Published by Jessica Weisman-Pitts
Posted on January 7, 2022
By Daumantas Dvilinskas, CEO and Founder of TransferGo
After the turbulent year before, 2021 has been a source of encouragement for the fintech industry. As a sign of the sector’s resilience and broader potential, fintech investment hit a new record of £18billion in August, while the UK government reaffirmed its commitment to fostering innovation through accommodating regulatory environments and offering renewed investment.
Undoubtedly, a calendar highlight was the publication of The Kalifa Review. A landmark moment for the industry, this official set of recommendations for the government to nurture and grow the fintech market, gave investors and business leaders alike a much-needed confidence boost. Similarly, a series of investment measures outlined in both the Spring and Autumn Budget, such as the new Infrastructure Bank or the Help to Grow scheme, laid the foundations for growth and signalled to the world why it’s an exciting time to be involved in UK fintech.
But with this support from the government and the investment being poured into the industry, what should we expect from 2022? Below is my top four predictions on what the sector can expect next year.
A transformation in how we approach talent
The UK finds itself at a talent cross-roads that could have long-term consequences. Initiatives like the Global Talent Visa are a step in the right direction. By encouraging businesses to recruit exceptional talent from all corners of the world and be entrepreneurial, the government is ensuring that the sector can attract a steady supply of skilled workers accelerate project timelines, source new investment, and ultimately contribute more to the local economy.
Yet in the same breath, the talent visa is but a drop in the ocean in trying to overcome and solve the skills shortage. To fulfil its promise, the fintech industry needs to appeal to those that may not have considered it a viable career or are looking to switch careers and build experience. This means looking beyond the CV or immediate job experience when hiring and taking on those with a general aptitude for the job, passion for innovation and change with the view to training people on the job. However, this is not possible without collaboration with the government. So, next year, it’s likely that fintechs will call on the government to expand its visa programme or relax rules on international talent, so the UK can continue to attract amazing talent and the fintech industry can continue to grow to be the number one hub for fintech.
Financial services will become hyper-personalised
In 2022, expect to see a greater focus on hyper-personalised financial services. Currently, the market is awash with one-size-fits-all solutions, adopted during the pandemic when there was an accelerated need for online, accessible, and secure services. Banks and financial institutions were forced to expedite their own digital transformation plans to compete with the value provided by fintechs. While this provided choice and helped drive financial inclusion when consumers needed it most, these cookie cutter services cannot last in a crowded market.
In the cross-border payments space, for instance, it’s critical that services reflect the nuances of the remittance market. Every corridor is different, and remitters often have niche requirements when looking to transfer money back home. At TransferGo, for example, we have built a specialist payments service for the migrant customer segment through corridors such as between the UK, Ukraine, Turkey and more. Next year, those with a blanket approach to money transfers, or indeed the wider financial services market, will find themselves falling out of favour. These companies will either need to pull back entirely or develop a bespoke approach to compete.
A greater investment in tech that keeps customers secure
One of the key responsibilities for fintechs in 2022, will be keeping customers protected from fraud. As the world gets accustomed to using digital payments, fintechs need to be vigilant. While financial loss is damaging to both the customer and financial services provider, fraud can cause emotional distress to customers and also impact the providers’ reputation, resulting in long-term repercussions. So, with fintech being a nascent industry, and a disruptor to established financial institutions, fintechs must do all in their power to maintain the trust built with customers.
Part of this will be a greater investment in automated technology that provides a robust first line of defence with strict Know-Your-Customer and Anti-Money Laundering protections. But next year, fintechs must go one step further and pay closer attention towards the importance of having empathetic and well-trained customer service agents available via multiple communication channels suited to customer needs. Fraud plays on emotions of confusion, scarcity, and urgency, so for those particularly complex or sensitive cases, automated websites and customer service bots will not suffice. Instead, human intervention is critical in delivering a personal, reassuring touch that ensures regardless of the situation, the customer’s needs are put first. This can be difficult, especially when the business operates across different markets. At TransferGo, we take pride in making sure our customer service is exceptional for every customer – which is why our agents are fluent in nine languages.
An increase in investment, mergers and acquisitions
With record breaking raises like Checkout.com’s $450m series C funding round in January, the fintech sector has not only demonstrated its buoyancy but cemented the role of digital in the future of financial services. As we head into 2022, it’s likely that the number, and value, of these financial deals will increase, powered by customer appetite for the convenience, security and cost-efficiency of fintech, that is otherwise difficult to experience with traditional players.
One segment of noteworthy growth is the remittance market which follows consumers no longer having access to high street options to send money. With new covid variants and countries going in and out of lockdown, this will likely increase in 2022. With fast-growth fintechs maturing and raising increasingly large amounts of money, it should follow that the industry will grow exponentially with some research estimating that the remittance market will grow to $930.44 billion by 2026.
At TransferGo, we raised $50m in a Series C funding round earlier this year and in doing so, maintained, and attracted new investors. This was not just a testament to the value we provide in delivering exceptional, reliable services to the migrant community, but a representation of a behavioural change as consumers adopt digital-first payment solutions in place of visiting a physical branch.
Final thoughts
Overall, 2021 has been an impressive year for the fintech sector and has highlighted the value and impact of digital in financial services. The support of the UK government, along with record breaking investment activity has truly made the sector thrive. As we move into 2022, there’s confidence the industry will soar as digital financial services become the de facto choice for customers and with that – it’s likely that we’ll see a deeper focus on personalisation instead of a one-size-fits-all approach as fintech’s look to compete for a bigger slice of the pie. What’s more, with a focus on growing the industry through talent, fintech is on track to truly revolutionise the way we handle, manage and move money.
By Daumantas Dvilinskas, CEO and Founder of TransferGo
After the turbulent year before, 2021 has been a source of encouragement for the fintech industry. As a sign of the sector’s resilience and broader potential, fintech investment hit a new record of £18billion in August, while the UK government reaffirmed its commitment to fostering innovation through accommodating regulatory environments and offering renewed investment.
Undoubtedly, a calendar highlight was the publication of The Kalifa Review. A landmark moment for the industry, this official set of recommendations for the government to nurture and grow the fintech market, gave investors and business leaders alike a much-needed confidence boost. Similarly, a series of investment measures outlined in both the Spring and Autumn Budget, such as the new Infrastructure Bank or the Help to Grow scheme, laid the foundations for growth and signalled to the world why it’s an exciting time to be involved in UK fintech.
But with this support from the government and the investment being poured into the industry, what should we expect from 2022? Below is my top four predictions on what the sector can expect next year.
A transformation in how we approach talent
The UK finds itself at a talent cross-roads that could have long-term consequences. Initiatives like the Global Talent Visa are a step in the right direction. By encouraging businesses to recruit exceptional talent from all corners of the world and be entrepreneurial, the government is ensuring that the sector can attract a steady supply of skilled workers accelerate project timelines, source new investment, and ultimately contribute more to the local economy.
Yet in the same breath, the talent visa is but a drop in the ocean in trying to overcome and solve the skills shortage. To fulfil its promise, the fintech industry needs to appeal to those that may not have considered it a viable career or are looking to switch careers and build experience. This means looking beyond the CV or immediate job experience when hiring and taking on those with a general aptitude for the job, passion for innovation and change with the view to training people on the job. However, this is not possible without collaboration with the government. So, next year, it’s likely that fintechs will call on the government to expand its visa programme or relax rules on international talent, so the UK can continue to attract amazing talent and the fintech industry can continue to grow to be the number one hub for fintech.
Financial services will become hyper-personalised
In 2022, expect to see a greater focus on hyper-personalised financial services. Currently, the market is awash with one-size-fits-all solutions, adopted during the pandemic when there was an accelerated need for online, accessible, and secure services. Banks and financial institutions were forced to expedite their own digital transformation plans to compete with the value provided by fintechs. While this provided choice and helped drive financial inclusion when consumers needed it most, these cookie cutter services cannot last in a crowded market.
In the cross-border payments space, for instance, it’s critical that services reflect the nuances of the remittance market. Every corridor is different, and remitters often have niche requirements when looking to transfer money back home. At TransferGo, for example, we have built a specialist payments service for the migrant customer segment through corridors such as between the UK, Ukraine, Turkey and more. Next year, those with a blanket approach to money transfers, or indeed the wider financial services market, will find themselves falling out of favour. These companies will either need to pull back entirely or develop a bespoke approach to compete.
A greater investment in tech that keeps customers secure
One of the key responsibilities for fintechs in 2022, will be keeping customers protected from fraud. As the world gets accustomed to using digital payments, fintechs need to be vigilant. While financial loss is damaging to both the customer and financial services provider, fraud can cause emotional distress to customers and also impact the providers’ reputation, resulting in long-term repercussions. So, with fintech being a nascent industry, and a disruptor to established financial institutions, fintechs must do all in their power to maintain the trust built with customers.
Part of this will be a greater investment in automated technology that provides a robust first line of defence with strict Know-Your-Customer and Anti-Money Laundering protections. But next year, fintechs must go one step further and pay closer attention towards the importance of having empathetic and well-trained customer service agents available via multiple communication channels suited to customer needs. Fraud plays on emotions of confusion, scarcity, and urgency, so for those particularly complex or sensitive cases, automated websites and customer service bots will not suffice. Instead, human intervention is critical in delivering a personal, reassuring touch that ensures regardless of the situation, the customer’s needs are put first. This can be difficult, especially when the business operates across different markets. At TransferGo, we take pride in making sure our customer service is exceptional for every customer – which is why our agents are fluent in nine languages.
An increase in investment, mergers and acquisitions
With record breaking raises like Checkout.com’s $450m series C funding round in January, the fintech sector has not only demonstrated its buoyancy but cemented the role of digital in the future of financial services. As we head into 2022, it’s likely that the number, and value, of these financial deals will increase, powered by customer appetite for the convenience, security and cost-efficiency of fintech, that is otherwise difficult to experience with traditional players.
One segment of noteworthy growth is the remittance market which follows consumers no longer having access to high street options to send money. With new covid variants and countries going in and out of lockdown, this will likely increase in 2022. With fast-growth fintechs maturing and raising increasingly large amounts of money, it should follow that the industry will grow exponentially with some research estimating that the remittance market will grow to $930.44 billion by 2026.
At TransferGo, we raised $50m in a Series C funding round earlier this year and in doing so, maintained, and attracted new investors. This was not just a testament to the value we provide in delivering exceptional, reliable services to the migrant community, but a representation of a behavioural change as consumers adopt digital-first payment solutions in place of visiting a physical branch.
Final thoughts
Overall, 2021 has been an impressive year for the fintech sector and has highlighted the value and impact of digital in financial services. The support of the UK government, along with record breaking investment activity has truly made the sector thrive. As we move into 2022, there’s confidence the industry will soar as digital financial services become the de facto choice for customers and with that – it’s likely that we’ll see a deeper focus on personalisation instead of a one-size-fits-all approach as fintech’s look to compete for a bigger slice of the pie. What’s more, with a focus on growing the industry through talent, fintech is on track to truly revolutionise the way we handle, manage and move money.
