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Top Trends to Witness in the Fintech Sector In 2023

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Flentas Tech 22nd June 2022 - 6 mins read

The Fintech industry uses technologies to make financial services more accessible to the public, such as innovative banking, investing, and cryptocurrency applications. The Fintech industry consists of start-ups and established financial institutions trying to enhance financial services usage provided by existing financial companies. The Fintech industry has been instrumental in automating banking services, insurance, investments, and trading. Artificial Intelligence, blockchain, cloud computing, and Bigdata are considered the key pillars of the Fintech industry.

It's a great time to analyze the latest FinTech trends expected to shape the industry and assess how they will affect business, customer experience, consumer demand, and government sectors worldwide. A recently conducted EY study estimates that by 2030, the fintech market in India will have an income of $200 billion and $1 trillion of resources under administration. This number was revealed in the Economic Survey 2022-23 conducted by the Government of India. Let's look at the trends in FinTech you need to watch out for this year!

Artificial intelligence and Machine learning

Processing large amounts of data and reaching valuable conclusions is done in machine learning apps by using its algorithms. Patterns are analyzed in real-time, enabling quick decisions. AI studies the typical behavior of the user in a banking app. AI notices any abhorrent behavior and alerts the client and the bank of the threat if a fraudster enters the platform. The Fintech sector will continue to be one of the leading sectors to be benefitted from AI and ML.

Blockchain

The modus operandi of Fintech is entirely transformed by the use of blockchain technology. Once stored in this system, data becomes very difficult to modulate. Hence it remains protected. Transactions can be done in a safer way using this technology. The philosophy of decentralized finance is a crucial aspect of blockchain.

Regulatory Technology (Reg-Tech)

Regulatory technology or Reg-Tech manages regulatory processes by technology in the financial industry. With Reg-Tech, companies are empowered with advanced software to simplify compliance processes. Reg-Tech, along with machine learning, offers data on money laundering activities, thus reducing the risk associated with it. The other significant functions of Reg-Tech are reporting monitoring and compliance.

Cloud banking

Cloud-based infrastructure makes banking processes more convenient and less prone to errors. Cloud banking perfectly suits seamless global payments, P2P transfers, and contactless payments. With cloud banking, banks can store enormous amounts of data with enhanced data security and improved operational speed.

Biometric authentication

Biometric authentication is more secure than regular passwords and pins. Users consider biometric authentication the best form of identity verification and dislike using multiple passwords as they don't have to remember different combinations of passwords and keep changing them. With biometric authentication, your confidential information remains safe even when your phone or laptop is stolen.

Robotic process automation (RPA)

RPA uses robotic process automation technology that utilizes digital workers or robots to automate tasks generally performed by humans. Digital workers automate backend office tasks like customer onboarding, security checks, account maintenance, closing, etc. Digital workers finish these tasks more efficiently and quickly, a significant benefit of the RPA. Implementing RPA helps in reducing costs and improves the overall organizational efficiencies.

Embedded Finance

Embedded finance is a term that indicates the offer of financial services by companies that don't have any say in this sector. These companies strengthen their relationship with the customers by providing financial assistance, thus improving their services and developing other sources of revenue. The growth of this trend has resulted in Fintechs offering banking as a service solution.

Neo-banks

The surge in digital financial services in India has attracted global neo-banking players to India. Unlike traditional banks with physical branches, neo-banks are online and operate on the cloud. The term neo bank is often used interchangeably with fintech bank. They fill the void between the services provided by conventional banks and new-age customers of the digital era. The neo-banking industry expanded tremendously during the pandemic and is already a ~US$40 billion market, which accounts for 2.2% of the total banking market. In India, more than 10 million customers are using neo-banking services, notes an EY report. Neo banks aim to streamline the banking process by delivering financial services in a customer-centric, digital-only format.

Conclusion

The Indian FinTech ecosystem has become more mature and now offers a consolidated digital experience for financial services. This positive development inspires confidence in overseas markets regarding the capabilities of the Indian FinTech sector. 2023 is believed to be a significant year for advancing digital banking and finance nationally and globally. 2023 will witness important trends in AI and Machine learning, blockchain, digital banking, Cloud banking, Robotic process automation (RPA), and Biometric authentication. These trends can transform the financial industry and provide customers with more personalized, convenient, and security services.

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