2022 Under the Microscope – What’s in Store for Fintech?

By Ion Fratiloiu
A look into the year ahead for fintech, uncovering ways to build a better future and the importance of partnerships across the financial industry

The past 12 months have been a turning point for fintech and the wider financial services sector. As consumers, we've all been party to significant lifestyle changes imposed by the pandemic, with businesses forced to adapt to these new behaviours. Financial institutions across the UK have been leveraging emerging technologies to serve the evolving needs of their customers better, and this work is far from over.   

It can be unwise to make any bold predictions about what's to come without first looking at the evidence of what's happened in recent months. So, to investigate how the market is responding, Yobota recently commissioned an independent survey of more than 250 UK banking and financial services (FS) leaders.

The survey delved into their experiences with digital innovation and explored their strategic plans for the coming year. 

So, with 2022 at hand, here's what we uncovered... 

The rise of BaaS

Banking-as-a-service (BaaS) has firmly broken into the mainstream in 2021. Under pressure from more and more digitally, native customers frustrated with fragmented or inconvenient customer journeys, banks, fintechs, and brands are joining forces to drive the future of banking. 

Buy now, pay later (BNPL) has stolen the spotlight this year, but this is just the tip of the iceberg where the potential of embedded finance is concerned. That said, it is one of the clearest examples of how innovators can use fintech to improve online experiences

Looking ahead, 44% of banking and finance firms plan to invest in BNPL or other embedded finance solutions in 2022. While to date, it has primarily been retail customers who have experimented with this newfound ability to stagger their payments, I expect the BNPL-for-business market to blossom soon. For startups in particular, who are often paying large invoices in lump sums, and on an ad hoc basis, BNPL solutions that could help them manage their cash flow better and overcome the difficulties of obtaining a loan would be a welcome development. 

Meanwhile, almost three in five (58%) of the businesses polled plan to invest in BaaS solutions. With all eyes on this fast-evolving sector, we will no doubt see a rise in recognisable customer brands looking to integrate financial services into their offering with the support of financial institutions and fintechs. 

Expect to see a range of new and accessible options for customers, with embedded finance extending far beyond the reach of traditional financial services. Embedded banking knows no limits: retailers, airlines, carmakers, hospitality venues, you name it. BaaS will be stepping in to bridge the divide between consumers and the businesses they interact with, making it easier for non-banking companies to integrate financial services directly into their offering and deliver exciting propositions to established customer bases. 

Building a better future 

The financial sector has been carving out creative avenues for sustainability and inclusion with increasing urgency in recent times, with enough momentum to carry through into the new year. New eco-conscious tools have already been tabled for 2022 by 69% of the banks and FS firms surveyed, with a further 64% saying that their organisation intends to invest in products that drive financial inclusion. 

We can see from recent developments that the customer is increasingly positioned at the core of banking, with players in this space looking for ways to improve the lives of their end-users. Expect the industry to focus more heavily on its environmental and social obligations and work even harder to create propositions that bring real value – greener loans, in-app carbon tracking features or more accessible and affordable financial products. 

Open banking transitions to open finance 

Much of the above has been made possible thanks to the rise of open banking. Our research found that the vast majority (63%) of UK banking and FS institutions plan to leverage open banking opportunities in the next 12 months, indicating that open banking – or, more accurately, open finance – will extend beyond its current limits.
What does this mean for customers? Many will already have had a taste of the advantages that open banking can deliver, particularly those who have enjoyed more personalised products and tailored financial advice as a result. As the number of open finance adopters increases, instant payments, borderless commerce, and made-to-measure customer experiences will become a reality.  

In the coming year, the movement of financial data will become even easier where required, granting greater autonomy to end-users and providing fintechs and financial institutions with an enhanced ability to deliver exciting propositions for customers. 

No progress without partnerships 

As consumers explore new financial tools that promise to streamline and enhance their lives, the key players involved in delivering embedded finance and other solutions must keep trust and transparency at the heart of their offering. Partnerships already play a critical role in uniting best-in-breed technology with strong banking experience. Still, as the financial services landscape becomes ever more interdependent, fintechs must assure customers that these services meet the highest technology and compliance standards. 

Therefore, fintechs cannot progress on the abovementioned fronts without solid partnerships. Yobota's' research is evidence of the appetite for collaboration, with over three-quarters of those surveyed (78%) saying that greater cooperation is needed between banks and technology players. As the fintech world becomes increasingly interconnected, we will undoubtedly see these partnerships power the invention of even more solutions that excite customers and help them reach their financial goals. 


About the authorIon Fratiloiu, Head of Commercial, Yobota.

From launching his financial career at Deutsche Bank, Ion spent many years consulting in the equity capital markets space and leading sales growth for FTSE500 company Fiserv and core banking provider Thought Machine. He joined Yobota in 2021 to launch its commercial operation, leading GTM strategy and building a diverse and multi-faceted team to take the company to the next stage of growth.


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