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Fintech Global

Year to Come 2022 and Year in Review 2021

Fintech Global Year to Come 2022 and Year in Review 2021

As part of Linklaters’ “Year to Come and Year in Review” series, our global fintech team has published its Fintech Global Year to Come 2022 & Year in Review 2021 publication.

In this, we look forward to 2022 and have summarised key legal and regulatory developments in the fintech space in 2021. Our review covers the full breadth of the fintech legal spectrum and addresses global, EU and country specific developments for 17 jurisdictions.

Visit our dedicated Fintech page to find out more about our solutions-driven advice, our other Fintech content: thought leadership, podcasts, videos and our FintechLinks blog, which provides fintech-focused news and updates from around the world.

7 Fintech Trends for 2022

We have identified 7 key trends for the year to come.

The digitalisation of finance and the opportunities for fintech

The supercharging effect of the Covid-19 pandemic on the digitalisation of financial markets and products continues – with a resulting power shift from finance providers to consumers. The crisis has provided an extreme stress test for the finance industry which – enabled by tech – has passed with flying colours. Going into 2022 the biggest theme in finance is “the great unbundling of financial services”, and its rebundling around a digital architecture, putting fintech at the heart of the industry. Fuelled by COP26, the prioritisation of sustainability and transition to net zero is also providing big opportunities for “climate fintech” and data/financial solutions to the climate change challenge.

Record levels of fintech investment and funding

The digital shift has also precipitated record levels of investment – including venture capital – into digital assets, payments and fintech generally. By the end of Q3 2021, global fintech funding reached US $94.7billion, almost double the 2020 year total. We expect that to continue to accelerate into 2022 and to drive more transformational deals in the fintech space, as well as exits for those investors. That said, it remains to be seen if the heat in the market can be sustained as regulatory efforts, such as the suppression of so-called “killer acquisitions” in tech, antitrust attention on control of data, and new/ enhanced foreign investment regimes focused on investments in tech, start to bite.

The global regulatory reset – financial services, antitrust and data

China has implemented a major regulatory reset across financial services, antitrust and data – focusing on some Big Tech business models and crypto. The China regulatory squeeze is impacting domestic investment but also creating opportunities in India and South East Asia. The US is also experiencing a reset – regulating by enforcement, with more anti-tech Biden regulatory appointees and changing tides of sentiment against US tech giants. The EU and the UK post Brexit are keen to catch up with their larger rivals: focusing on fostering safe and trustworthy innovation, building on their established frameworks and putting out bold new proposals with more to come in 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.

Payments and the future of money

Innovation has enabled the payments industry to benefit from commerce moving online. Products, such as buy-now, pay-later, have boomed. As local payments become frictionless, calls will grow louder for infrastructure and regulations to harmonise so that cross-border payments become cheaper, quicker and easier. But it is not only existing infrastructure which is being improved; wholly new ways of making payments are also under development. The global supply of stablecoins is already over $100bn. Central banks are continuing to explore what it means to issue digital currencies, although many CBDCs are still years from being in widespread use. In the meantime, payments firms can expect regulation and competition to put pressure on business models and increase the potential for disputes.

Data governance, AI and cyber– an increasingly complex matrix

Regulators in major markets are adopting divergent approaches to incentivising effective risk management. The EU’s first-mover proposals for an AI specific regulation benchmark a comprehensive, risk-based approach, while the UK is considering deviations from EU standards for both data protection and AI to foster innovation. China has responded to the EU’s GDPR with a similar, but sometimes more stringent, data protection regime, and has its own proposals on global standards for AI. Data protection and cyber rules are proliferating in the US, as is increasing enforcement against digital platforms. Several markets are also following the UK and EU’s lead with wide-ranging operational resilience requirements. This broad, unharmonised matrix of requirements is placing pressure on the increasingly complex interaction between the technology, risk, compliance and procurement functions in international financial institutions.

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.

Tech Legal Outlook 2022

Read our complementary report exploring the key global trends in the technology sector that we believe will shape the legal outlook for businesses in 2022 and beyond.


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