The Kuflink Peer to Peer Investor Blog

Publish at: 2022-11-25 19:28:14

Top Banking Trends And Themes In 2022

Things have changed a lot in recent years due to the global pandemic, and so have the banking industry trends. The pandemic has been seen as a watershed in the evolution of banking. As a result, banks have become more proactive, adaptive and innovative. Instead of looking back at their progress, they are more likely to look forward to the opportunities ahead for a resilient future.


We have identified the top 10 trends and themes shaping the banking industry and building an exciting new future for banking. 

Geopolitical Tensions

It is assumed that geopolitics is likely to dominate soon. So, the financial institutions must adjust according to the change in the sanction regime. Additionally, they need to build up their knowledge about second-order exposure (for example, many automotive firms are vulnerable because of their dependency on Ukrainian plants) and the long-term effects of this crisis on the economy (typically a fall in GDP and global trade). 

When it comes to sanctions, banks need to focus more and more on the ultimate beneficial owner for collateral such as properties or other assets. Banks that do not understand this area could face significant regulatory penalties, reputational fallout or the moral dilemma of their involvement in this conflict.   

Uncertainty In Macroeconomy

One of the most significant effects of global economic uncertainty is its impact on energy costs and increase in material inflation. Raise in fuel prices and supply chain issues are the two critical drivers of hyperinflation and are now more likely to be amplified.  

The pandemic mainly affects banks in terms of revenue, but the impact on earnings may not last long. Many times, losses on lending did not crystallise mainly due to government support schemes. However, the future is less promising. The cost of living is increasing, and among other things, it also impacts banks and alters their earnings. Therefore, we expect an increase in loan loss provision and bank earnings volatility.    

Interest Rates And Monetary Rules

Many businesses have not seen sustained inflation, and banks and the corporate sector must carefully assess their commercial impacts. In response to rising inflation, central banks are raising interest rates. The Bank of England has increased the base rate to 3%, and there could still be further rate rises. The increase in interest rate will continue as long as inflation is maintained. The current circumstances indicate that the quantitative easing and property price inflation of recent years are coming to an end. 

Although the net interest margin (NIM) for banks increases with the increase in rates, it may be outweighed by the adverse financial impacts as customers and industries suffer. In addition, high credit rates also give rise to discussions of the cost of living that will impact individuals and businesses. Both might struggle to manage the new and rising costs, leading to default rise and delinquencies.  

Fraud Risk and Payment Crime

Payment frauds are increasing, and criminals are developing new ways to target and get money from their victims. Authorised push payment fraud and card payment fraud are some common examples of payment fraud. Moreover, the scams of purchasing goods and services that are never delivered or materialised are also increasing. 

There are technical and regulatory standards in the UK, such as strong customer authentication (SCA) and Pay. UK's Confirmation of Payee (CoP) to ensure the security of customer funds and reduce payment fraud. However, these reforms and actions come with unique implementation challenges.  

In 2021 regulatory authorities focused highly on payment fraud, and there were several high-profile fines regarding financial crime. Past failings by banks are still coming to light, and most financial institutions need to continue to invest in this to keep pace with regulatory expectations. Furthermore, with recent geopolitical events and the use of sanctions, the regulators are unlikely to take their foot off this particular pedal. 

Value from Expenditure

Banks will seek to reduce inefficiencies, which can be highly challenging. Some may cut too quickly and easily, while others may fail to act sufficiently and broadly. Both can significantly impact operating models. 

In recent years we have noticed explicit cost reduction targets. While this agenda continues to grow, we anticipate more focus on 'value for money and 'getting it right the first time. However, with the high cost of remediation, it is still not possible for most larger banks to put an end to their past mistakes.    

Customer Duty 

Every year, the Financial Conduct Authority (FCA) changes regulations, so this year it is moving the dial for financial service providers. Now Financial institutions do not only need to be fair, but they also have to work in the best interest of their customers and be able to evidence that

It may need only a few changes in larger organisations, such as a more diversified product range and income streams, but small and medium-sized banks may need to work hard to prove that their business model is in the best interests of customers.     

Regulatory Requirements

Regulators are placing extreme pressure to make sure that the information they receive is accurate and reliable. Making regulatory reporting strong is an ongoing theme in the financial sector. As a result, firms need to keep up with the reporting requirements and ensure that their processes also fit the purpose.

The use of data and analytics to support reporting is a popular theme. Financial organisations should consider it an opportunity to modernise their regulatory reporting, risk and finance teams. The regulators have shown that they want to be more data-led, and the industry should support them in every possible way.                    

Customer journey and Value Chain

Traditional net interest margin (NIM) may no longer be the most significant revenue source for banks. Compared to traditional banking models, equity valuations for payment and those that own the customer interface are massive. In addition, value is now seen in those banking elements which affect the customer directly, and all other things become less important. Simply put, the value lies in controlling the customers coming to you.  

Banks are focusing on making good customer relationships to make more money. Therefore, disintermediation is a significant risk starting to materialise, and banks must consider it. Furthermore, some non-banking firms are also starting to provide services in the space that can threaten banks' market share.   

Data Collecting and Improvement 

Data collection and improvement are becoming increasingly popular in the financial services sector. Access to all the data can help banks support internal and external decisions. It also helps firms to justify their course of action and support information requirements from regulatory authorities. 

The raw data must be robust enough to support broader business and investment in innovation. Banks should also consider and control who owns the data because different teams might have different opinions of what is and is not the correct data source.           

ESG and Ethical Banking 

Banks will need to take sustainable steps to decarbonise their loan portfolios. Corporations and financial service institutions focus on environmental, social and governance issues (ESG). Still, we see nuances concerning other issues beyond climate change, including biodiversity, sustainability, diversity, and inclusion.

Social (S) and governance (G) still rank second to the environment (E), but they are growing continuously. For instance, banks are increasingly pressured to change their lending habits and assess their services and investments' ethics.  


We have discussed some key themes that are becoming popular among the banking and payment sectors. Adapting these trends and themes will help them to ensure future resilience. With the growth of technology, digitalisation has become a significant part of the financial service sector. Banks are creating super apps and electronic payment methods to provide ease to their customers. 

While staying on top of all the topics discussed in this article may seem challenging, banks have an opportunity to transform their processes and become more scalable, sustainable, and future-proof. 

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This is for information only. Please always seek professional advice before acting. 

Kuflink Ltd is authorised and regulated by the Financial Conduct Authority (FCA) (Registration Number 724890). Kuflink Ltd has its registered office at 21 West Street, Gravesend, Kent, DA11 0BF, under company number 08460508.  Kuflink Ltd has been approved by the Board of HM Revenue and Customs to act as an ISA manager in May 2017 to offer Innovative Finance ISAs – ISA manager No – Z1943.


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