5 Tech trends that will change the fintech industry in 2023
A recent report by Bain and Co. recognized India as one of the first leaders to uplift the exposure of the country’s fintech industry globally. Further, the report states the boom in smartphone adoption in India, set to breach 1.1 billion units by FY26, could push the net valuation of fintech services by 3.5 times in India, from $100 billion to $350 billion in four years. Experts believe Digital Transformation played a significant role in enhancing customer experiences, strengthening value offerings, boosting earnings, and extending product offerings to multiple applications.
GenZ stepping into financial knowledge
In a recent trend, Gen Z users are highly influenced by e-commerce and online purchases, with the frequent use of the “Buy Now Pay Later” option, and hence, the market expects integration across sales and services. According to the Global Payments Report by Worldpay from FIS, “Buy Now Pay Later” will account for 9% of the country’s overall eCommerce market share by 2024, making it the fastest-growing eCommerce online payment method in India. So much so, that many companies have adjusted their business models to fit this new trend and are developing strategies to meet the demand for BNPL among young consumers.
Keeping Gen Z in mind and the impact of social platforms, there is a need for bringing about transparency, customer experience, and a predictive approach that could drive the new age of banking and the financial products offered. India’s young working population is appreciating the individualized financial solutions that Neobanks have to offer which makes this industry so alluring. An interesting survey by C-suite executives (CXO) states that fintech infrastructure (for Banking as a Service), consumer financing, and neo-banking have emerged as the top three fintech issues that business executives are most optimistic about for the short to medium term.
Nowadays the youth are much more comfortable with digital technology as they grew with it. They are more at ease moving not only toward the web but moving directly to mobile apps. This also applies to their financial services needs too — payments, investments, lending and many more. Keeping that in consideration, organizations are now understanding their requirements and building a lending infrastructure where their real-time money issues are served with solutions. These services also include numerous ‘Buy Now Pay Later’ products such as HealthTech, EdTech and many more which gives them affordability and upgradeability.
Trends leading the Fintech Industry to grow
Hence, Fintech develops a secure, and simple payment for all individuals. Here are 5 tech trends that will define fintech in 2023:
- Use of AI and ML for decision making
An emerging trend in FinTech is being driven by artificial intelligence (AI), including banks and other financial institutions. Fintech companies can break fraudulent transactions because it can help to identify patterns in fraudulent activities and prevent fraud from happening. On the one hand, AI technology can speed up processes and provide more convenience.
However, given the difficult situation of today, when online fraud is on the rise, fintech sectors could end up being a target for cybercriminals. To prevent these fraudulent transactions, AI and ML are backed up with an underwriting model, that helps to reduce the number of defaulting customers who automatically get approved.
These tools are not only helping new customers to maintain proper scorecards, who do not have a credit history but also create newer variables and data points, which aid in the creation of increasingly complicated models which improve risk prediction or automate processes. This increases the efficiency of security measures and advances the use of data outside of the planned list of mainstream lending practices. As a result, future market trends can be predicted more quickly and precisely.
A step ahead in the world of personalization, the fintech sector portrays the choices, preferences, and demands of potential customers to the next level. The concept of hyper-personalization works well with AI, where the customer’s data is used to operate the process.
AI helps to develop patterns and makes conclusions that are then employed by businesses, using consumer data such as past experiences, reviews, purchases, and even clicks. In today’s world, consumers expect their fintech providers to cater to their requirements and recommend products and services that are relevant, just like any other shop.
This personalization is not context to the next best product that offers, but utilizing data and analytics to foresee client demands, providing it to customers at the right times. This can possibly increase trust with existing customers by expanding new customers and deepening existing ones.
- Super Fintech application
Applications for mobile banking today aim to cover many financial products. By now, it is very evident that super apps becoming the new trend and one-stop shop making these consumers’ needs accomplished.
The trend has evolved around the globe shifting the lifestyle towards digital banking and financial services. These super applications are the aggregators, who are continuously developing online experiences and connecting customers to the market. This built an existing ecosystem for digital banking and financial services; hence it is solving problems by offering and expanding.
- Voice-activated technology
Voice assistance can prevent fraud because the voice is the most natural method of communication and one of the hardest modalities to mimic. Artificial intelligence (AI)-enabled voice assistants can handle payments, card activations, password resets, and setting payment reminders for customers, freeing up customer support employees to concentrate on more difficult customer inquiries.
The FinTech movement is rapidly gaining ground, and in 2023 it is anticipated to further thrive in the banking and payments sectors. The fintech industry and developments related to it could nonetheless have a big impact on the organization. With these emerging trends, Fintech will allow transforming banking into a safer, and easiest experience for consumers.
(The author is Mr. Akshay Mehrotra, Co-Founder and CEO, Fibe and the views expressed in this article are his own)