The financial landscape is being shaped by an extensive range of technological advancements and innovations, creating an indistinguishable link between the two sectors.
The FinTech industry is constantly evolving, leaving us to wonder where it stands and what it has in store for the upcoming year. Below are five crucial trends anticipated to reign the FinTech industry in the year 2023.
The growth of the inclination towards fully online banking
In 2023, a survey discovered that 61% of US citizens were willing to switch to digital banking entirely. Furthermore, it was observed that the younger demographic held a higher preference for this option, with 77% of them expressing their interest.
The traditional banking and financial services industry has been largely affected by the COVID-19 pandemic, resulting in the closure of many establishments. Thus, customers have transitioned to digital mediums for their financial transactions.
The banking sector has the potential to gain substantial benefits by switching to a paperless system. This would enable better accessibility to financial services, especially for individuals with limited mobility, freeing them from the requirement to be physically present to take advantage of these services. Additionally, the process would prove to be more convenient, fast and productive.
In the current era, a multitude of financial operations can be conducted online, spanning from money transfers (without the previously steep charges), deposits, and a lot more.
This is why the likelihood of cashless transactions becoming the new normal in the future is high.
Sweden is projected to become a cashless nation by 2023. Besides this Scandinavian country, many other governments are also considering a shift towards a cashless system. Digital transactions offer numerous benefits, such as greater ease of use for both sellers and customers as it eliminates the necessity of handling physical cash.
By employing digital transaction modes for monetary purposes, certain categories of physical crimes can be prevented or discouraged, given the absence of physical cash to be stolen. This mode of payment can also result in saving time for both the vendor and the customer, while paving the way for inventive methods for conducting commercial practices.
Despite the numerous benefits of a cashless society, there are certain limitations that should be taken into account. Among them is the potential compromise of privacy, as financial activity becomes electronically recorded and more susceptible to unscrupulous individuals. Furthermore, individuals with limited technological know-how may face difficulties adapting to this digital concept.
In the future, there is a probability that businesspeople would aim to resolve these problems since fintech predominantly revolves around embracing solutions.
The Adoption of Blockchain Technology is Exponentially Growing.
The blockchain industry is forecasted to have a worth of $39.8 billion globally by 2025, with a year-on-year growth rate (CAGR) of more than 65% from 2023. This progress constitutes one of the most notable advancements in recent times, and its positive influence is not restricted solely to the fintech industry.
The usage of blockchain technology has progressed beyond its original purpose in cryptocurrency and serves a variety of functions. Financial institutions are continuously acknowledging its potential, given its ability to enhance security, optimize processes, and foster higher public trust and openness.
Customers are progressively placing their confidence in blockchain technology as they recognize the advantages of a decentralized, unalterable digital ledger.
Open Banking Poses a Bright Future
Through open banking, APIs are gaining greater traction in transforming financial transactions and data sharing.
The implementation of open banking has allowed banks and other financial organizations to share data seamlessly. Such advancements have resulted in several advantages for customers and clients, including improved efficiency that allows for time and effort conservation. Moreover, third-party organizations can securely obtain vast quantities of data through the creation of decentralized networks and offer services that enhance users’ financial welfare.
In circumstances where customers open accounts with multiple banks, said banks can share relevant data with one another, streamlining the process of providing customized loans, financial services, and products to customers. Additionally, this allows for individuals to better understand their unique financial status.
Artificial Intelligence Continues to Spearhead the FinTech Industry
When projecting the forthcoming state of fintech, the presence of Artificial Intelligence (AI) must be taken into account. AI is steadily gaining greater recognition across an array of industries, with varying use cases within finance.
Artificial Intelligence (AI) is a potent instrument in detecting and addressing fraud instantly. For instance, if a customer displays an unexpected variation in their spending habits, AI can notify relevant persons to scrutinize the transaction further. AI can also evaluate prospective borrowers’ creditworthiness by analyzing their financial records.
Businesses can benefit significantly from AI as it aids in conserving time and resources. Chatbots can handle progressively intricate customer inquiries, freeing up customer service staff for other tasks. Moreover, these personnel can attend to repetitive tasks, such as creating recommendations based on past behavior and transactions and processing deposits. Furthermore, AI can expand the possibilities for personalization.
The Future Advancement of Financial Technology
This forecast for the Fintech industry in 2019 is not exhaustive, as the sector prioritizes novelty, indicating that extensive changes are likely to occur.
The development and evolution of this field are of paramount importance to our continual existence. Businesses operating in this realm acknowledge their responsibility towards the financial system and the public, offering significant opportunities for expansion and change.
