6 Fintech Trends To Pay Attention to in 2022
The pace of innovation in fintech (financial technology) has been speeding up, and businesses are wise to pay attention. Advancements in fintech can enhance customer experience and engagement, while streamlining how customers shop and buy things.
Moreover, the lines between digital-only and in-store experiences are increasingly being blurred as technology can help fill gaps and make both in-store and remote shopping experiences more engaging and seamless.
Here are six growing trends in fintech and related online shopping technology that everyone should know about:
1. “Digital-first” interactions
Digital experiences used to be “nice to have” and complementary to in-person experiences, but that’s changing fast and increasingly they’re the priority. More companies are supporting their customers’ desire and need for “digital-first” interactions as the primary way they provide services.
Financial institutions are a great example. Many banking apps were originally designed to supplement customers’ in-person banking experiences. But the rise of digital-only banks means more customers are coming to rely on digital platforms as the primary way to interact. To remain competitive and meet people’s changing preferences, traditional banks have made their digital experiences more robust by offering more features and capabilities—such as providing their customers with digital receipts of their payment card transactions and more detailed transaction data.
This also provides merchants a unique opportunity to engage their customers by providing additional information about their purchases in the channels customers are using, well after a purchase has been completed.
Why it matters: As digital becomes a primary way that customers engage and transact, merchants must think about their total customer experience — and recognise that consumers increasingly expect a smooth and seamless shopping experience whether they’re in-store or at home.
2. QR codes for payments
Contactless and cashless payments are here to stay, and quick-response (QR) codes are an increasingly popular way to facilitate them. Customers can easily scan QR codes with their smartphone and be directed to an ecommerce page or directly to a payment platform.
For example, some restaurants have started giving customers QR codes to make it easy to pay their tab. The customer can simply scan a code on their pay slip using their smartphone camera and be directed to a mobile payment app with their bill details and the ability to pay directly through the app. Everything happens through the app, and no signing is necessary.
The ease and increasing familiarity with using QR codes has been helping to drive their adoption. In fact, Juniper Research predicted that QR codes would become “the most used digital commerce mechanism in terms of volume” over the next few years, comprising 27% of all digital commerce transactions by 2024.
Why it matters: As merchants offer more QR code-based payments, they need to know that these types of mobile-based payments can increase their CNP fraud risk.
3. Augmented and virtual reality shopping
According to IBM’s 2020 U.S. Retail Index report, the pandemic has accelerated the shift to digital shopping by about five years. In light of this trend, more merchants are trying to enhance and personalise the digital shopping experience through mobile apps and other tools that allow for “try before you buy.”
Augmented reality (AR), for example, can let consumers see what that sofa, flooring or paint color will look like in their living room before they take the plunge. Virtual reality (VR) experiences can immerse shoppers in experiences, such as concerts or conferences, from the comforts and convenience of their home.
AR and VR help provide more enriching shopping experiences and bridge the gaps between physical and digital commerce.
Why it matters: While these technologies can enhance and personalise the shopping experience, they can also potentially open the door to more CNP transactions and ultimately chargebacks. While AR and VR are filling the gaps between shopping in person and online, there’s still a chance that something a shopper buys isn’t exactly as it appears through those technologies. When that happens, customers may be more likely to dispute charges.
4. Voice-activated search and shopping
More shopping today is happening via smart speakers such as Alexa and Google Home, and growth of voice recognition speakers is expected to soar. One analysis found that 35% of U.S. households had a smart speaker in 2019 and projected that 75% would have them by 2025.
Voice-driven interactions give customers more of a “self-serve” experience, as they use vocal commands to get the information they need and find products or services they’re looking for both locally at physical merchants and online. (“Hey Alexa, order more cat food.”).
Voice-directed customer service is also picking up, as companies make it easier for customers to ask specific product- or service-related questions directed to a particular merchant through, say, Alexa, to get fast answers.
Why it matters: While voice-activated shopping can give customers another easy way to buy from you, it could also potentially increase the number and types of transaction disputes—as people may mistakenly order things they didn’t intend to—as well as impact how disputes happen.
5. Biometrics-driven authentication
“Active” biometrics—such as using thumbprints or facial recognition to verify identities and authenticate users of banking and other services—have become commonplace. But increasingly, companies are realising that asking customers to take these extra steps is unnecessary and are turning instead to “passive” biometrics to eliminate the friction and improve the overall user experience.
Passive biometrics rely on analysis of behaviors, such as how fast someone types or how they move their computer mouse. People will start “seeing” less active biometrics as they increasingly run seamlessly in the background. What this ultimately means is that the authentication process will continue to reduce fraud and create less friction for the shopper—it’s a connection of data points working together to make the customer experience more secure while also less burdensome.
Overall, biometric technologies are expected to increase significantly, growing at a 13.4% compound annual growth rate (CAGR) between 2020 and 2024.
Why it matters: Biometrics are one part of taking a layered approach to fraud. Digital authentication helps reduce disputes. Read more about passive biometrics here.
6. “Versionless” cloud technology
As cloud software-as-a-service (SaaS) applications become the go-to, companies that rely on them are benefiting from the time and hassle savings of not having to update their software. New features and versions are integrated automatically and any glitches are resolved without requiring companies to download a “patch.”
Gartner has estimated that cloud services—which includes SaaS applications—will grow worldwide from $270 billion in 2020 to $397 billion in 2022.
Why it matters: Cloud-based applications are big game-changer as they make technology investments less time-consuming and ultimately less costly—meaning it’s far easier for companies to leverage new technology.
Staying Ahead on Fintech
The rapid acceleration of digital transformation happening right now means merchants can’t risk falling behind. They must be digital-ready and embrace technologies that provide the customer experience that people want and expect. At the core of this, each new technology changes the customer experience and fraud strategy for businesses. While there is great opportunity, it’s important to also understand the downstream impacts they pose – so you can choose the right tools that will adapt and scale to help keep your experience seamless, and your fraud and chargebacks low.