Fatihah Ramzi | 12 January 2022
2021 was the year of great financial innovation and developments. Let’s discuss the key events of the year.
The year 2021 was truly one of a kind. Following the global COVID-19 epidemic, which wreaked havoc on international markets, forcing families into lockdowns and organizations to close their doors, 2021 saw the introduction of safe and effective vaccines, as well as rebuilt consumer trust. However, due to COVID-19’s structural limits and manufacturing shortages, this resurgence of consumer demand resulted in a number of market upheavals, oddities, and record-setting prices.
It’s also a year of technological advancements in the banking industry, with a slew of new financial technology businesses. With banks, financial technology businesses, and regulatory bodies, 2021 is a strong contender for fintech year. Purchasing financial technology companies rather than banks is becoming increasingly fashionable. Fintech companies are now vying for a piece of the global market. With the year 2021 being designated as a Financial Revolution, let’s take a look back at some of the most significant events of the year.
An Increase In Mergers & Acquisitions
Global merger and acquisition (M&A) activity has reached a record high, continuing the year’s record-breaking deal-making run, which has been boosted by low loan rates and rising stock prices. More than 40,000 mergers and acquisitions, as well as private equity deals, were exposed, totaling more than $6 trillion in value. Part of the rationale for this uptick in deal-making can be ascribed to catching up, as the previous year’s mergers and acquisitions volume was low, with only $3.6 trillion in transactions being completed in 2020.
Acceleration of Digital Banking
Before COVID-19, engagement patterns were rapidly shifting to digital across all age groups, and this trend has only intensified subsequently, with digital experience now being the key driver of attrition and a crucial determinant when selecting a main bank. Generally, banks have attempted to digitally copy in-person transactions in order to save money, without giving much thought to replicating the in-person experience.
This is fast changing, as competition becomes more digital and seamless, and emotive digital experiences become the center of a bank’s value proposition. Banks have noticed the trend and are investing extensively to address current pain points, with new entrants in particular speeding up the pace of innovation.
Inflation At An All Time High
Singapore’s headline prices climbed at their highest rate in nearly nine years in November 2021, thanks to higher private transportation and service costs, and the government raised its forecast for the measure for 2021 by a smidgeon. In October, headline inflation reportedly increased by 3.8 percent, beating economists’ expectations of 3.35 percent and 3.2 percent. It’s at its highest level since February 2013.
Consumer prices have risen over the past year due to a variety of variables, including supply chain disruptions, workforce shortages, and an unexpected burst of purchasing following widespread lockdowns during the COVID-19 epidemic, according to economists. Although As much as we hope that these higher expenses will be forgotten by 2021, economists are not hopeful about 2022, especially as new variants of the virus continue to emerge.
The Rise of Fintech
The fintech market has continued to help increase accessibility to financial services throughout the COVID-19 epidemic, especially in emerging nations, with robust growth in all sorts of digital financial services. Access to affordable financial services is crucial for economic growth, particularly in the aftermath of the epidemic, when more individuals began using contactless payments and digital transactions.
Furthermore, the usage of basic financial services can help people increase their incomes, enhance their resilience, and better their lives. Fintech technologies are lowering the cost of providing services, allowing more people to access them, and minimizing the necessity for face-to-face interactions, which are critical for maintaining economic activity during the epidemic.
What To Expect For The Financial Industry In 2022
As we have already observed in the financial industry, technological innovations are reshaping how people use and access their finances. AI is revolutionizing the way financial companies operate and service their clients, from better and quicker credit decisioning to risk management, fraud protection, investing, automation systems, and robo advisory services. IoT will play a bigger role in cash management in the near future, allowing banks to automate essential business activities.
However, it is important to note that the booming of Artificial Intelligence (AI) and Fintech will not equate to a loss of jobs or a cut of manpower. Artificial intelligence (AI) and financial technology (Fintech) can only facilitate the movement of goods and services. In a nutshell, digitization has eliminated the middlemen. As a result of technological advancements, vocations that require creativity and cannot be undertaken by AI will prosper in the upcoming year. Every revolution involves wins and losses, which is why intellectual capital will always be needed in the future. Leadership, invention, analysis, and creativity can only be provided by people.
Despite the epidemic, 2021 is described to be The Great Financial Revolution due to many fintech startups, the growth of technologies, digitalizing financial services, a significant increase in M&As as well as the global inflation. 2021 was a great year for financial innovation as well as economic growth. We can only hope that the finance industry will continue to boom in 2022.
