5 Trends That Will Dominate The FinTech Landscape In 2023

2022 has been a remarkable year for the Indian fintech market. A recent EY report revealed that India has a fintech adoption rate of 87% – the highest among all countries and substantially higher than the global average of 64%.?

These numbers indicate enormous potential and opportunities to satisfy an increasingly sophisticated and demanding customer base. Therefore, it is important to consider the trends that will become driving forces in 2023.?

In this blog, we will take a look at the fintech trends that will dominate the industry and how they shape businesses, user experience, consumer demand, and government sectors worldwide.?

The rise of regtech technology:

Regtech or regulatory technology is the management of regulatory processes within the financial industry through technology. It simply means using technology to oversee regulatory procedures. Regtech addresses issues like tracking, reporting, and compliance.?

As per reports, the regtech market is anticipated to grow to $44 billion by 2030. With digitisation becoming the norm, there are also increased risks. The digital financial landscape is a hotspot for fraud, hacking, data breaches, etc.?

Regtech companies collaborate with financial institutions and regulatory bodies, using cloud computing and big data to identify issues or irregularities in the digital payment space and minimise risks and data breaches.?

The emergence of digital-only banking:

Digital banking, as the name suggests is banking done via a digital platform. Simply put, it is the automation of traditional banking services. Digital banking enables customers to access banking products and services via an electronic/online platform. It substitutes the bank’s physical presence with an online presence, eliminating a consumer’s need to visit a branch.?

Ease, convenience, variety of products, cross-border transactions, minimal fees, immediate peer-to-peer transfers, and perhaps even investment options are driving the demand for digital-only banking. In fact, 2.5 billion people are expected to use digital-only banks globally by 2024. Thus, the shift toward digital banking will continue.?

The amalgamation of AI and fintech:

As per a report by Modor Intelligence, the global market for AI in fintech is expected to reach $26.67 billion by 2026 while maintaining a CAGR of 23.17% from 2021 to 2026. 90% of international fintech businesses already depend significantly on AI and machine learning.?

AI can facilitate client data management, offer suggestions on management strategies, identify human errors, prevent fraud and maintain banking quality. AI can also interact with clients directly via chatbots and self-learning apps. Moreover, backend procedures like security checks, customer onboarding, and other services can also be automated using AI.?

Increased consumer demand for embedded finance:

Embedded finance means non-financial companies offering financial products and services. It covers financial services such as banking, credit, investment, payment processing, lending, or insurance. It involves placing a financial product in a nonfinancial customer experience, journey, or platform. For instance, sales financing at appliance retailers and auto loans at dealerships are instances of embedded finance.?

Among consumers, demand is already maturing for a range of deposit, payment, issuing, and lending products, among them, buy now pay later (BNPL) is a notably growing sector. Buy Now, Pay Later is a type of short-term financing that allows for the future payment of goods or services. This service functions without interest, making it popular among consumers. As per a study by Allied Market Research, the BNPL market is predicted to almost triple by $531.53 billion. And by 2030, the BNPL market is forecast to be worth an impressive $3.27 trillion.?

Contactless payments to witness an upward surge:

Contactless payments had been there, but the pandemic accelerated them in a way like never before. Convenience, speed, reliability, security, frictionless customer experiences, and efficiency are some of the factors that facilitated the quick adoption of contactless payments. And the trend will continue. According to a 2021 report, the volume of these transactions will increase by 92% globally in 2023.?

The road ahead:

While AI technology will keep disrupting the market and help businesses reduce overhead costs; embedded finance and contactless payments will continue to improve customer and user experience. Society is enthusiastically embracing these trends, thus accelerating financial inclusion . Ultimately, it is the consumer who will be the final winner as he will benefit from the conveniences that these innovations are offering in the financial space.?