Biggest BFSI Trends to Watch out for in 2022

The banking & finance industry witnessed a significant surge in activity after the reopening of global markets. To mitigate the adverse consequences of the COVID-19 pandemic, digital transformation is continuing to drive the re-invention and innovation across all BFSI industries. 

With the advent of 2022, banking and finance institutions are seeing an institutionalized change and exploring ways to adapt to the new normal. Financial institutions are investing in offering a smooth customer experience. This has prompted banks, credit unions, and other financial institutions to take a closer look at their present goods and services and work towards exploring more opportunities. They are focusing on offering more client-centricity and personalization to improve the customer experience. 

Investment banks are utilizing the latest tech to realign and revamp their deal origination strategies. Environmental, social, and governance (ESG) banking trends are also enjoying the limelight in the ever-growing demand for sustainable investing. The market is further expected to undergo changes in the coming period.  

As we look forward to 2022, this trend will blur the lines between traditional financial services segments. Here is a curated list of top trends that will guide the course of the BFSI industry in 2022. 

Read more: The Future of Hedge Funds: Top Trends to Watch Out For in 2022 

Top Salient Trends that will Shape the BFSI sector in 2022 

Sustainable finance is not new to the BFSI industry, but it is now gaining popularity and hitting new milestones. With investors and stakeholders showing more interest in it, post the COVID-19 pandemic’s impact and the COP26 climate conference, major global organizations are announcing plans to work towards achieving net-zero carbon emissions. This has propelled the growth of ESG investments in the BFSI market. In 2022, corporate stakeholders and investors will jump on the bandwagon and increase their focus on implementing mandatory ESG regulations in their firms. Sustainability-linked bonds (SLB) will also gain popularity thanks to climate change commitments. 

Given the rise in blockchain and cryptocurrency, banks are slowly incorporating and supporting cryptocurrencies. With the rise in crypto consumers, banks are exploring ways to cater to their demands. 60% of crypto owners use their bank to invest in cryptocurrencies and blockchains. Banks are working towards making it easy for mid-size institutions to integrate crypto services into their digital banking platforms.  

Several payment networks are also following the trend. Many banks are feeling the pressure as they are seeing their peers offering crypto, and in this outright fear, many bank boards are pressuring the management to get into the crypto game. 

In 2022, many banks will jump on the crypto trading tack. Until now, bankers have plenty of legitimate reasons to resist cryptocurrencies, but not anymore, as this resistance may turn futile. 

In 2022 and beyond, customers may not visit physical branches of banking institutions as regularly as they used to. This does not indicate that banks will ignore their physical sites. To tackle this issue, traditional banks are incorporating internet banking solutions in their business model and using it as an advantage to entice contemporary customers.  

With the physical branch reimagined, banking institutions are moving towards building the branch of the future. To compete with the existing digital banks and to provide an enhanced client experience, banks are moving towards showroom-style design that offers the benefits of face-to-face encounters while converting their physical locations into customer training centers. It guides the consumers with the right advice and helps them learn the way to utilize technology to make their money go further. 

This future branch will include both features and self-service alternatives, communal space, and sophisticated technology, thus allowing customers to experience a hyper-personalized banking experience. 

In 2022, 28% of mid-sized financial institutions are expected to deploy real-time payments in the year 2022. The deployment of real-time payments will put many financial institutions at the front and offer a competitive advantage to secure more of tomorrow's fastest-growing companies. Payment modernization will help in fundamentally generating more revenue for banks. Faster payments will be one aspect of a broader trend, thus offering a breakthrough for financial institutions in 2022. 

 Read more: Top Trends That Will Shape Investment Banking In 2022 

Customer self-service is one of the fastest-growing banking customer experience trends. Customers can completely access their bank's resources from their mobile devices. 

Mobile banking apps are a must-have in today's evolving market, and banks without them are at a major disadvantage. These mobile apps capture a lot of data, which may be useless to the customers but is insightful for the banks. The banking apps help institutions to study consumer patterns and habits. With data analytics tools and machine learning algorithms, banks can extract important insights from this customer data and employ them to build new products, enhance their existing processes, empower customers, and offer a smoother banking experience. 

Banks are employing machine learning applications to process large amounts of data sets and reach valuable conclusions. AI & machine learning is helping them drive effectiveness and provide time-saving opportunities. These applications analyze the data and patterns in real-time, thus enabling quick decision-making. Several banking and FinTech organizations will adopt AI and machine learning practices to perform multiple functions, including lending approvals, fraud detection, risk monitoring, and investment predictions.  

AI (Artificial Intelligence) & ML (Machine Learning) applications are aiding in increasing the adoption of blockchain technology. Synonymous with cryptocurrencies, blockchain is experiencing a lot of utilization in the BFSI space. The new tech is helping to alter rudimentary processes and replacing them with highly secure, fast, and transparent processes. Thanks to machine learning, the financial sector will experience greater growth in 2022 and will likely continue. 

Faster transactions, newer payment methods, and improved accessibility will drive the BFSI sector in 2022. The focus of FinTech applications in the future will lead to an increase in the use of AI in organizations, thus leading to a rise in the popularity of contactless payment options.  

With customers more inclined toward apps, finance organizations will offer services like tap and go payments or buy now and pay later. Furthermore, to reduce the use of plastic and promote sustainability, more banks/ NBFCs are reducing their focus on card issuance and pushing digital transactions. 

By breaking the chain of traditional markets, digital banks will now take the monopoly in the banking world. They aim to make banking convenient and accessible. While most of the transactions would be carried out online, bank branches will experience a fall. These banks offer a cheaper alternative to the traditional banks without the need for physical branches. With advancements in AI, cyber security, biometrics, and online banking, consumers can now access and experience a wide range of personal financial services on their devices. 

Read more: Thinking of Crypto Investments? Watch out for the Ten Common Mistakes  

To Sum Up 

The BFSI sector has undergone a remarkable revolution. With the world slowly recovering from the effects of the Covid-19 pandemic, financial services are steadily changing their ways of doing business and the ways they communicate with their consumers. 

The last two years have seen a massive shift in the way consumers interact with the Banking, Financial Services, and Insurance (BFSI) players. With this change in consumer behavior, organizations are shifting their ways of communication. 

The previous year has put the spotlight on courage, resilience, empathy, and hope. As we progress ahead, the BFSI sector players will need to work on catching the pulse of the consumers and work on offering solutions based on the touchpoints they are most comfortable with.  

In 2022, the industry will experience a year of simplification. Through partnerships and consolidation, the sector will simplify the customer experience and the ecosystem. With consumers at the center stage, organizations are figuring out their pain points and working towards solving them. Seamless customer experience will play an inherent role in 2022. The future of the BFSI sector will be all about convenience and simplicity. 

With presence in New York, San Francisco, Austin, Seattle, Toronto, London, Zurich, Pune, and Hyderabad, SG Analytics, a pioneer in Research and Analytics, offers tailor-made services to enterprises worldwide.   

A market leader in the BFSI space, SG Analytics assists businesses with insightful relevant research along with sophisticated technology solutions. Contact us today if you are in search of a BFSI firm that helps in driving value-accretive decisions and executing efficient processes to enhance the efficacy of your investments.