, narcotics, and COVD in real-time.
Our favourite sectors remain healthcare and technology with an affinity for companies that include unique and agile models, strong and bold operators, and underlying proprietary tech with clearly-defined adoption paths.
Africa: An emerging middle class, swift mobile adoption, and green pastures for innovation and leapfrogging, yield tailwinds. We like founders who courageously collaborate with various stakeholders (employees, partners, regulators), genuinely feel the pulse of the customer and utilise tech to magnify opportunities on the ground. In particular, Nigeria-based Lifestores Healthcare (a rapidly expanding network of tech-enabled pharmacies), and Kenya-based Koa (an innovative, community FinTech platform), are well-positioned.
Preventative Health Services: The pandemic has enabled consumers to access healthcare more broadly than ever before and raised awareness on preventive care. We think companies that are empowering users with enhanced access and new types of information such as Phosphorus (a preventive genomics testing company that enables customers to optimally map their health journey based on their DNA), and Freenome (an early-stage cancer detection platform), are ahead of the curve.
FinTech: Growth will remain hot with fewer brick and mortar banks of yesteryear, increased consumer comfort around mobile banking, and new one-stop platforms that go beyond full-service legacy bank offerings. One such innovator is Pallo (an all-in-one platform designed specifically for freelancers, which helps users manage all personal and business finances, from money management to taxes).
2022 Should Be Better
Whilst history is obviously not always the best predictor of future success (Google Glass, Apple Maps, Speed II: Cruise Control) this innovation factor is objectively real and potentially more potent than in 1919 or 1969.
While in this piece, we have pointedly omitted some dramatical forces at play that are above our predictive pay grade (China’s muscle and Russia’s flex, crypto and NFT chaos, the painful $USD demise, omicron, Kristin Stewart’s portrayal of Diana in Spencer), on the simplest level we think 2022 should be markedly better than 2021 for most things but most certainly not for air travel.
About the Author
Steven Barrow Barlow serves as the CFO of BINJ and co-runs Andon Okapi Holdings, an investment firm providing financial, operational and strategic support to founders with big ideas & unique tech. After a decade as an equity analyst on Wall Street covering the consumer and healthcare sectors, he co-founded Kallpod in 2014, a tech solutions provider for the hospitality & healthcare industries.
__________________________
No Investment Advice
The content in this article is for informational purposes only and should not be construed as financial advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, or offer by Steven Barrow Barlow, BINJ, Finance Monthly or any third-party service provider to buy or sell any securities or other financial instruments.
The threat is becoming increasingly clear. It’s a massive threat to markets, society and economic growth. Expect to read a lot about it.
The big news in December is Jerome Powell, Fed Chair, finally admitting the post-COVID inflation we’ve seen building over the past 18 months is anything but “transitory”. It’s here to stay. That’s come as something of a surprise to many analysts who went with the central bankers dismissing inflation as a likely short-lived issue, a mere post-pandemic hurdle that would swiftly be passed by. Over the coming weeks, sentiment is likely to shift towards new long-term inflation scenarios as the inflation numbers remain stubbornly high. It’s difficult to imagine an inflationary scenario that’s positive.
Inflation is currently running a shocking 5-6% across the Western Economies – for how much longer, or how much higher is a “how long is a piece of string question.” We don’t know. Inflation is now in a spiral of supply chain hick-ups, wages, earnings and contradictory expectations. Inflation may ease tomorrow. It may not. Be a boy scout… Prepare for a rough ride.
Unexpected consequences include fears that inflation will boost rising pandemic populism, leading to protectionism and the end of globalisation – a less connected global economy is likely to prove inflationary, especially in terms of increased tariffs.
What is, perhaps, most frightening, is how little financial professionals – from central bankers, investors and traders – really understand what inflation is and how it emerges. It is overly simplistic to state inflation is “everywhere a monetary phenomenon” as the uber-monetarists proclaim. That fundamental ignorance could create massive policy mistakes and market uncertainty.
Unexpected consequences include fears that inflation will boost rising pandemic populism, leading to protectionism and the end of globalisation – a less connected global economy is likely to prove inflationary, especially in terms of increased tariffs.
The next time some “expert” tells you inflation is all the fault of Governments borrowing too much, ask them to explain how and why. What a vast number of market participants don’t get is inflation doesn’t follow rules – it follows sentiment. Governments and central banks have been stuffing the global economy with liquidity for the last decade, but it's only in the last few months the pandemic shock has crystalised real inflation. Why… Because suddenly people fear inflation.
Let me coin a new mantra on inflation: “Inflation is everywhere what people fear it might become…”
Conventional wisdom assumes inflation can be mitigated inflation by cutting liquidity; central banks raising interest rates (tightening), while governments can raise taxes and cut spending programmes (austerity). These monetary arguments are logical but also highly simplistic and create largely erroneous hopes and expectations. Hope should never be a strategy. Conventional wisdom is cheap.
The confusing reality of the system of multiple demand and supply transactions we call the global economy is it’s anything but a series of binary questions. It’s unfeasibly complex. If you raise interest rates that may cause a rise in the relative value of the currency, thus reducing inflation from imported goods, but it will equally create a series of shocks through the economy in terms of more expensive loans, impacts on retail jobs and services and rebalance the whole demand/supply equation as a trillion new decisions will be made by economic participants.
Hope should never be a strategy. Conventional wisdom is cheap.
Financial markets work because participants are constantly evaluating every nuance of information to determine future prices. Prices are a reflection of the market putting together everyone’s perception like some enormous voting machine. Inflation is just a particularly important part of the economic picture influencing the market vote at present. Should we let it panic us?
Maybe not - we’ve just undergone a period of unmatched and sustained global monetary creation through the past 12 years – since 2009. Stock prices have tripled – posting massively higher gains than the relatively lacklustre economic growth we saw over the same period. It’s financial asset inflation, pure and simple. It’s happened because stocks look relatively cheap to ultra-low interest rates, and central banks have been pumping liquidity into the financial system (in the hope of creating economic activity) via QE.
The result is massive financial asset inflation on a cause and effect basis: make money cheap and financial assets will rise. (Conversely, that’s why everyone predicts a stock market crash when rates (the price of money) rise!)
But long-term Financial Asset Inflation since 2009 has created a whole series of massively destabilising consequences. The rich have become phenomenally richer – buoyed by soaring stock prices. Generally, they are exactly the same people saying governments are borrowing too much, taxing them too much and it’s time to cut spending! Expectations that markets will only keep going higher have sucked in legions of retail investors convinced they’ll get rich (only if they stay lucky). The results of chronic inequality, political blindness and insane financial optimism make for a hopeless unbalanced and unfocused economy.
The real value of the global economy is not the market cap of an electric car company worth trillions, but the number of electric cars being produced and sold. (These are very different metrics – one is perceived future value, the other real value.)
What a vast number of market participants don’t get is inflation doesn’t follow rules – it follows sentiment
Inflation in the real economy is not cause and effect. It’s a constantly evolving perception and expectations led threat. It changes as the votes with the markets change and the behaviours of economic participants change.
The supply chain crisis as the global economy reopened triggered a host of consequences around the globe. What’s happened has been complex and spawned a host of unforeseen knock-on effects. The coronavirus and successive lockdowns are still throwing new shocks into the system – as a result, the system is becoming increasingly chaotic and impossible to predict as the threat board keeps changing.
This is roughly how it worked:
Economies around the globe shuttered themselves through lockdowns and working from home. Goods become scarce – from construction lumber to microchips at both micro and macro level, from local shortages to national level. Prices of scarce goods rocket – often temporarily till new supply leaven shortages. However, workers perceive higher prices and demand higher wages to compensate – triggering wage inflation. Prices become elastic to the upside and sticky to adjust downwards. Companies raise margins and prices to meet wage demands, fuelling further wage demands and declining demand. The intricate balances between demand and supply become increasingly chaotic, and more so when new COVID lockdowns raise new supply chain threats. Throw in an energy inflation spike and you create a recipe for disaster.
The key thing is not that inflation is simply due to the consequences of too-low interest rates (the monetary phenomenon) or rising government indebtedness (pumping money into the economy) but is due to the expectations of crowds towards perceptions of rising costs.
In a crisis, human behaviour tends to become increasingly difficult and fractious to predict. The unpredictable behaviour of crowds makes Central Bankers policy choices fraught. Traditional inflation responses like austerity, raising taxes, tighter monetary policy, are as likely to cause market instability and generate increased expectations to push inflation as to ease it.
The time to cut liquidity, the amount of money sloshing around the financial system was a long time ago. That money – that’s fuelled financial asset inflation – is now pouring into the real economy in terms of buying real assets like property, pushing up real inflation.
Complex eh? But don’t panic… yet.
As most global activity defaulted to remote, FinTechs were able to cater to this trend by offering digital tools that solved a whole host of new problems businesses were now faced with - in the case of Soldo, for example, by offering visibility for finance teams as they increasingly found themselves in the dark as a result of remote working.
As a consequence, it’s been pleasing to see a significant increase in FinTech investment over the last year, in spite of a rocky economic landscape. This has been particularly pronounced in the US, where private equity investments have grown from tens of billions of dollars several years ago to hundreds of billions, approaching trillions of dollars - if counting the market caps of firms that have gone public.
But what does 2022 have in store for the sector? Will the industry continue to thrive and what challenges will need to be surmounted in order to ensure this?
The post-pandemic boom
2022 will hopefully see the end of the COVID-19 pandemic and, with this, a subsequent economic boom. Soldo’s recent report with Coleman Parkes entitled Open for Business looked at how finance teams are planning for this and the opportunities and challenges they see. We found that almost three quarters (70%) of UK businesses are prioritising growth in the next 12 months – with 44% saying their strategy will be to raise new capital, and a third (33%) to acquire businesses through mergers and acquisitions.
The report also highlights that (72%) believe greater visibility, control and oversight across expenditure has a positive impact on revenue growth. In preparing for this, finance teams are turning to investments in technology, and specifically automation tools. Two thirds (66%) cited investments in IT tech and automation as key drivers of profitability, while almost three quarters (74%) have invested in automation to manage employee expenses. FinTechs will hence have a critical role to play in facilitating post-pandemic growth and need to capitalise on the opportunities that the needs of businesses will present.
The great “switch on”
The economic instability brought about by the pandemic caused many businesses to shift into survival mode and cut back on spending, limiting expenses to the strictly essential. However, with the end of social distancing measures, events, meals, drinks and travel are increasingly once again becoming a part of working life.
For finance teams, this great “switch on” means having to manage an influx of POs as workers look to enjoy their renewed freedoms, and this is only set to increase into 2022. This will have to be balanced against managing the costs of the coronavirus crisis, with Bounce Back Loans and deferred tax payments having to be paid off.
With so many UK businesses geared towards growth, the pressure is on finance teams to deliver a holistic view of spending, control costs and implement systems that provide the business with a level of data insight that is essential to driving growth – in whichever format that takes. This pressure provides further opportunities for the FinTech sector to step in and offer solutions. Without the right tools and services in place, finance teams will undoubtedly be wasting precious time that could be better spent on initiatives that aid strategic growth.
Europe vs the World
The global FinTech landscape is in constant flux and it will be interesting to see how this plays out in 2022, particularly how European FinTech businesses hold up in the face of increasing competition from elsewhere in the world.
Providing that COVID-19 has no further nasty surprises to throw our way, we can expect the next 12 months to see a huge global economic rebound.
The EU is currently home to only 7.2% of worldwide unicorns. The sum value of all EU unicorns and EU tech and digital champions already public is dwarfed by the value of today’s non-EU big tech. This allows the latter to buy out potential disruptors, solidify industrial control, build scale, and manage the global digital and tech agenda – and we should expect this trend to continue upwards in 2022.
We have watched the development of China’s FinTech space with particular interest and expect to see a continued rise in 2022. As of April 2021, the sectors home to the highest number of unicorns in China were technology and telecommunications, and transportation and logistics. However, Chinese unicorns active in finance or insurance had significantly higher market valuations than unicorns in either of these sectors.
Maintaining high levels of innovation is a key challenge for European FinTech. In the EU, ensuring innovation is essential to both territorial cohesion and growth. Government, as well as business, has a role to play in facing this challenge. It can do so by reducing fragmentation of regulation across the EU’s main innovation areas and removing unnecessary obstacles. It is equally important to have close cooperation with the existing expert organisations who unite various European innovation industries.
Final thoughts
We all hope that 2022 will bring a return to true normality and much needed social and market stability across the globe. Providing that COVID-19 has no further nasty surprises to throw our way, we can expect the next 12 months to see a huge global economic rebound. This will mean that opportunities for the FinTech sector will be in no short supply. But FinTechs, investors and governments alike must not be too complacent about the inevitability of bouncing back. Careful planning and management will still be required to ensure opportunities are not squandered.
That means working to build your savings and ensuring that you make the most of your time and money.While some wealthy households have saved money during the pandemic, other individuals with uncertain work or who have been on furlough might have depleted their savings.
You might be looking to save more money in the future to give you a financial cushion in case of an emergency, or you might simply want to be able to treat yourself again. Whatever your situation, if you’re looking to save money and make some extra cash in 2022, then you need to make sure that you stay safe.
Many ‘get rich quick’ strategies advertised online turn out to be fraudulent, with a large proportion of them turning out to be pyramid schemes. To help you earn extra money and stay safe in 2022, here are some practical tips for money-savvy individuals.
Be Careful What You Click On
When you’re searching for money-making schemes online, you might find that many of the links look suspicious, and the websites appear poorly maintained. That’s because some cybercriminals prey on people who are looking to make extra income by making websites and links that can launch viruses onto their computers. These viruses can then encrypt their data and hold it for ransom, or they can simply steal your financial information and then take money from your bank accounts and more.
To avoid this issue, you should make sure that you have anti-virus software installed on your computer and other internet-connected devices, such as your smartphone and tablet computer. Your anti-virus software will usually protect you from infected links by blocking you from clicking on them. You should also be vigilant when you’re opening digital communications and be wary of unsolicited proposals for money-making schemes so that you reduce your chances of encountering a virus.
Use Refer And Earn Schemes From Trusted Brands
Many businesses offer easy ways to make extra money, but you should only consider ones from trusted brands. You should also check the terms and conditions to ensure that you won’t be in for any nasty surprises or will only earn credit, not actual cash.
Companies such as Lebara offer clear and easy refer and earn programmes that allow you to earn real money simply by inviting your friends and family members to get a SIM-only plan. If you sign up for the Lebara refer a friend programme, you can get real cash for every person you get to use this innovative mobile network. By only using trusted businesses such as this one and checking the terms, you can ensure that you don’t waste your time and get the most money for your effort.
Check How Much You Have To Spend
Some money-making schemes, even from respected brands, can involve you spending money first. For example, you might be able to get money off your purchases, but only if you spend a specific amount of money. You might also have to pay a specific amount before you can access specific tools to help you earn extra cash. If you’re freelancing and using a platform, you might have to pay to use it and respond to potential employers. As such, you need to make sure that you understand exactly how much you’re paying before you start using a new tool or platform. If you’re concerned that the cost is too high, then look elsewhere for a more cost-effective solution.
Make Your Own Products To Sell
As well as using schemes from trusted brands, you can also consider creating homemade products to sell. This approach is a safe way to earn money and ensure that you don’t get caught up in a pyramid scheme or land yourself with a load of tacky merchandise that you can’t get rid of. When making your own products, you should consider talking to your friends and family. They can help you to find out what they would like you to make and would buy. After all, unless your idea really takes off, you’ll probably be earning primarily from friends and connections and growing your sales through word of mouth. So, you should talk to your network of loved ones and find products that might tempt them.
Choose Trusted Online Marketplaces
For anyone who is making their own products to sell or who wants to earn money from second-hand items, you’ll need a platform to sell on. If you’re only selling to friends and family, then you could also consider allowing them to collect items from your home or passing them on via other friends. For strangers, you will need a more formal arrangement. While you could consider an in-person market stall, online e-commerce platforms can save you time, effort and, most importantly, money.
However, you need to make sure that you’re careful when using online marketplaces. Choose reputable online selling platforms that allow you to control your sales, such as Facebook Marketplace, Amazon or eBay. When you’ve found an online marketplace, you need to make sure that you’re careful when trading online. Make sure you receive confirmation of payment before you send out the item, and make sure that you package it correctly to reduce the chances of damage in transit.
Do Your Research And Stay Up To Date On Changes
Once you’ve found a money-making strategy, you should do your research and get first-hand insight into how safe each approach is and if it’s worth your time. Check out online reviews of money-making schemes and strategies and read social media posts on them to see what people who’ve already tried them have to say. While you don’t have to take all of these reviews at face value, you should use them to inform your approach. It would help if you also tried to stay up to date on new scams to ensure that you’re always one step ahead of criminals looking to exploit hardworking individuals like yourself. Following financial news blogs or listening to podcasts about cybercrime can help you to learn about and avoid potential new scams.
Know What To Do In Case You Encounter A Scam
Following these tips will help you to avoid the most obvious online schemes that are designed to take your hard-earned money while promising to multiply it. However, criminals can be incredibly smart, and they are always adapting their approaches. If you do get caught out, it’s important that you work to get your money back as soon as possible. That means learning what to do if you’re the victim of online fraud. If you don’t report the issue promptly and proactively protect your computer from further infiltration, then you could face further problems moving forward. So, you need to be proactive and make sure that you deal with the situation as calmly as possible.
Earning extra money is a great way to make yourself feel more financially secure, and it will allow you to treat yourself to the things and experiences you’ve always wanted. By using these tips, you can ensure that you don’t get scammed while trying to earn extra cash.
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.
4. Blockchain
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.
Final Thoughts
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.
