We might only be a few days into 2022, but it's never too late to looking forward to see what this new year will bring us in terms of
2021 has been a rather up and down ride, and when it comes to financial trends and topics, it introduced quite a lot of new things for us to ponder moving forward.
The new year is likely going to feature plenty of these trends: meme stocks, cryptocurrency, inflation, the metaverse, and a whole lot that is tied to a shift from traditional finance into digital finance, but what else can we expect in the new year?
Let’s see what financial trends for 2022 you should be keeping an eye out for.
NFTs have been all the rage for the entirety of 2021, so it might be surprising to see them listed as a trend to look for in 2022, but the fact of the matter is that we have barely begun to scratch the surface with them.
Many believe they’re simply a gimmick, maybe even a money laundering trick, or they’re just monkey JPGs selling for ludicrous amounts, but truth be told, there’s some benefit to having a unique digital stamp or token of a transaction online.
First, people can and will steal anything that isn’t metaphorically nailed down online, so it’s not just about protecting your rights to a JPEG monkey, it’s about authority over a piece of digital property - houses included in some cases.
Marketplaces like OpenSea, Rarible, SuperRare, Nifty Gateway, NBA Top Shot, and plenty more are already bringing in tons of users, so exchanges such as Coinbase, Kraken and Binance are getting in on the craze as well.
This checks out given that cryptocurrencies are traded on exchanges would simply make it easier for users to access NFTs they have created, or access NFT wallets for investing, but the real benefit of NFTs is yet to be seen when it can help with verifying purchases as unique, like for concert tickets, and not just JPEGs of pixel art.
Speaking of NFTs, the metaverse, and with it VR/AR (virtual reality, augmented reality), is set to expand tremendously as plenty of big names in the tech industry are already making big strides to open their own metaverse or operate within existing virtual worlds.
Facebook, as the prime example, has even changed its corporate name to Meta in a move that hails their departure from simply social media, into a new world of online media.
This is already happening, and in fact, the metaverse isn’t anything particularly new (World of Warcraft, Second Life, PlayStation Home) but as a means of a virtual hangout, it’s expanding more and more to include other aspects of our online identities.
How the metaverse going mainstream will be important is that Morgan Stanley, the famous investment bank, pegs the value of the metaverse economy at roughly $8 trillion dollars.
Companies looking to cash in are implementing their products in the virtual space, like Nike and Adidas with their shoes being able to be bought as NFTs but worn by an avatar.
These emerging virtual economies could usher in a new age of user freedom to sell and buy goods away from corporate control, or it could simply end up being a digital extension of our existing economy, but the metaverse and VR/AR interaction in these online games and worlds is sure to make things interesting.
Crypto and Blockchain Integration
It’s much harder to predict the future than analyze the past, hence why hindsight is always 20/20.
What do I possibly mean by this? It’s that crypto and blockchain integration is likely here to stay barring any cataclysmic event to it or us.
More people are adopting crypto as both a store of value (more on this later), a legitimate investment opportunity, and a useful method of payment. Beyond that, businesses are starting to realize that implementing the blockchain into their ecosystem is a matter of “when” not “if.”
The ease of access for getting a digital wallet is miles better than it ever has been, at the loss of some privacy argue many, but nonetheless, the access to crypto is expanding in plenty of places where it’s harder to access financial instruments, especially in Africa as a whole.
More options for exchanges make it easier to purchase crypto as well and that’s making it apparent that online retailers are realizing crypto may be a legitimate form of payment that they should allow.
This opens up the need for blockchain integration through APIs and other business platform solutions to make it a seamless integration, one that should be happening before being left behind in the Web 3.0 age where your future login credentials are a seed phrase or an integrated wallet.
A.I and Adaptive Learning Machines
Artificial intelligence and adaptive learning machines aren’t here to eradicate us after being sent back in time (yet), but they are helping to automate plenty of processes in the financial industry and beyond.
We’ve already seen our fair share of automated trading bots for traditional stocks and even crypto, but using them as a system for data analysis is the real money maker.
Big data is more than compiling a spreadsheet of billions upon billions of users or transactions, it’s about determining future trends such as the ones listed here, trends amongst users, patterns, finding losses, and determining sets of information or values that can be used to focus efforts.
It comes as no surprise that the financial industry, which is marched along by the collection and dispersion of numbers, would want something to help streamline this process. Is this going to disrupt jobs? More than likely, but the ongoing struggle to be the controlling factor of numbers requires a system that can function on its own, for the most part.
A.I. and adaptive learning provide the best opportunity for improving productivity and expanding the possibility for a highly-functional system that requires little human input.
Software as a Service (SaaS)
Software as a Service (SaaS) is nothing new, but it’s growing faster than many might have predicted just 10 years ago for a few reasons.
First, and this is one of the more humorous reasons, is that people simply forget to stop paying for subscriptions on their card.
So much so, that entire businesses have modeled themselves on finding and canceling unused subscriptions.
Second, it’s more efficient to provide a license for the use of a product or service rather than provide it as a product once, then expect a reduction in repeat customers buying your new product if they continue to use the same one.
No matter your side of the argument, it’s pragmatic for them to offer something like Adobe Creative Suite as a monthly/annual subscription, which ultimately requires you to keep renewing to keep the product or get a new one, or in many cases, allow them to phase out an old build/product.
More software is going this way because it’s more cost-efficient, so it shouldn’t be a surprise if, in the future, most software is subscription-based solely for the fact that it benefits the manufacturer over the consumer.
Platform as a Service (PaaS)
In just about the same way that SaaS is only trending upwards in how often it’s implemented, Platform as a Service (PaaS) is something similar.
The best examples of this include Google App Engine, Windows Azure, and AWS Elastic Beanstalk, all of which are PaaS that allows a developer to use their proprietary product.
It’s much easier for companies to provide PaaS, just like SaaS, but in a more abstract way. What that means is that a PaaS isn’t something that can be as easily sold as a standalone product, because you would want repeat customers in the same way.
Not to mention, the growing shift of developing and coding means a higher user base in the near future is likely to mean continuous growth for users of these platforms.
Going back to the point about cryptocurrency being adopted further in 2022 and beyond, it’s also becoming alarming at which the rate of inflation is steadily rising.
At 6.8% in the U.S., many are worried about the devaluation of their currency and wages not being concurrent with the cost of living and inflation, which is why many are putting their faith in cryptocurrency as a means of decoupling for traditional finance.
Why not stocks? Retail investment has actually risen dramatically thanks to plenty of trends like Gamestop and AMC generating plenty of “get rich quick stories,” but cryptocurrency is still seen as a better play, as volatile as it can be, given the low cost of entry.
Not to mention, it holds more value now as the adoption of crypto is expanding like mentioned earlier as well.
Investing in gold, silver, and even NFTs are inflation hedges as well, but it seems that crypto is considerably more popular than the rare earth metals industry or the as-of-yet to realize the potential of NFTs.
Giving consumers the freedom they want might not sound like something that is trending for 2022 given the growth of SaaS and PaaS, but buy-now-pay-later certainly makes up for it in the ecommerce sector.
Plenty of companies are partnering with payment processors or payment companies to allow for micro-payment plans to purchase products.
Some of the biggest names, like Sezzle, Affirm, and Afterpay allow you to buy something over the course of smaller payments. It might not seem like a huge trend, but it has its pros and cons.
It’s not usually a bad idea to give more payment flexibility in the hands of the customer, especially given that crypto is growing as a means of payment, but the buy-now-pay-later model can lead to more irresponsible spending, which is already a problem.
This isn’t meant as a financial literacy lesson, but it’s a trend that might show that if as a collective whole, 2022 is more open economically than 2021 or 2020, that consumer spending will increase, meaning this model will likely be seen in a wider range of online stores.
Fees are one of the reasons why cross-border payment solutions have been a major trend in the past few years and will continue into and past 2022.
As crypto and other digital payment processors, like Wise, Square, Paypal, Zelle, or Stripe, continue to provide faster turnaround times for transactions and lower fees, banks will be scrambling to compete.
The cost of converting USD to GBP and the time it takes to send it is slowly inching closer to more reasonable fees and times, but it’s still a work in progress, but it’s good news that it’s at least becoming something that a wider, more interconnected world economy wants and as it usually is, the market dictates the trends.
If you haven’t guessed by now, plenty of the financial trends of 2021 have been digital-based, and 2022 is not slowing down in this regard.
What may come as the most obvious trend is the further integration to switch to cashless and digital banking.
It’s not that cash is going to be obsolete or disappear altogether, but it’s becoming increasingly rare year in and year out.
More digital banking features, more cards, more options for digital-only payments and a focus on expanding with blockchain integration and crypto is creating a new arena that banks need to contend with for dominance in finance.
Notably, DeFi (decentralized finance) is also helping lead the way and could potentially eclipse more centralized cryptocurrencies in the near future as well given it’s even less regulated than many crypto coins.
As I said earlier in this list, it’s hard to predict the future, near impossible really.
While we have plenty of trends, events, and topics to look back on to help guide our thought processes, it’s not a surefire thing to know what people will be doing with their money or what money will even look like or mean in the future.
Given that it’s hard, it’s still possible to make an educated guess, and things like the metaverse, blockchain integration, A.I. and adaptive learning, and a further step into a cashless society are things that have been building steam in a meaningful way, along with the other additions to this trends predictor, that we can make safe assumptions that we’ll be seeing more of it, not less, by this time next year.