April 7, 2022
New playgrounds for fintechs and big players in the banking world
It’s interesting to note the changes in the strategic priority list of fintechs and banks for 2022.
1. Cancellation of overdraft fees
According to Consumer Financial Protection Bureau (CFPB) data, Bank of America, J.P. Morgan Chase and Wells Fargo were responsible for 44 percent of fees (estimated $15.47 billion) collected in lieu of overdrafts in the year 2019. 80 percent of the amount collected as overdraft fees were received from less than 9% of their customers.
Despite these encouraging figures, most banks in the USA are modifying or completely removing overdraft fees to level up with fintechs charging zero overdraft fees. This move is targeted towards making customers happy and retaining their loyalty in future.
2. The rising popularity of embedded banking
Ali Khan, President of Spearhead Technologies says, “I recommend the latest technology adoption to keep next-gen customers happy. Financial service products and embedded finance solutions can be used to identify and address their needs proactively.”
Embedded banking – wherein banking transactions are carried away from a bank’s portal, branch or app – gained momentum in 2021 and is here to stay. The loan services on purchases provided by e-commerce portals, such as Shopify, is a striking example of embedded banking. Carrying the trend forward, financial services and banks are offering their products to customers at the easiest and most useful point of engagement to solve their problems.
3. More banks to provide cryptocurrency services
The value of cryptocurrencies increased 300 times over in 2021 to reach a global figure of $2.25 trillion Given this, there seems to be no turning back for crypto investors. The market watchers at Spearhead expect the prices of digital currencies to continue rising this year. A steady increase in their market capitalization has encouraged banks to add on partners like Anchorage, Figure, NYDIG and Tassat to handle crypto custody.
The buying and selling of cryptocurrencies are channeled through scalable mobile banking apps that rely on the latest digital technology, such as Blockchain. Blockchain is helping the global banking sector grab new opportunities, manage regulations, and test proof of concepts. 2022 should witness further formalization of cryptocurrency regulations to meet the business purpose of customers and their banking channels worldwide.