As a catch-all word for a plethora of technological developments and inventions in the financial sector, the two worlds are becoming inextricable.
As the industry of FinTech continues to innovate, where are we now and what can we expect for the coming year? Here are five key trends that are expected to dominate the FinTech industry in 2023.
Trend Toward Entirely Online Banking Is Growing
A survey conducted in 2023 revealed that 61% of Americans expressed openness to transitioning to digital banking exclusively. Notably, the younger generation were even more likely to embrace this alternative, with 77% in favor.
The COVID-19 pandemic has had a significant impact on the traditional banking and financial services sector, leading to the closure of numerous organizations. Customers have consequently shifted to digital platforms to conduct their transactions.
The banking industry could benefit greatly from transitioning to a paperless format. This would provide greater access to financial services, particularly for customers with mobility impairments who would no longer need to be present in person to take advantage of them. Furthermore, the process would be more practical, quicker and efficient.
Nowadays, a variety of transactions can be carried out online, such as money transfers (which no longer come with the hefty fees that were once associated with them), deposits, and more.
That’s Why It’s Possible that Cashless Transactions May Become the Norm in the Future.
By 2023, Sweden has set its sights on becoming a cashless society. Not only is Sweden looking to transition away from paper currency, but other governments are also looking to move to a cashless system. The advantages of non-cash payments include increased convenience for both merchants and customers, as it eliminates the need to handle physical currency.
The use of digital payment methods can have a deterrent effect on certain types of physical crime, as there is no physical money to be taken. Additionally, it can save time for both the consumer and the business. Furthermore, it is leading to the development of innovative approaches to business and commerce.
Although there are advantages to a cashless society, there are a few drawbacks to consider. One of the main issues is the lack of privacy, as financial activity is stored and may be more vulnerable to hackers. Additionally, those who do not have the technological knowledge may struggle to keep up in this environment.
It’s possible that in the future, entrepreneurs may attempt to fix these issues; after all, fintech is all about accepting solutions.
Blockchain Is Expanding at an Exponential Rate.
It is projected that by 2025, the global blockchain industry will be worth $39.8 billion, with a compound annual growth rate (CAGR) of over 65% from 2023. This represents one of the most significant developments of recent years, and its impact is not limited to the financial technology sector.
Blockchain technology has gone beyond its initial application in cryptocurrencies, and is now being used in a variety of ways. Financial institutions are increasingly recognizing its potential, with its capabilities to provide increased security, streamlined processes and greater public trust and transparency.
Consumers are increasingly placing their faith in blockchain because they understand the benefits of a decentralised, immutable digital ledger.
Open Banking Holds Promising Future
Open banking is increasingly leveraging APIs to revolutionize data sharing and financial transactions.
The introduction of open access data sharing between banks and other financial institutions provides a range of benefits to customers and clients, such as improved efficiencies that save time and effort. Furthermore, by setting up decentralized networks, third-party organizations can access large volumes of data securely and offer innovative services that improve users’ financial wellbeing.
When customers open multiple accounts with different banks, the banks can share the pertinent information amongst each other. This facilitates the provision of tailored loans and other financial products and services to customers, as well as enabling them to gain better insight into their personal financial situation.
Artificial Intelligence Remains at the Head of the FinTech Game
It is essential to consider the role of Artificial Intelligence (AI) when discussing the near future of Fintech. AI is becoming increasingly prevalent across industries, and its applications within finance are numerous.
Artificial Intelligence (AI) is a powerful tool for identifying and responding to fraud in real-time. For example, if a customer’s spending patterns change suddenly, AI can be used to send a notification to investigate the transaction further. AI can also be used to assess potential borrowers’ creditworthiness by analyzing their financial history.
AI can help businesses to save time and resources. For instance, it can help to free up customer service staff by having chatbots handle increasingly complex inquiries. Furthermore, these resources can take care of various recurring tasks, such as enabling deposits and creating suggestions based on past transactions and behaviour. Additionally, AI can open up the scope of personalization.
How Financial Technology Will Develop in the Future
This is not an exhaustive prediction for the FinTech sector in 2019. With its emphasis on innovation, it is expected that the industry will experience significant changes.
Our continued existence is inextricably linked to the advancements made in this field. Enterprises in this domain are aware of their responsibility towards the financial system and the public, which holds an abundance of possibilities for development and transformation.
