Juniper research has announced their top 5 trend predictions for 2022 in the fintech and payments sector.
In a whitepaper on the subject, the research house has named the biggest trends of the year in fintech and payments to include the acceleration of instant payments, the surge of wallet-based digital identity, open banking becoming open and embedded finance, the merging of digital wallets and BNPL, as well as e-commerce fraud accelerating machine learning, tokenisation and biometrics.
Acceleration of instant payments
Juniper predicts that the volume of instant payments will grow to $102 billion globally in 2022. Covid has driven acceleration in instant payments but some countries have seen greater progress than others, as sometimes system roll-outs can take a number of years. The authors predict that in 2022 card networks and large payment companies will bring new value-added services.
“Card networks are already offering real-time payments schemes as part of their offerings, including for example, Mastercard Vocalink and Send,” said the authors.
“Alongside this, we are already seeing cloud-based payment hubs offering instant payment capabilities; offering easy integration with existing banking systems. The planned 2022 completion of migration to SWIFT ISO 20022, the worldwide standard for instant payments, will enable the roll-out of cross-border instant payment schemes, but these will take longer to scale, given the complexity.”
Wallet-based digital identity
The digital identity market is moving towards a single wallet-based approach, despite a number of competing business models.
However due to Apple’s recent Digital Identity scheme roll out and the European Commission’s future Eidas (Electronic identification and trust services strategy), it appears that a user-permissioned digital identity wallet will be the strategy of choice, the authors believe.
According to the report, “Under this model, the process is streamlined, and the user is in control of who accesses their data. This minimises manual work and increases overall efficiency.
Furthermore, the underlying technology is already in place – the technical capabilities are there, and have been there for a while, meaning that the market is in a place where these business models can emerge quickly.”
Open Banking becoming Open and Embedded Finance
Juniper analysts believe that vendors will rebrand their Open Banking services to become Open Finance and Embedded Finance as they seek to attract new clients in the market. Open Finance includes broader financial services such as credit cards and mortgages, while Embedded Finance brings non-financial and financial tasks together.
“Embedded finance is now seen as increasingly key to broadening the revenue bases of non-financial actors, which we have already seen being explored – Facebook Pay for example is a good example of where financial activities are being leveraging in non-financial areas.”
Digital wallets and BNPL merge
The authors recognise similarities between BNPL offerings and products, and digital wallets. As digital wallet services such as Paypal also offer BNPL solutions, and some BNPL providers such as Klarna are offering virtual cards that act like a wallet, the two solutions are coming closer and closer together.
E-commerce fraud accelerating machine learning, tokenisation and biometrics
As e-commerce activity has accelerated in recent years, so too has e-commerce fraud.
“The fraudsters are following customer activity. The increased volume of activity means a much larger threat landscape,” the authors report.
Machine learning, tokenisation and biometrics are all surfacing as solutions to combat fraud and increase security above existing measures.
“Fraud detection and prevention vendors will add new capabilities, such as machine learning and predictive analytics, and will become more compelling. End users will suffer less due to fraud, leading to fewer losses & accompanying effects, such as stress.”