The fintech industry is constantly evolving and improving by emerging technologies and innovative solutions.
As per reports, India is leading the FinTech adoption race with a rate of 87% which is much higher than the global average of 64%. The promising Indian FinTech market is expected to reach $1 trillion in AUM and $200 billion in revenue by 2030.
The banking industry has recently gone through a massive surge in leveraging fintech solutions as customers are becoming more tech oriented. From embedded finance to SaaS services there are notable trends around technology that will shape the fintech industry in 2023.
In this article, we will look at the trends that will frame the future of fintech in 2023 and further and will make banking much more accessible and hustle free.
AI & Machine Learning
One of the trends that will certainly change fintech's future is AI technology. AI and ML can redesign banking, payments, investments, risk management and much more.
AI is a broad term used to describe machines with the ability to adapt to the environment and act upon to maximize the chance of success. ML is an application of AI that uses structures and algorithms to evaluate data and identify patterns within it.
Fintech companies can leverage technologies to automate processes while providing accurate insights on customer behaviour.
By leveraging these tech advanced tools, businesses can reduce labour cost while increasing overall performance accuracy and efficiency.
Embedded Finance
Embedded finance has started getting traction recently and is on its way to become the dominant trend in 2023.
The term defines a broad category of financial services and products that may be used within a certain platform or system. Users can manage personal finances without switching between multiple apps or websites if these services are embedded within the platform.
"Buy Now Pay Later" is the fastest-growing embedded finance model. Experts also predict that the market for embedded financial services will expand by 40.4% annually over the next couple of years.
SaaS
SaaS (software as a service) is another trend to watch out for in 2023. Experts believe that the sector is moving in the right direction and will hit the $623 billion milestone in 2023 at an annual growth rate of 18%.
SaaS based services lets companies access and pay for software applications hosted in the cloud without installing them on the servers.
This eradicates associated operational costs and allows organizations to leverage their resources on building customer experiences.
SaaS provides access to powerful tools which deliver security protocols for data storage that would be expensive to implement by firms themselves.
Open Banking
A financial technology through which customers give consent to securely share their financial information with third parties or entities providing more control and accessibility over their finances. This will be more relevant as the fintech industry size is getting bigger every year.
It promotes customer convenience and business opportunities in accessing new markets, creating valuable products and services and double efficiency through accurate data exchange.
Open banking leads to many possibilities for banks, payment platforms and other fintechs who leverage the power of customer data.
The framework can revolutionize customer’s money management and interactions for banking services since it provides unprecedented transparency, choice, and control.
IoT
IoT enables collecting data, analyzing it and then evaluating it without human intervention. It has made banking more secure, efficient, transparent and convenient.
Banks use sensors embedded in their products to monitor customer activities and automate output based on preferences or behaviour. Fraud detection or automatic payments are a few examples.
Voice recognition technology is being used for authentication, simplifying login processes and enhancing security thus making account hacking difficult.
Blockchain
Blockchain is one of the most promising trends in fintech. Defined as a ledger that records and monitors all different types of transactions.
permits individuals or entities to securely transfer digital assets without any central authority or third-party intermediary presence. This decentralization lets the technology be used for various financial applications and use cases.
In addition to its security measures, the technology also has potential for cost savings due to its distributed nature with no centralized power.
There is also an increased transparency to improve trust in financial systems worldwide by reducing fraud and delays in settlement times.
Neobank
Neobanking platforms and global investments in the segment have risen consistently in the past few years.
Neo-banks are third-party companies that provide apps through which you access a savings account and hosting other financial services offered through RBI-licensed banks.
The continuous funding received since 2017 reflects the increased interest in this sector.
Investors realized the true potential that neobanks bring to the larger financial services industry.
The way forward
Digital adoption will drive financial inclusion and banking - tech education:
Financial inclusion and tech learning will be two of the important driving factors for financial services. Digitalization and the concept of FinTech planning to reach the underserved population with improved access to banking services.
Transform the global payment landscape:
Major initiatives by RBI and NPCI are likely to have a far-reaching impact on the digital payments and credit space. As regulatory bodies try to build on data privacy and open banking, private fintech payment entities emerge to offer financial services to achieve profitability. It has brought the Indian FinTech space into the spotlight internationally with NPCI’s conversation with 30 countries for RuPay and UPI.
Bank and FinTech aim for personalization:
Banks and FinTechs shall build partnerships to utilize the customer base and regulatory understanding while leveraging FinTech’s agility and customer experience to serve innovative and customer oriented products.
Ecosystem business models will evolve:
The business model will produce connected products and services offered to a common set of customers with more value and better customer experience.
Evolving regulations on building secure markets for growth:
The regulatory system in the country has facilitated FinTech adoption by introducing guidelines and regulations. They are changing with the evolving market conditions and keeping a customer centric approach.
Rise of India FinTech 2.0
Fintech will be a powerful force of the industry's future in the very long run. There will be multiple usage of technologies like blockchain, AI and IoT in financial transactions. Adoption of tech around automation and integration will grow more rapidly. Thus consumers will have access to more tailored services to fulfil their needs. As tech innovation continues to craft the space, companies must stay ahead of the curve to tackle any challenges that may come over.
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