What is the future of fintech? 6 industry-shaping trends

As fintech continues to grow, emerging trends show its potential to become part of our daily lives and improve financial equity.

October 03, 2022

Justin Headshot
Justin Trificana

Justin has been a writer at Plaid since early 2020 and is focused on the evolution of trends across the fintech ecosystem. He’s the author of the company’s annual Fintech Spotlight report.


More and more, consumers are enjoying the convenience and expanded options that fintech offers, providing ever greater economic freedom and inclusiveness to those who often lacked access to financial resources in the past. 

According to a 2021 impact survey published by Plaid, nearly nine out of ten US consumers used fintech in 2021—a 52% year-over-year increase in adoption. To put this into perspective, it took smartphones five years to make a similar leap. While initially fueled by the circumstances of the pandemic, this shift shows no sign of reversing. The same survey found that between 80-90% of those who used fintech in 2021 planned to use it equally as much or more going forward. 

What does all this mean for the future of fintech? Here are six trends we see on the horizon.

1. Venture capital will become more discerning but growth remains strong 

Though fintech funding doubled in 2021 to $91.5 billion, the first half of 2022 was down 23% over the previous six months—dropping from $71.5 billion in the second half of 2021 to $55 billion in the first half of 2022. 

Why the downturn? Many feel the boom—and possible overheating—of 2021 was the venture capital (VC) world’s response to fintech’s rapid mass adoption that took place in the wake of the COVID-19 pandemic. With economic headwinds such as inflation and talk of a recession in 2022, those levels naturally couldn’t keep up as VC firms became more discerning with their investments. 

Despite the short-term drop, fintech funding is still increasing on the long-term horizon. In fact, H1 2022 fintech was more than double H1 2020—despite poor macroeconomic conditions. Not only that, H1 2022 funding was nearly the same level as H1 2021.

Fintech VC funding per half-year period

This strong showing indicates that investors are still optimistic about the fintech sector's long-term growth. With valuations and deals continuing to flourish, it’s clear that VC firms believe in fintech’s ability to transform the financial services industry over the coming years and decades—and are investing according to that belief.

→ New to financial technology? Read our guide, 'What is fintech”, to learn more about the most popular fintech use cases and the impact fintech is having on the world.

2. Fintech will make finance more inclusive

Fintech is revolutionizing financial growth by widening access to financial resources. One example is Dollarito, a digital lending platform that helps individuals from low-income populations with no credit history or low credit scores access fair credit. Another is Kaoshi, a platform of APIs that financially connects immigrants to their home countries. Fintech companies are lowering barriers to lending, investing, saving, and more for underserved groups—allowing consumers previously left out in the economic cold to participate in the financial arena. 

In the US, minority groups report banking fees as their biggest financial challenge at up to twice the rate of White people. Fintech addresses this concern through innovations like peer-to-peer (P2P) lending and low or no-fee online banking. This makes BIPOC (Black, Indigenous, and People of Color) individuals more likely to turn to fintech to overcome financial roadblocks. In addition, programs like Plaid’s own Accelerate support early-stage fintech founders who are Black, Indigenous, or People of Color, with the aim of making the industry itself a more inclusive one.

Percentage of Americans who report fees as their biggest financial challenge, by race

3. Embedded finance will become ubiquitous

Embedded finance integrates financial solutions into non-financial business offerings. While a rising phenomenon, it’s nothing new: Furniture stores have been offering payment plans or lines of credit for large purchases for decades. 

Now, fintech is expanding these types of services into just about every shopping experience, including e-commerce. The approach has seen a huge uptick in recent years and is expected to continue rising, with estimates projecting $230B in revenue in 2025—a ten-fold increase over the $22.5B seen in 2020. This is a huge opportunity not only for businesses but also for consumers, opening up a world of options to increase convenience and savings, such as zero-interest point-of-sale loans or brand rewards. 

According to Plaid and Accenture’s research report, embedded finance has the potential to create new types of competition, a new era of partnerships, and above all new revenue streams. In fact, Andreessen Horowitz believes that it will allow companies to increase revenue by two to five times per customer. Expect to see it everywhere.

An illustration of three people, two with longer hair in ponytails and one with shorter hair and a beard, interacting with an abstracted version of a Rube Goldberg machine.

Plaid's 2022 Fintech Effect Survey: Stability, impact, and building for the future

Download our free fintech report for insights on building the future of digital finance.

4. Fintech will continue to break the money taboo

As fintech becomes the norm, people are becoming more comfortable talking about their finances. In fact, 63% of Americans report that fintech has made them feel more at ease discussing financial topics with their friends.

This is a net positive, as money taboos historically keep people from sharing their financial issues and successes. What was once a touchy subject, such as borrowing money from family or friends, has now been made easy and shame-free, thanks to peer-to-peer lending apps like Lending Club and Prosper

This cultural shift improves transparency around financial situations, empowering fintech to expand as a platform for those seeking judgment-free advice.

Americans are more comfortable discussing financial topics

5. AI and ML will mitigate fraud risk

Financial institutions lose around 5% of their annual revenue globally to fraudulent activity. In parallel, 90% of consumers are concerned about the potential of banking or credit fraud as both become more digital.

To combat this, artificial intelligence (AI) and machine learning (ML) are being harnessed to make the industry safer and more accessible. They do so by analyzing data at a level beyond human capability, directly verifying financial data with consumers’ financial institutions, rapidly communicating between banks and fintech apps to spot anomalies, automatically verifying identity, and continuously learning to recognize and prevent bots.

The results are impressive: According to Plaid data, 55% of unauthorized ACH returns (R10s) were detected by beta customers of Plaid’s automated ACH risk scoring product, Signal, when combined with internal risk models. 

For developers, these approaches will continue to be of particular technical interest to calm user apprehension, while financial institutions will be drawn to the attractive economic savings they can provide.

6. Fintech solutions will become more personalized

A study shows that 81% of Gen Z say personalization could deepen their financial services relationships. It’s a phenomenon already seen in apps like Brigit, which analyzes users’ spending and can even advance them money automatically if they appear in danger of overdrawing their account. Signs point to expanded personalization within fintech, including in the realms of “privacy and trust benefits”, which the same study showed as the most critical personalization aspect for banking consumers worldwide. 

Such hyper-personalization can only be achieved by integrating and analyzing large amounts of disparate data—i.e. financial data APIs working hand in hand with artificial intelligence. Successful execution will add value to existing financial services offers with improved onboarding processes, increased customer engagement, and strengthened customer loyalty. 

All this adds up to increased revenue: In as early as 2019, BCG estimated that for every $100 billion in assets held, a financial institution could achieve as much as $300 million in revenue growth by personalizing its customer interactions.

The consumer is king

At the heart of these six trends is consumer benefit. From underserved markets and unaddressed inequities to fraud protection and more personalized services, the industry is directly answering the call.

In 2022, there will be nearly 197 million digital banking users in the US alone—over 75% of the adult population. This mass adoption of fintech gives consumers more power than ever while solidifying fintech’s reach and ever-growing potential to serve their needs.

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