2021 was a year of recovery and opportunity for many, after months of turmoil caused by the pandemic. But while many industries have struggled to recover from the turmoil, many fintech companies have been able to thrive in a somewhat hostile economic climate as a result of innovation, digital disruption, profitable financing, and a vision of how products can change consumers’ lives with help. Business grows.
From a personal perspective, it was great to see that as an industry we have demonstrated our continued resilience and ability to focus on customer needs that has seen a boom in open banking and contactless payments in the wake of the pandemic. The resilience and disruptive mindset of established players and emerging spoilers means the competition is getting fiercer, making everyone work harder, smarter and ultimately pushing the boundaries of what is possible.
It is therefore not surprising that UK fintech funding more than doubled to $11.4 billion in the first half of 2021 alone, indicating investor confidence in the industry. This will pave the way for more opportunities to innovate and disrupt financial services for the better.
2021 for IFX has been one of the best years so far since we started in 2015. We’ve expanded our capabilities, worked with new partners and supported our team with great success. All of which we aim to further amplify further in the coming year.
As we look to 2022, it is important to consider emerging new trends and movements that are set to change the industry and how we as a company can play our part in what will be another groundbreaking year.
2022 . trends
1. Building FinTech Partnerships
In 2022, we will see greater collaboration between service providers across a range of industries. Being a collaborator, not a competitor, is the key to success in this sector because we are all looking to identify a way to adapt to a modular ecosystem. As a starting point, every company should recognize that success comes from taking advantage of others’ strengths to amplify their own. Companies must recognize that they cannot be the best at everything and counter this by creating strategic partnerships that prevail. Ultimately, collaborating with and incubating other professionals within the sector allows fintech companies to expand their capabilities and differentiate themselves from competitors. As the industry grows, to be the best in the field means not offering the cheapest cost or narrow margin, but incorporating value-added propositions that make the product more attractive to its customer base. For example, this year IFX successfully partnered with Volt to connect IFX’s virtual IBAN numbers with Volt Connect allowing UK and EU based merchants to realize the full potential of open payments.
2. Changing consumer payment habits through open banking
Open banking has been a hot topic in 2021 and we know that work will continue in the space this year. While the majority of the work in the past year around Open Banking has been somewhat conceptual, it has paved the way for some innovative ideas and an improved customer experience. Undoubtedly, there are many benefits to open banking, settlement is faster, rails are cheaper and arguably safer for customers, but it is now facing the challenge of encouraging customer adoption by competing with the convenient and simple UX of card payments offered by smartphones and computers. As such, I expect that changing the template for how people pay will dominate the majority of the conversation and work we do as an industry in the coming year.
3. lifting system
At IFX, we always aim to identify industry best practices from our regulatory expertise, and ultimately break the mold of bad practices that have historically tainted the forex industry. While regulation has certainly taken center stage, and captured most high-level discussions, I would expect a greater focus on PSPs and EMIs while testing both security and operational resilience to ensure that client funds are adequately protected. Getting tough on regulation is a way for payments and fintech companies to separate themselves from the pack. The Financial Conduct Authority (FCA) is also certain to take further regulatory action as it begins to clear the backlog related to the coronavirus, which in my opinion would be a welcome move to help combat some of the problems we’ve seen this year. Companies need to be sophisticated when it comes to making sure they comply with regulations. Properly protecting client funds is a challenge that requires constant attention, so we are likely to see this as a commitment in which companies are investing heavily.
4. The introduction of the digital currency of the Central Bank of Britain
This is likely the door for many banks to embrace crypto-related technology. Blockchain infrastructure is an incredibly powerful tool that can revolutionize the industry with an array of features not limited to instant global settlement capabilities and transaction monitoring. The reluctance to adopt this infrastructure, along with a number of crypto assets, appears to come from the use of the old dark web, where assets were used for illegal purposes and money laundering; But again, so does criticism. In the end, we should not be afraid of the capabilities that this revolutionary development can carry because of the negative connotations. Instead, the focus in 2022 should be on education and equipping our industry to understand the power of blockchain so that everyone can understand the good it can do, the risks it carries and how to mitigate them.
So what now?
2021 saw major innovation steps taken in payments and fintech, but as we look to 2022, that pace doesn’t seem likely to settle. The industry will continue to adapt and grow to meet changes in consumer and business habits, and we will see partnerships, open banking, regulation and digital currency as key strategic milestones across the board. At IFX, we continually strive to be the best in our fields and by partnering with other brands, tightening our regulatory processes, continually educating ourselves and others about developments in the industry, we look forward to even greater growth in 2022 and beyond.