7 Fintech Trends for 2022

Blurring lines between crypto and mainstream financial markets

The range and complexity of digital assets continues to expand, with the rapid growth of DeFi and NFT markets and broadening development of digital assets pegged to traditional assets. Institutional exposure to digital assets as a distinct asset class is expected to increase significantly while deployment of novel technologies in the traditional financial markets gains momentum. The crossover between decentralised and traditional markets and related contagion risks will be of particular concern for policymakers. A key challenge is to determine how policies should evolve to address both novel market activity and traditional market activity deploying novel technology in a manner that fosters innovation whilst managing risks effectively.

Innovation leading to increasing enforcement and litigation risk

Novel financial products and services do not always fit easily into legal frameworks and may pose greater inherent risks (such as volatility, vulnerability to market manipulation and data breach, scams/financial crime). The increase in their uptake has focused regulators even further on mitigating consumer harm. Where provided by start-ups/ scale-ups with relatively immature compliance frameworks, there is a recipe for future investigations and litigation. Regulators’ expectations are also increasing around preventing financial crime, transparency, fair processing of personal data, acting in consumers’ interests and responsibly on ESG and D&I. The risk of civil claims – including class actions – is also increasing due to the availability of litigation funding in many jurisdictions.