By Clint Lotz, President and Founder, TrackStar.ai
As 2022 is now here, it is a good time to take a look at what some of the key trends that will be prominent in the financial industry – both on the startup and the traditional banking side. While some of these trends have been happening for a couple of years, 2022 is the year that certain topics become more than just bullet points, as companies look to implement real change through fintech advancements.
Here are some of the key trends the industry should expect to see accelerate in 2022:
Tackling Conversation AI and its Biases
Biases in AI is something that is going to be at the forefront in 2022, especially when it comes to eliminating bias in AI being deployed for lending purposes. We have already seen pushback on AI biases from the general public (see facial recognition tech), and we should expect the financial industry to see even more against some of the technology that became most pervasive during the height of the COVID lockdowns.
More Privacy Controls Please
In fintech and beyond, there will be more demands for consumer privacy control, as people are going to want more control over their data. Based on daily online interactions people make, there are billions of data points out there and fintech/financial services companies will have to be more mindful of how they use this data. They will also need to be more transparent with their customers, particularly for marketing purposes.
The Fintech M&A March Continues
Perhaps the biggest trend we will see in fintech M&A next year is large finance companies/banks taking a keen interest in acquiring startups developing “AI for good” technology. With racism systematically baked into many systems in America, one the most obvious examples is in the world of finance. To balance things out, PE/M&A companies and banks will target hot startups that are getting closer to solving these issues with AI, whether it be discriminatory lending practices, housing, credit, etc.
Fintech in 2022 will likely shine the spotlight on founders/startups who are aiming to and reaching out to underserved communities, as fintech companies will get better at understanding their needs. The catch is that 2022 might be the year when a fintech not only figures out how to build a product that reaches this market, but that is actually profitable in the process.
The reason why we have yet to see a blockbuster startup that is dedicated to the underserved/underbanked communities is that there are core challenges afoot – namely that it is often hard to get accurate research on the true needs of this population and more awareness is needed. Moreover, there are many within this community that still don’t trust the banking system and don’t want to open a checking account in a traditional bank, much less a new, unproven neobank where everything is done via a mobile phone. A big key for fintechs to breakthrough is to establish trust in new tools, ones that actually meet the needs of this population.
Clint Lotz is the President and Founder of TrackStar.ai – a new, predictive API designed to help enterprise level banking/lending/mortgage institutions offer better and more accurate loans to customers – all based on information in lender’s existing databases.