The Future of Finance

By Saar Yahalom, Co-Founder and CTO of Rewire

Fintech trends in 2022 are re-framing the way we do finance. These are not fleeting fads, or far-off future predictions – fintechs are fast transforming the financial sector, and the pace is quickening. Businesses that want a stake in future financial markets need to keep pace with these fintech developments, if they’re serious about securing continued growth.

Mobile payments ARE mainstream

Customers have never had as many ways to pay for items as they do today, and most of these are digital and contactless. Hastened by the pandemic, virtual payment options are mainstream, and virtual currencies and blockchain payments will only further change how consumers view mobile banking and fund transfers. A great example of the way mobile payments are driving change is through Google Pay and Apple Pay, which have encouraged more and more people to leave behind their physical credit and debit cards. As new payment methods emerge, financial institutions that adopt digital payment features will be the ones to attract and retain customers.

The rise of ‘digital-only’ banking

I’m not talking digital-only payments, but digital banks. The technology is already here, and there are many benefits to eschewing bricks-and-mortar for the virtual world. Digital banking and free-floating financial platforms are already changing the way people bank today – generation Z, digital natives born with a smartphone in their hands, are particularly open to new digital experiences and willing to trust a digital-only bank. As they move through their careers, it’s not hard to imagine a day – in the not-too-distant future – when most of the world’s banking takes place entirely online.

A proliferation of vertical banks

With the rise of digital banking comes an increasing number of vertical banks – financial services tailored to the specific needs of smaller groups of people. Several fintechs, including Rewire, have homed in on a specific audience, such as freelancers or small businesses (or migrants in our case), and are providing tailored financial services to meet their unique needs. There are many segments of society that have been underbanked and underserved in the past, and these groups represent huge potential for fintechs – or any financial institutions – that see opportunities to expand services to these growing markets.

The emergence of Banking-as-a-Service

In recent years, Banking-as-a-Service (BaaS) platforms have emerged as a cost-effective and efficient way to deliver financial services. Banks must adapt to a service-oriented and modular approach to the delivery of new and innovative digital services and BaaS is a critical component in expanding their digital offering. We will see more and more legacy financial institutions collaborating with fintechs to deliver BaaS, so they can enhance their existing offerings.

From competitors to collaborators

Collaboration is the key to success in today’s financial industry. Established banks and other financial institutions have a lot to offer, but they are wise to look to the technological innovations being brought to the table by start-ups. In a time of accelerating change, new, innovative financial services are vital to stay competitive. All financial organisations, old and new, need to see opportunity – not competition – in collaboration. Working together, for mutual benefit, businesses can grow, whether it’s in terms of market penetration or the breadth of products and services on offer.

An increase in embedded finance

Embedded finance has been growing over the past year and will continue to do so as more and more organisations look to collaborate, not only to grow, but also to create increased stickiness for their customers. It’s about providing more of what your customers need, in one place. Banks are increasingly becoming service providers to non-banks and institutions – companies that want to offer financial services as part of a wider proposition. This kind of collaboration is exciting, as it allows fintechs (and additional industries) to provide a more holistic service in their niche.

Payroll is next for fintech innovation

In its short life, fintech has focused mainly on payments from consumer to merchant. But that’s all set to change. In the coming months, we will see companies taking payroll to another level. Look out for salary on demand, salary advances, and early direct deposits as they become mainstream.

Banking with a conscious

From consumers, there’s an ever-increasing demand for service providers to have a conscious, and this will only become more pronounced. Businesses increasingly need to demonstrate that they can have a positive impact both socially and environmentally, on top of heightened expectations for customer service and efficiency. Promoting financial inclusion or helping to reduce poverty are two real ways fintechs can make a difference both for their customers, and in the wider world.

Of course, there are many other trends impacting today’s financial services and shaping the fintech ecosystem. Regtech improvements and innovation in cross-border services will be the main enablers for a new set of banking services in a world in which borders are becoming more fluid.

Thanks to technology, modern banking is fast evolving. Those financial institutions that embrace and collaborate with fintechs will be the ones that maintain a competitive edge and flourish in a rapidly changing market.

About Author:

Saar Yahalom is a co-founder and CTO of Rewire, a cross-border financial services platform designed to meet the unique needs of migrants. The fintech provides money transfer, debit cards, local payment accounts (IBANs), insurance products and the ability to make cross-border bill payments.

The team were inspired to set up Rewire after one of them highlighted the financial struggles of a Filipino caregiver close to the family. By providing fair access to financial services Rewire is working to narrow global financial gaps, reduce inequality and promote financial inclusion for migrants.