[eMarketer] In 2022, fintechs brace for trends that will make or break them

Fintech startups attracted a record number of users and funds in 2021, marking a turning point for fintech.

In response, incumbent financial institutions (FIs) accelerated their digital transformation initiatives, and Big Tech companies threw their hats into the finserv ring.

Meanwhile, use of fintech tools became widespread among consumers, fueling a retail trading frenzy and a boom in the adoption of more cutting-edge products like crypto.

According to eMarketer, in 2022 the fintech funding boom will usher in a new era of digital offerings. Fintechs will use their funding to improve the financial health of neglected customer segments and bring more customers into the fold. For example, we anticipate greater focus on the needs of hourly and salaried workers from fintechs like Origin and CloudPay which offer in-demand services such as earned wage access.

Big tech will make big moves in banking and insurance. Big Tech’s “on ramp” to financial services will be embedded finance—the inclusion of financial products and services in the customer journeys of nonfinancial companies. In 2021, VCs allocated $4.25 billion in embedded finance investments, almost three times the amount of 2020 funding, according to PitchBook. And while payments is the most mature area of embedded finance (see Apple Pay and Google Pay), we expect banking and insurance to become the next battlegrounds for embedded finance.

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