Earlier this year, DirectID CEO & Founder James Varga was asked what lenders should be paying attention to in 2022. Alongside other industry thought leaders, James' response was included in Trade Ledger's 'Business Finance Predictions 2022' - a report outlining industry changes coming up this year.
James message was straight to the point: Open Banking is going mainstream, it's time to get on board.
Read the exert below and download the full 'Business Finance Predictions 2022' report from the Trade Ledger Website.
Fintech has been a niche industry in a lot of ways, but people will be surprised this year at the overall acceptance of using open banking and open finance.
By the end of 2022, 20% of the UK, maybe even 20% of Europe, and in a couple of years 20% of the world, will be using open banking - and that’s a critical mass. The key to this will be deeper engagement between lenders and fintechs, and the emergence of compelling use cases to drive demand.
The speed of digitisation the pandemic sparked had a huge impact on fintech, financial services and lending. It was horrible for a lot of people, but the industry benefited from a long overdue shake-up. Banks have historically been fairly slow at innovating, building inhouse is costly, and reliance on third parties always seemed too much of a risk. Covid changed all of that. Larger institutions now know they need to look outwards to adapt, and fintechs are stepping up to fill that gap.
Fintechs and lenders working together is only half the battle – it’s what you do with the data that counts. Clear and compelling use cases will help people see the value in open banking – for businesses, that’s reduced costs, fraud reduction, and increased underwriting; for consumers, it’s convenience, better journeys, and faster funds. If I can prove my income or the cashflow of my business with just a few clicks, to get a loan in 30 seconds, I’d be a pretty happy person. This speed and convenience will become routine.
Now that the pandemic has forced lenders’ hands to digitise, I think 2022 will be the year that we get to see the real value of open banking. And that’s what will get us to critical mass in adoption. I’ve always seen financial services as a global trust network. The really exciting bit for me is to see what we can build from that – what pains we fintechs can solve for customers by leveraging the network.