Over the last two years, COVID-19 has disrupted every sector of the economy—and business banking has been no different.
On more than one occasion, this pandemic has shut down businesses and made gathering face-to-face exceedingly difficult. But it’s also acted as a catalyst for banks and credit unions who are on a path toward digital transformation.
If last year was any indication, 2022 will be another year where financial institutions take important steps forward to bring their business banking practices inline with customers’ rapidly changing expectations.
To get a better glimpse into what the year ahead may hold, we sat down with our CEO and Co-Founder Dan O’Malley and our Chief Strategy Officer Derek Corcoran to get their takes on 2022 fintech trends.
Numerated’s CEO on Fintech Trends to Watch in 2022
In a recent Q&A with The Motley Fool’s Bram Berkowitz, our CEO Dan was asked to provide three trends for the fintech space in 2022. While you can read the entire interview with Bram on The Motley Fool’s website, here are the top three trends Dan highlighted during the Q&A:
- Blurred Lines: According to Dan, in 2022, the line between bank and fintech will be almost indistinguishable. There are two trends at play here. For one, banks and credit unions are digitizing their business-lending experience. Fintechs, on the other hand, are applying for charters and becoming regulated banks. The result is more digital options than ever before.
- “We” Is Better Than “Me”: In the year ahead, Dan believes partnerships will proliferate. Here, we're expecting to not just see banks and credit unions partner with fintechs to better compete in an increasingly digital marketplace, but we also expect to see more fintech-to-fintech partnerships that allow vendors to provide even better tech to their customers.
- A New Battleground: Business lending will become the new battleground in 2022, according to Dan. We expect the spotlight to shift from the retail side of the bank, focused on consumers, toward the business-lending side. As neobanks and alternative lenders get more aggressive in the business-lending space, we believe traditional financial institutions will adopt new technology to fight hard to keep this market share, which is core to their business.
Three More Fintech Trends from Numerated’s CSO
To get a different perspective on 2022 fintech trends, we sat down with our CSO Derek to get his take on the big moments we can expect in the industry over the next 12 months.
Derek’s top three fintech trends include:
- A Wave of Consolidations: According to Derek, as the economy continues to recover, we’ll see an acceleration in the wave of mergers and acquisitions among regional banks. This will come as they continue to compete with fintechs offering increasingly advanced lending capabilities and efficiencies. In the last 20 years, including after the Financial Crisis of 2008, bank consolidation peaked at 5 percent. We expect to see that level or rise even higher in 2022, especially when we consider the pent-up demand created by mergers delayed due to the pandemic. The result: A smaller number of larger financial institutions fighting it out, with customer experience becoming the defining differentiator.
- BBaaS Making Its Debut: Business Banking as a Service (BaaS) is a term you might not be familiar with. But in 2022, Derek says, it will build momentum as a new customer acquisition channel for banks and credit unions. Pockets of success were demonstrated in recent years like Marcus/Apple Card and Synchrony/Google Finance. Today’s digital loan origination systems make it easy for financial institutions to embed their business banking products directly into third-party apps and services. In the year ahead, it won’t be uncommon to see a lender’s equipment and vehicle loan products seamlessly integrated into a truck dealership’s sales workflow, for example. Financial institutions have already found ways to sell other business banking products through popular third-party apps that business owners’ rely on, like QuickBooks. We’ll see more of that in the new year.
- Digital Touch in Business Banking Getting Priority: Initial changes spurred by the Paycheck Protection Program (PPP) —chiefly around digitization—are here to stay, Derek says. Today, billion-dollar institutions are only seeing a handful of their customers opt to handle standard processes like loan documentation physically (versus digitally, indicating the lasting shift in customer preference towards more convenient, digital offerings. Additionally, 99.96 percent of the 500,000 PPP loans processed by the Numerated platform included digital signatures vs fewer than five in 10,000 asking to physically sign docs. Again, this is a strong indication of the readiness for business banking customers to accept digital experiences.
Stay Ahead of the Trends in 2022 With Our Small Business Lending Playbook
A common thread among the six trends mentioned above is the unstoppable march toward digitization.
With business customers now geared toward digital-first services, it’s incumbent upon banks and credit unions to make the right investments and stay ahead of these trends in the year ahead.
To help you do that and grow your small business lending portfolio, we sat down with our team of in-house experts to build a playbook for you and your financial institution in the year ahead.
Download the Playbook, written by bankers, for bankers, here.
