The rapid pace of change and ever-changing consumer preferences in recent years have meant that companies and financial institutions have to be prepared for change almost on a daily basis.

The changes companies made in 2021 now provide a roadmap for navigating the New Year that is sure to have more surprises in store. As the pandemic further accelerated the changes already observed, it created a tipping point that prompted executives, bankers, and corporations to reassess their priorities and adapt to this new operational reality.

The past year has demonstrated the resilience and adaptability of the industry, but it has only laid the foundation for the changes we can expect in the new year.

Here are some banking trends in 2022:

Economic shifts

In 2020, the U.S. economy hit an all-time low, shrinking at an annual rate of 3.5% – the lowest annual rate since World War II, according to ECLAC – but by the end of the third quarter of 2021 we saw a slow but steady rate of annual growth of 2 percent signals that the economy is making headway in its recovery.

The recent surge in inflation has posed a new challenge for companies, forcing them to blow their budgets, think about price increases and, most importantly, plan ahead.

According to a recent consumer price index report, prices rose 6.8 percent in November to a nearly 40-year high. 2021 will clearly go down in the record books, suggesting high inflation. While officials continue to claim that rising prices will not become a permanent part of the economy and that policy makers have tools to keep inflation under control, inflation can create longer-term business challenges than expected. Against this background, the Fed has announced two to three rate hikes for 2022.

Continued consolidation

M&A activity continued at unprecedented levels in banking and beyond this year. More than $ 2.5 trillion in deals were announced by mid-year, and the total value of US bank mergers in 2021 surged to more than $ 61 billion in late November, according to S&P Global Market Intelligence.

Further consolidation is expected in 2022. Scaling will be critical to enable companies to master changing regulatory landscapes, recruit top talent, and continue to make significant investments in digital infrastructure and new technologies.

Banks will invest more capital in product development and partnerships and will continue to consolidate to meet the rising cost of technology investments and regulatory requirements for these companies. We will also see an increase in banking / fintech M&A. In fact, we’re already seeing a number of announcements by the end of the year. More recently, we’ve even watched fintechs take over small banks, a trend that could continue as fintechs try to expand their offerings.