The future of fintech: 5 current trends and what they mean for brands
• • • • • •
Learn about five emerging trends in the fintech landscape and what they mean for brands today.
Inflation. Supply chain issues. A recession. It’s been a tough year financially for consumers. At the same time, we’re seeing several emerging finance and fintech trends, like the rise of digital currencies, the collateralization of NFTs, and Environmental, Social, and Governance (ESG) initiatives.
Recently, Suzy teamed up with Exploding Topics to uncover five current finance and fintech trends in 2022 and what they mean for brands. We’ll dig into each trend, uncover consumer attitudes and behaviors, and leave you with some takeaways.
CBDC, Cryptocurrencies, and NFTs
Central Bank Digital Currency (CBDC)
Digital currencies (money, or money-like assets that are managed, stored, and exchanged on digital systems) are growing in popularity among consumers. 39% of consumers are familiar with cryptocurrency; 27% are familiar with virtual currencies, like Microsoft Points or frequent flyer miles; and 10% are familiar with central bank digital currency (CBDC). But over half (51%) of consumers are not familiar with digital currencies.
Thanks to the pandemic, people now spend their money differently. 71% of people in the US use cash infrequently, including 25% who now use cash less often due to the pandemic. As a result, more than 80% of central banks and countries worldwide are considering the implementation of a CBDC, including Sweden, the European Central bank, and the US Federal Reserve. China is already on the CBDC map.
Nearly a third (30%) of consumers are interested in using digital currencies. However, most consumers (58%) prefer to use physical currency, like cash, debit, or credit cards. Nearly 20%, though, prefer digital currency, with many citing “ease of use”. When it comes to CBDC, the connection to the government also offers some peace of mind.
Crypto Insurance
It’s been a tumultuous year for cryptocurrency holders. On top of plummeting values, cryptocurrency is an increasingly tempting target for hackers and scammers. Just last year, the amount of money lost due to hacks in decentralized finance (DeFi) projects doubled to $1.3 billion. That number is already surpassed this year.
But first, let’s dig into some crypto basics.
75% of consumers don’t currently own cryptocurrency. Of those that do, 20% own Bitcoin, 10% own Ethereum, and others own Tether (6%), BNB (6%), and USDCoin (6%).
Nearly a third (32%) of consumers are interested in owning or using cryptocurrency. There are a solid amount of detractors though. Nearly 40% said they were not at all interested in owning or using crypto.
5% of consumers say paying with cryptocurrency is their preferred method of payment.
With all the hacks, 63% of cryptocurrency owners are concerned about the security of their crypto. Naturally, their main concern is hacking and hackers (23%). Many crypto holders are already taking steps to protect their digital assets, using two-factor authentication (45%), avoiding public WiFi (36%), and using a password manager (34%). Nearly a third (29%) said they use a desktop wallet, a slightly more popular option than either cold or paper wallets. And 20% have purchased insurance for their crypto.
A type of liability insurance policy designed to cover cryptocurrency-related losses, theft, and security breaches, crypto insurance is largely appealing to crypto holders. This fintech trend is up over 700% according to Exploding Topics. In our own survey, 82% of crypto owners expressed interest in crypto insurance.
NFT Lending
NFT lending refers to the process of obtaining an NFT-backed loan. Essentially, an NFT serves as the collateral that secures a loan, typically issued as cryptocurrency. NFT lending is trending (up 500% according to Exploding Topics) because NFT owners can monetize their digital assets without needing to sell them. Several startups have launched platforms that support NFT lending, like NFTFI and Nexo.Io.
So far, digital assets like crypto and NFT only function as a store of value. To extract that value, an investor must sell the asset when it appreciates. NFT lending and digital asset collateralization allow NFT owners to unlock the value of their digital assets through loans.
In a recent Suzy survey, 10% of consumers said they are familiar with NFTs and have acquired them. Most NFT owners own between 1-2 (71%) NFTs. In our survey, respondents self-reported the values of their NFT collection, with most saying their assets were worth between $100-$500.
Over half (59%) of the NFT owners surveyed were interested in using their NFTs as collateral to secure a cryptocurrency loan. The main reasons NFT-owners were interested in NFT lending were taking advantage of short-term investment opportunities (57%), liquidity (49%), financing ‘real life’ needs without having to sell their assets (59%), and taking advantage of long-term investment opportunities (47%).Those interested in NFT lending cited liquidity and the ability to make other investments.
Collateralization of digital assets may be critical for the development of DeFi. NFT lending is just part of the Digital Asset Collateralization meta-trend, according to Exploding Topics. In addition to growing interest in NFT lending, crypto staking and crypto lending are also on the rise. In Suzy’s survey, we found that over half (57%) of NFT owners were interested in taking out a loan to borrow cryptocurrency at a fixed interest rate.
Digital Currency Takeaways
Though cryptocurrency hasn’t achieved widespread adoption, it’s on its way. CBDC could speed that process up, but fintech brands will need to be patient.
In the meantime, crypto pioneers have some work to do to secure the blockchain. Major concerns about security may prevent wary consumers from buying into crypto.
Finally, early adopters of crypto and blockchain are looking for solutions that protect and put their investments to work.
ESG fintech
From credit cards that help plant trees to fintech platforms created specifically to address the racial gap in wealth, Environmental, Social, and Governance (ESG) initiatives are taking fintech by storm. Searches for ESG FinTech have increased by 1400% over the last 24 months, according to Exploding Topics. And according to HBR, FinTech receives approximately a quarter of all impact-oriented investments.
42% of consumers say it’s important for them to use a financial institution that has ESG initiatives. 24% said it’s neither important nor unimportant, and 34% said it’s unimportant to them.
However, most consumers are unfamiliar with the efforts or ESG initiatives at their current financial institution (51%), and 36% of consumers aren’t sure if they trust the claims financial institutions make about their ESG initiatives or not.
Some of the most important initiatives for consumers are climate change (41%) and diversity, equity, and inclusion (DEI) (27%).
Climate fintech
Focused on addressing climate change, climate fintech is an emerging trend across the financial space expected to grow 7.5x in the next six years.
Even established financial institutions are introducing climate initiatives. Stripe, for example, launched Stripe Climate, which allows businesses to donate some of their revenue to climate causes.
For those consumers that prioritize the climate in ESG efforts, 28% said they don’t currently take any steps to address climate change with their finances. 47% get paperless statements, 28% bank only online, 26% bank locally. 13% use climate-friendly credit cards, 12% use checking/savings accounts at financial institutions that give back to the climate, and 11% use their credit card points to offset emissions.
DEI fintech
Another emerging trend in the ESG fintech space are platforms and tools specifically designed to promote financial equity for racial minorities.
Take Stackwell, for example. A digital investment platform, the startup was designed to help Black community members grow their wealth by investing in stocks. Stackwell works like many other investment platforms, recommending a portfolio and investing schedule based on an individual’s current financial position and goals. The app provides educational content and uses personalized reminders to keep users on track.
With a third of consumers prioritizing DEI initiatives at financial institutions, they’d like to see certain things from financial institutions, like diverse leadership on executive and board leadership at financial institutions (58%). 56% want to see financial institutions invest in Black- and POC-owned businesses. And 42% would like to see dedicated lending platforms for Black and POC communities.
ESG Takeaways:
Brands need to be clear about ESG efforts. Consumers aren’t always aware of what financial institutions are doing, or how they can take advantage of ESG initiatives to make a difference.
Fintech brands should work to publicize the results of their ESG efforts to appeal to the 42% of consumers that care.
To foster trust, ESG goals should be SMART. Even small steps towards addressing climate change or racial inequality can build confidence with consumers.
Last Words
Knowing what consumers expect and want from their financial institutions and the fintech brands they’re interested in can help your brand stay ahead of the curve. While these high-level consumer insights can be helpful, it’s even better to directly survey your target consumers to learn what they want and need and how your brand can deliver it.
As an end-to-end consumer insights platform that integrates quant, qual, and high quality audiences into a single connected research cloud, Suzy helps teams conduct iterative research, with agency-quality rigor, in less time and at a fraction of the cost. Learn what fintech trends your consumers are most interested in with Suzy.
Exploding Topics helps investors and entrepreneurs find exploding trends before they take off by analyzing millions of searches, conversations, and mentions across the internet.
