2021 was a busy year for the fintech community. Buy Now Pay Later (BNPL) became ubiquitous. Financial Health felt a positive impact fueled by the stimulus. And credit card spend rebounded with overall credit purchases up 25% compared to 2020. We asked top fintech leaders to share with Nickels what their predictions are for fintech and consumer needs in 2022. What we heard centered around three key areas: Financial Health, BNPL, and Personalization.
Greater Focus on Financial Health
Financial health will make its way to the top of everyone’s consideration at the beginning of the year as individuals evaluate their holiday spending, savings and annual retirement statements. In 2022 we will see increased focus and consumer demand for financial health solutions.
“I believe 2022 will be the year that financial health is viewed as a holistic part of overall health. 
With the heightened focus on mental health and physical health (anything related to the Global Pandemic) the natural connection to financial health will start to become clearer. None of these items occur in a bubble, rather they are self-reinforcing (positively and negatively) forces for overall health. Financial stress begets high risk behaviors. These high risk behaviors lead to poor health outcomes. And the cycle cascades into an even greater deterioration of financial and physical health.”
Credit card health will see greater attention in 2022 as a key piece of financial health. Credit card health is the ability to use credit cards in a way that minimizes fees, expands financial flexibility, and improves credit scores.
“Improving their customer’s credit card health presents a big opportunity for banks and credit unions, and is the right thing to do. Wildly high interest rates on credit card debt make it hard (and irrational) to build savings that are necessary for individuals to be financially secure, and access, if they want, larger, asset backed, loans such as car and home loans.”
Buy Now Pay Later Backlash?
Although Buy Now Pay Later has been available for years, BNPL had its moment in 2021. Propelled by an increase in online shopping during the pandemic, BNPL is now an option at most major retailers.
“Some survey data that we have seen suggests that over half the individuals using BNPL are aiming to avoid interest and a third of individuals want to pay off items separate from their credit cards. Although it is not totally clear the exact degree of BNPL’s cannibalizing overall credit card spend and how much of it is just enabling increased consumption, large credit providers’ efforts to offer and/or acquire BNPL solutions is a clear signal that incumbents see it as a key offering within a broader suite of financing solutions.” -Adam Hartmann, Director of Innovation at Financial Health Network
In 2022 consumers will begin to feel the pitfalls of BNPL. Payments are often hard to track and missing or late payments can result in fees. Consumers will begin to feel this in a big way in 2022 especially those taking a closer look at their financial health. In fact, 5 of the main companies in the rapidly growing BNPL market are now under scrutiny from the Consumer Financial Protection Bureau.
“Though BNPL solutions can enhance financial health through providing easier access to needed goods and services, there is notable risk. Consumers, particularly those purchasing discretionary goods, may go too far. Future financial obligations from BNPL commitments are often hard to keep track of and sit in secrecy. If kept unchecked, BNPL arrangements can become the next debt trap.”
– Bryson Hearne, Manager of FinHealth US at Village Capital
Personalization, Personalization, Personalization
Consumers have many options when it comes to their money. To win in 2022, institutions will need to meet consumers where they are with solutions that are frictionless and tailored to their specific financial situations. Gone are the days of just moving analogue services online. Digital services now need to be able to contextualize their functionality to each consumers’ scenario and situation.
“I think we’ll see a continued expansion of technology leading and improving the extension of social services.” -Adam Hartmann, Director of Innovation at Financial Health Network
“Advances in data science enable more and more tailoring and personalization in financial services – and yet, data alone won’t bridge the trust gap between people and financial institutions, especially among those people who’ve been historically excluded from financial systems. There’s an opportunity here for providers that truly understand the unique needs and context of the communities they serve and are committed to serving those communities responsibly.”
– Katy Davis, Managing Director of Financial Health at ideas42
