The Top 5 Fintech Trends for 2023
With the number of financial breaches hitting the headlines, security is an overriding concern for all financial services. Moreover, the privacy and ownership of data will be a focus of regulatory scrutiny in digital banking. While nations will approach data ownership issues at their own pace, an ideal outcome would be comprehensive national standards. In addition, blockchain and other emerging technologies will add an extra dimension to fintech trends and regulation.
Hyperlocal financial services
China continues to lead the fintech revolution with a large internet population and a high rate of investment. Its population is underbanked and uses cash for minor transactions, but there are solutions in the form of hyperlocal financial services. Accenture and Microsoft are leading the charge in creating a blockchain-based identity network for 2017. The technology is set to provide secure identification to 1.1 billion people around the world.
Another popular trend in financial services is neobanks. These digital-only banks are able to provide a variety of conveniences, like expense management tools, quick balance review features, and real-time analytics. These new services are highly attractive to consumers, but they are also targets for financial fraudsters. Financial fraud is the most common type of internet crime.
Smart contracts
As the world continues to adopt new and innovative technologies, the number of applications in finance is constantly increasing. One area that is thriving is peer-to-peer finance. This technology allows borrowers to borrow money from others without having to put up any security. It is becoming increasingly popular, particularly with millennials. While it was initially used by friends and family to lend money to each other, P2P finance is now being adopted by banks, credit unions, and non-financial companies.
Blockchain-based smart contracts are a key area for continued innovation in the financial services industry. This technology is already being used by JPMorgan to facilitate instant payments in the $2.3 trillion repo market. The technology has a high level of security and trust and is able to extend across national boundaries. In addition to this, fintech companies are continuing to consolidate in the financial services industry as fintech startups continue to merge with larger organizations and add new capabilities. In order to remain competitive in this market, SMEs need to implement open APIs, partner platforms, and integrate fintech services.
P2P finance
One of the biggest trends in fintech is peer-to-peer finance, and many fintech companies are now offering this service. It provides a way to borrow money from friends and family without any financial security and is becoming increasingly popular with millennials. Originally, peer-to-peer lending was only used by individuals, but today it is being used by banks, credit unions, and even non-financial companies.
One of the biggest trends in 2023 will be the growth of P2P finance. The popularity of e-commerce means that the need for cash is dwindling. Consumers are increasingly looking for convenience when they pay for goods and services, and many are ditching cash in favor of cards or digital wallets. There has been a 42% decrease in the use of cash since 2019.
Banking-as-a-service
As consumers become less reliant on cash, the need for new and faster ways to pay for goods and services is increasing. While banks are still the dominant players in payment systems, non-traditional players like technology companies, start-ups, and retailers are increasingly competing with them by introducing value-added services. This trend is expected to continue in 2023.
Another emerging trend in fintech is voice-enabled transactions. For example, Amazon’s Alexa has voice-activated payment capabilities that allow users to pay through voice commands. This technology is gaining popularity with consumers and is expected to become a secure means of payment in the future.
Embedded finance
Embedded finance is a rapidly growing market and one of the top fintech trends for the next decade. This type of financial service eliminates the need for intermediaries and gives companies control over payment workflow. It also improves the customer experience by analyzing customer behavior patterns to fine-tune products and services. It also creates integrated platforms that enable users to complete transactions from a single place.
Embedded finance is a growing market for fintechs, and banks are taking notice. Some companies, such as ABN AMRO, are embedding financial products into their applications. Another example of embedded finance is 10x Future Technologies, which secured 187 million dollars in a June 2021 investment round. This company is helping existing financial institutions build next-generation solutions and services to improve efficiency.