Five Trends We’re Watching in 2022

Since 2016, Citi Ventures has explored emerging technological, behavioral, and societal trends that we believe are impacting the future of financial services. These trends take shape for us each year based on conversations we have with startup leaders, clients, and our innovation partners across Citi. This theme-based approach informs the investments we make, the technologies we investigate, and the solutions we create.

These trends are of particular importance in 2022, as the world continues to grapple with the economic and societal ramifications of the COVID-19 pandemic. Looking ahead, this decade will be defined by how humanity responds to the significant challenges posed by COVID, climate change, inequality, and increasing political and societal polarization. In such an environment, global business leaders have both an obligation to prioritize societal well-being and an opportunity to lead the way forward to a more equitable, sustainable future.

Here are the five global trends that Citi Ventures is examining in 2022.

I. Resilience

The Trend: The pandemic and climate crisis have laid bare the dire need for resilience in all forms and at every level of society—from global supply chains and healthcare systems to individuals and communities.

• In the US alone, the cost of climate change reached $890 billion in the 2010s and will likely hit the trillions in the 2020s.
• The Omicron variant of COVID-19 has driven case counts around the world to all-time highs, sending healthcare and school systems back into disarray.
• In 2021, 72% of supply chain executives reported that the pandemic negatively impacted their businesses.
• Inflation in the US has hit 7%, driving increased consumer anxiety and changing spending patterns.

The Opportunity: Financial institutions (FIs) can help support resilience in a variety of ways, such as: capitalizing companies that facilitate climate solutions; financing disaster recovery efforts; investing in/developing solutions that embed resilience within supply chains and the operations of public and private institutions; supporting the sustainable, equitable management of common goods; and helping consumers “hedge” their life and financial plans to account for future volatility.

II. Power to the People

The Trend: Financial power, once reserved for relatively few people and organizations, is being dispersed among individuals and self-organized groups, who are using it to build wealth, shift markets, and democratize access to the financial system.

• Roughly 63 million people in the US alone are either unbanked or underbanked.
• The GameStop short squeeze caused its stock price to rise by nearly 3000% in less than one month.
• The social media-driven “creator economy” was estimated to reach over $100 billion in 2021.
• The blockchain-based Decentralized Finance (DeFi) ecosystem controlled over $250 billion in total value as of December 2021.
• Over the next 25 years, roughly 45 million US households will bequeath over $68 trillion to their heirs, mostly Millennials.

The Opportunity: This transition should provide FIs with critical opportunities to meet next-generation customers where they are and better serve their changing needs. This could include: helping younger consumers manage their money through digital platforms and educational resources; working with the DeFi ecosystem to develop safe, secure, and accessible products and services; securely financing the creator economy; and investing in new pathways for wealth creation.

III. Inequality, Instability, and the Breakdown of Trust

The Trend: Amid growing inequality, widespread economic and societal disruption, and pervasive online misinformation, rising tensions between geopolitical superpowers including the United States, Russia, and China are threatening to further destabilize the global economic system and diminish trust. This will likely make collective action on critical global issues such as COVID and climate change all the more difficult, and may lead to state-sponsored conflict on the ground and/or in cyberspace.

• Today, global inequality is close to early 20^th-century levels, with the bottom half of the world’s population owning just 2% of all wealth while the top 10% owns 76%.
• Due to the pandemic, extreme poverty rose in 2020 for the first time in over 20 years—resulting in roughly 100 million people living on less than $1.90 a day.
• Trust in traditional institutions may be reaching an all-time low. For example, in the US, trust in the national government declined to 24% in 2021, and globally nearly 60% of people say government and business leaders purposefully try to mislead.
• Climate change is already impacting populations unequally, and over the next several years could push 132 million more people into extreme poverty and force roughly 216 million people to relocate.

The Opportunity: As global organizations that regularly interface with key stakeholders in both the public and private sectors and are fundamentally built on trust, FIs are well-positioned to offer leadership and sound guidance in the midst of these unpredictable times. By investing in stabilizing forces and speaking out against unethical companies, governments, and other actors, FIs can help foster renewed trust around the world and rally various stakeholders around such key issues as ESG, racial equity, and public health.

IV. Digital Economies

The Trend: From e-commerce to the Metaverse, our increasingly virtual lives are driving the growth of digital economies and giving rise to brand-new markets, while upending traditional concepts of ownership, wealth, and value and making it harder for consumers to track their purchases and assets.

• Bitcoin reached $1.3 trillion in market capitalization in November 2021, then dropped below $700 billion by late January 2022—once again displaying its volatility.
• Over $22 billion was spent on non-fungible tokens (NFTs) in 2021, compared to just $100 million in 2020.
• The global gaming market reached roughly $180 billion in 2021.
• Many predict that the Metaverse will reach a market size of $800 billion by 2028.
• One-third of US consumers who used "buy now, pay later" services have fallen behind on one or more payments, and 72% have seen their credit scores decline.
• An early Bitcoin miner threw away the key to his $500 million worth of Bitcoin and is now fighting to retrieve it from the local dump.

The Opportunity: As these fast-evolving economies mature, their stakeholders will need strategic guidance, support in scaling, and help understanding their potentially vast implications. This presents compelling opportunities for financial leaders to engage with the space by: exploring “fractional ownership” and the shift from ownership to access models; helping expand the crypto and DeFi ecosystems; banking the Metaverse; empowering digital wealth creation and management; and more.

V. Decentralized Institutions

The Trend: Remote/hybrid work, the “Great Resignation,” and blockchain-based Decentralized Autonomous Organizations (DAOs) are raising questions about what the future of traditional institutions such as corporations, universities, and cities will look like.

• 36.2 million Americans will work remotely by 2025—an 87% increase from pre-pandemic levels.
• Deel, a startup that helps companies hire, onboard, and pay employees in regions where they don’t have an office, reached a $5.5 billion valuation in 2021 and now works in more than 150 countries with roughly 4,500 companies.
• DAO membership quintupled over six months in 2021 to over 1.3 million, and the DAO ecosystem now holds nearly $11 billion in assets under management.
• In October 2021, the US state of Wyoming passed a law granting DAOs the same legal authority as an LLC.

The Opportunity: While still in its early days, this trend could open up a host of new opportunities for FIs to engage with such questions as: how to manage a truly global talent pool and maintain culture and connectivity in the future of work; how to manage physical real estate and infrastructure in a hybrid world; and even what a DAO-based, decentralized “gig economy” could look like.