6 fintech and technology trends that will redefine CX in 2022
As we look out over the horizon of 2022, one thing is clear — we can only move forward. We won’t just dust off old habits, even for workers who finally return to the office. As individuals, our mindset, our needs and our priorities have shifted. And companies in technology, financial services, logistics, and other sectors will have to do more than just react.
Digital-first experiences are evolving at full-speed, driving further shifts in customer behaviors and expectations. For both B2B and B2C, an organization’s ability to manage change and innovation will be the keys to a successful 2022.
Our Beyond the Arc team collaborated to share our predictions – through a customer lens — on where businesses will need to focus in the year ahead…
1 — CRYPTOCURRENCIES
prediction: Crypto complaints will lead to CX headaches and increasing regulation
Cryptocurrencies have ridden a rollercoaster in the past year. As speculative investments like Bitcoin and Ethereum carry a high degree of risk, Nina Katz, our training and banking expert, predicts there will be increasing pressure to regulate them:
“Young, inexperienced investors are flocking to cryptocurrencies. They’re influenced by social media and a game-like atmosphere. Yet many have no background in investing, which has attracted a flood of scammers. Between October 2020 and March 2021 alone, nearly 7,000 people reported over $80 million in losses due to cryptocurrency scams.1
Regulation is in the works, and cryptocurrency companies aren’t resisting the idea, just the old banking laws. Industry leaders are pushing Congress to support a new regulatory framework for crypto. We can expect new momentum as regulators focus on oversight for storing cryptocurrency assets, fraud prevention, tax evasion, and currencies like stablecoin.”
Beyond the Arc CEO Steven Ramirez sees there are also customer experience issues with crypto that will only get exacerbated as the audience expands past the early adopters.
“Fees are always a top pain point for financial services, and cryptocurrency newbies are learning this lesson the hard way. For example, it isn’t uncommon for gas fees (transaction fees) for small Ethereum transactions to be as high as 20-35%. In the IOS app store, people have complained bitterly about ‘hidden fees’ charged by the app they’re using. Users may not realize that the fees are incurred on the Ethereum blockchain and can fluctuate wildly based on network supply and demand.
We also anticipate increasing consumer dissatisfaction with crypto companies as their customer service teams struggle to address account management issues and fraud. According to a June 2021 report on CFPB complaints from MASSPIRG, the three most common complaints involving digital wallets are problems managing, opening or closing accounts; problems with fraud or scams; and problems with transactions (including unauthorized transactions).“2
In 2022, we also expect to see high-profile announcements by banks and other traditional financial institutions about their new cryptocurrency services. Our Beyond the Arc team encourages these providers to invest in developing plain-language product disclosures, educational resources, employee training, and customer communications to avoid regulatory complaints and improve customer experience.
2 — FINTECH 2.0 and SUPER APP FINTECH ECOSYSTEMS
prediction: Super Apps will force banks to transform mobile services
Financial super apps such as China’s WeChat and Italy’s Tinaba are way ahead of U.S. banks. By giving consumers an integrated experience for social messaging, finances, and lifestyle services, these super apps are capturing hundreds of millions of customers. Big tech companies like PayPal are moving swiftly to fill the gap for American users.
To stay competitive, banks of every size will need to reinvent their digital customer experience. As a CX strategist and our Director of Creative Services, Gavin James sees it like this:
“FIs in other countries are crushing market share by offering one super app that’s a digital hub for a modern lifestyle. Beyond banking, contactless payments, and P2P lending, the app ecosystem can capture top-of-wallet with integrated access to payment-related experiences like shopping, entertainment, food delivery, ride-shares, etc. And it’s all infused with social sharing.
Most mobile banking apps don’t come close to that. Players like PayPal and Amazon are seizing the opportunity to deliver these social-commerce ecosystems, and it’s a prime focus of Fintech 2.0. Banks will need to prioritize super app innovation and fintech partnerships to remain relevant.”
prediction: Fintech 2.0 will require deep focus on holistic customer experience
Bundling multiple apps into a unified ecosystem is a slippery slope. With 88% of people using fintech in 2021,3 there’s a huge potential audience for financial super apps. However, Gavin cautions that it also opens the door for disjointed experiences unless there is cohesion across many services, some of which may be third party. She predicts fintechs and financial institutions taking this route will need to rethink how they communicate through the customer journey.
“Fintech innovations typically have a laser-focus on solving a specific need or pain point. A super app requires a holistic view across a multitude of diverse experiences. Design and communications will need to really understand many types of users and situations, so developing customer personas and journey maps will be critical. And using machine learning to predict user behaviors will be an important part of that.“
“The required changes to technology stacks, business models, distribution channels, skills and expertise, are just too great for most banks to successfully tackle alone. While many organizations feel like they can fly solo, 2022 will be a good time to seek outside perspective and strategic advice. Companies can’t afford to be trapped inside of their internal echo chambers.“
3 — WEB3
prediction: The first successful DeFi (decentralized financial) offerings will be B2B, not B2C
Web3 holds huge promise as a new engine for technology innovation. As CNBC notes, “Web3 proponents argue that today’s online platforms are too centralized and controlled by a handful of large internet companies, like Amazon, Apple, Alphabet and Facebook parent company Meta.”4
In a Web3 world, self-governing online communities, known as Decentralized Autonomous Organizations (DAO), make traditional corporations about as modern as a rotary phone. Online services will be provided by smart contracts operating on a blockchain, voted on by community member-owners.
But what happens when there’s a problem? As Steven sees it:
“The essence of a decentralized solution is that services are built on an underlying blockchain with no central control. With smart contracts, based on a set of conditions that are defined in advance, transactions should ‘just work.’ However, due to user error, network congestion, fraud, or other circumstances, we expect problems will occur.
From a customer perspective, where do you go for assistance? Suppose your Ethereum disappears because it was transferred to an incompatible wallet address? Or what if a smart contract is stuck in limbo because the gas fees were set too low? While some issues may be resolvable, it’s unclear who will assist with that resolution. And who is responsible for fraud, and what is the recourse?”
Based on these dynamics, Steven predicts the first commercially-viable dApps (decentralized applications) will serve B2B customers with high-value transactions:
“B2B companies are likely to be the greatest beneficiaries of DeFi in 2022. They can invest in strategies that help lower transaction costs – like user training and implementing controls that reduce the risk of erroneous transactions. While Web3 will be disruptive, consumers are not going to find dApps worth the risk.“
4 — BUY NOW, PAY LATER (BNPL)
prediction: BNPL growth will fuel an M&A race
BNPL gives consumers financial flexibility to meet a rapidly growing array of needs, from shopping and airline flights, to medical bills and insurance. That makes BNPL leaders like Afterpay, Affirm and Uplift perfect acquisition targets, predicts Gavin.
“Since 2019, use of BNPL has grown six-fold in Gen-Zers, doubled in millennials, and tripled in Gen Xers.5 And by 2025, BNPL transactions are expected to reach $680 trillion worldwide.6 And PayPal reported 400% YOY growth on Black Friday sales this year.7 That action will simply be too enticing for tech giants to not attempt a land grab. Amazon is already partnered with Affirm, and Apple with Afterpay. Even Expedia could give it a go as their many travel booking businesses offer BNPL.”
prediction: Consumers will grow wary of the downside costs of BNPL
Along with the rapid growth, however, Nina expects we’ll see consumers become more cautious as the disadvantages of BNPL become more obvious.
“Charges for late payments and collections can be uncapped. Returned payments may incur a ‘dishonor’ fee. And missed payments could block a consumer from future purchases. To avoid negative backlash from customers (like bashing a brand in social media), businesses will need to set expectations upfront with communications that are clear and transparent.”
5 — THE METAVERSE
prediction: The metaverse will become an identity nightmare
The metaverse — virtual environments that will take the internet, social media, and e-commerce to the next stage — will enable entirely new customer experiences. However, the metaverse will still need to grapple with some of the internet’s most pressing problems like preventing the growth of terrorism, human trafficking, or the dissemination of false and misleading information.
We believe the metaverse will introduce a host of new challenges for verifying and protecting user identities. Steven expects it will have a forcing function on the cybersecurity industry:
“How much anonymity will be allowed in the metaverse? How will digital identity needs and requirements vary in different contexts and use cases? How will anyone know anyone else is who they purport to be? Companies across every industry already struggle with these issues, and the metaverse will add more complexity. The upside, however, is that it will be a critical driver for digital identity innovations to gain traction and widespread adoption.”
For several years, we have been advocates of blockchain-based solutions to manage identity. Passwords and Social Security Number should be replaced by encryption and tokenization. The metaverse may turn out to be just the environment we need to prove who we are, while simultaneously keeping our private identities safe.
prediction: Immersive experiences will require safer VR hardware to drive adoption
The metaverse aims to enable virtual reality (VR) for a world of activities. It could transform how we experience social media, group events, travel, arts and music, business training, and more. But VR has long been hindered by hardware restrictions that make it costly, limiting, and physically unsafe. Beyond the Arc’s Brian Yang is a fan of VR tech and expects the metaverse will only become mainstream once some key limitations are solved.
“VR equipment is still cumbersome and limited to visual and auditory senses so it’s not yet fully immersive. When using a system, users have a high risk of hitting nearby objects and physical strain from too much fake sensory stimulation. While I can see a future where the Metaverse can become a substitute for in-person events, there are far too many issues to overcome before this can become the new normal.”
6 — SOCIAL RESPONSIBILITY
prediction: More companies will adopt CSR values as part of customer experience
The importance of corporate social responsibility (CSR) grew dramatically in the past two years, and we expect it to keep escalating. Designer Michelle Espinoza predicts that a company’s social ethics will play a bigger role in overall CX and brand reputation:
“77% of consumers are motivated to purchase from companies committed to making the world a better place.8 That tells us businesses will need to put more attention into how they define their values, and express them in ways that are authentic and believable. It may become a more important part of social media strategies and PR.”
prediction: Investments will shift significantly toward ESG funds
ESG focuses on socially responsible investing using Environmental, Social and Governance criteria to evaluate companies. Jacqueline Espinoza, a CX consultant, expects it will become a pivotal choice for investors:
“The intense focus on the climate crisis and social justice will encourage more people to move their money to ESG funds. While millennials helped to highlight the importance of this ethical investing, more people from all cohorts will shift their investments to match their values and focus on the environment. From a customer experience perspective, this shift means financial advisors and wealth firms will need to make it easy for clients to understand ESG investing.”
How did our 2021 predictions turn out?
In 2021, we identified a handful of other top trends that gained traction throughout the year. Here are some thoughts on how organizations can take action and further progress in 2022:
Hyper-personalization. By early 2023, Google will put an end to third-party cookies. Recently, for a national retailer, our data science team developed customer segmentation models that were able to identify high-value ‘look-alike’ customers without using cookie data. This approach reinforces the opportunity to use alternative data sources to personalize marketing and customer engagement.
AI for contextual experiences. Many organizations are convinced of the potential of AI. The focus in 2022 needs to be on machine learning, best practices for increasing the accuracy of predictive models, and moving models into production. As Beyond the Arc data scientist Bruce Johnson notes, “To capture the business value from machine learning, in the year ahead companies will need to prioritize MLOps and increase their focus on deployment.”
Payments as a starting point for designing new customer experiences. An exciting development is the progress the U.S. Federal Reserve is making toward FedNow, which aims to provide safe and efficient instant payment services. Enabling real-time payments will be an excellent starting point when it comes to designing new experiences.
The digital future looks bright for both consumers and business customers, with compelling opportunities and ever-increasing convenience. However, for many organizations (especially banks and fintechs), it will mean fiercer competition and renewed focus on engagement strategies and retention.
The Beyond the Arc team hopes that our discussion of these trends will strengthen your company’s customer experience and marketing plans in 2022.