Top 7 FinTech Industry Trends in 2023

This can lead to regulatory challenges for fintech companies, such as difficulties in obtaining licenses and complying with regulations. In this article, we’ll be going to illustrate how digital transformation is accelerating changes in the fintech sector and redefining customer experience with its exceptional benefits. Smart Contracts could probably be called one of the emerging trends in financial services. The advantages include the speed of performing operations and the lack of actual paperwork required. Especially, when we are talking about a need to operate with physical objects in the real world. Artificial intelligence and machine learning remain a top FinTech trend as one of the main influences behind the rapid growth and development of new technologies in the FinTech industry.

After intense deal competition helped turbocharge fintech valuations in 2021, VC-backed valuations are declining at all stages. Strategize with our financial experts to help you achieve your business goals. Discover what makes RSM the first choice advisor to middle market leaders, globally.

Plummeting tech stock prices in early 2022 also made investors think twice about funding fintechs. According to the report “State of Fintech Global | Q3 2022” there was a drop in many fintech funding indicators, deals, and new unicorns. It shows the current state of play to be at pre-covid levels or even being similar to those seen back in 2018. Investors will ramp up their targeting of jurisdictions considered to be underdeveloped in terms of financial services — making more deals in regions like Africa, Southeast Asia, Latin America, and the Middle East.

Additional use cases of quantum computing include improving security along with privacy, increasing the speed of trading algorithms, and reducing the time to settle transactions. The prominence of regtech may help to preserve fintech security as political governments change and governments increasingly seek to promote increased cybersecurity laws. To fulfil regulations, these tools are designed to manage large data transfers. Authentication methods like facial recognition software, voice analysis, or fingerprint scanners will play a more prominent role in the future of banking security. Another example of autonomous finance would be using blockchain-based smart contracts to automate fund management and insurance premiums. Fintech startups looking to implement proof of concept projects on tight budgets can look to voice-enabled payments as an option.

Please see /about to learn more about our global network of member firms. “There’s broad recognition that the technologies can be used to solve certain problems, but financial operations and services are complex. We’re currently in the realist phase of ‘This is what these technologies can do. “Let’s talk more about blockchain technology, and its enablement of peer-to-peer transactions,” says Santhana, naming blockchain as a fintech trend. A growing number of businesses are adopting sustainable business practices too.

  • They’re acting as venture capitalists and investing in their internal projects to see what specific problems these technologies can solve.
  • The United States Fintech research report provides a comprehensive outlook of the market size and an industry growth forecast for 2023 to 2028.
  • These days, Financial Technology or FinTech is encountering a rapidly positive change.
  • Deliver next-gen financial experiences with conversational AI that guide consumers toward financial wellness.
  • Among financial services and fintech firms, 49% of respondents believe that ESG frameworks will increase revenue.
  • It will be no exaggeration to say that digital-only banks pose a true threat to traditional banks, as they attract younger, internet-savvy customers who need simpler ways to manage their finances.

We expect even more market movement in that regard in the upcoming year. Investment bank UBS bought automated wealth management provider Wealthfront to accelerate its growth ambitions in the US, broaden its reach among affluent investors, and expand its distribution capabilities. Abrdn, a global investment company, acquired the UK’s leading subscription-based investment platform,Interactive Investor, in order to grow and expand its leading position in the UK’s attractive savings and wealth market. Clearly the market is stabilising, and the boom of 2021 is well and truly over. In 2021 we saw a record increase in funding and the birth of new unicorns, but this boom was a reaction to the economy bouncing back after a covid-impacted 2020. The most obvious explanation of these statistics is that the economy has moved towarda recession, and investors are simply holding onto their capital and waiting for the situation to stabilise.

Top FinTech Investment Trends to Follow

Open banking allows banks to connect third-party APIs to their own banking platforms. Customers can share their financial data with third parties in return for new services and modifications to make existing information better. For example, customers may grant access to a utility company app to pay bills directly from their bank account instead of having one more login and payment method on file. Other examples of AI in finance include chatbots used by banks to provide basic customer service queries or IBM Watson for financial analysis.

For many of the same reasons they outsource software development, fintech companies may choose to have outsourcing providers take some of these areas off their plate. Additionally, for many companies, a high level of specialization is needed to create custom fintech offerings. Retail businesses might want to include embedded finance options and include features they know their customers want.

AI: a natural for financial institutions

This could instill much more confidence in the public, making them more likely to adopt it at scale. If you’ve ever been shopping online for a high-cost item like furniture, and you’ve seen something like “pay as little as $100/month or 0% APR with Affirm,” you’ve seen—and maybe even taken part in—embedded finance. Embedded finance, as the name suggests, empowers companies to offer consumers credit without having to leave their platform.

fintech industry trends

In-depth industry statistics and market share insights of the Global Fintech sector for 2020, 2021, and 2022. The Global Fintech research report provides a comprehensive outlook of the market size and an industry growth forecast for 2023 to 2028. Available to download is a free sample file of the Global Fintech report PDF. Outsourcing fintech software development entails a high degree of trust, especially if you are using a remote team or having the outsourced developers take over entire projects. Each degree of distance between yourself and the process increases the chance that the work will be done according to the outsourced team’s rules and guidelines rather than your own.

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As a result, the practice of companies merging in order to enhance their market capabilities will carry on through 2023. Of the startup companies that have become publicly listed since the beginning of 2020, many are being traded well below their IPO prices. Also, looking at the sector more generally, investors seem to be staying away from growth stocks at present. Member firms of the KPMG network of independent firms are affiliated with KPMG International. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. In H2’21, fintech investment in the Americas reached US$105.3 billion with 2,660 deals.

Using technology to keep track of regulatory compliance is known as regtech. Regulatory technology solutions automate the monitoring and reporting of data with tools with the capability to handle large datasets or unstructured information. These technologies are also designed to help financial institutions keep up with changing regulations in various jurisdictions around the world. Fintech startups are using cybersecurity technology in ever more innovative ways, such as blockchain, to create a more secure form of holding information. Multi-cloud data storage, secure access service edge , and decentralisation are other noteworthy cybersecurity advancements in the fintech sector. One notable development is robo-advisors; they are now one of the most popular trends in fintech.

Consumers who don’t have bank accounts are known as the “unbanked.” These individuals still have a need for financial support such as small loans. Credit scoring enables institutions to evaluate their creditworthiness. Use of fintech generates massive amounts of data that support service delivery and customer retention efforts.

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We have already touched on the subject.Green FinTech companiestake over the niche, which becomes more and more important. Business puts more emphasis on sustainability, consumers expect good practices. 8% of fintech founderssay they are in the “sustainable fintech” category. The adoption of artificial intelligence will become even more natural.The more data you have, the more informed decisions you can take. The more precise tools for data management and processing you have, the more accurate those decisions.

Combine actionable consumer insights, peer benchmarking data, personalized views, and critical data needed for segmentation to enable contextual, hyper-relevant customer interactions. Our shopping insights dashboard allow merchants to analyze their market and grow their business with confidence. Deliver next-gen financial experiences with conversational AI that guide consumers toward financial wellness. “Fintech and other emerging disruptive technologies generate excitement, but with the disruption comes changes to existing architecture and the creation of new implementation and deployment challenges.” A large number of our clients are taking aggressive action to determine how they can use these technologies within their ecosystems. They’re acting as venture capitalists and investing in their internal projects to see what specific problems these technologies can solve.

fintech industry trends

It provides an immersive experience to monitor real-time movements on the market and make quick investment decisions. It is an excellent example of how consumers can use fintech and modern technology for their investments. It has revolutionised several industries in the financial sector, from payments to consultancy services. To help you stay on top of all the latest trends propelling the fintech revolution, we have compiled a list of seventeen technologies changing the industry. Investors are now more interested in the feasibility of the business models of various fintechs than just their technological prowess. Outside the world of finance, many technology firms owe their success to the right business models, coupled with the right processes and operations as well as targeting the right pain points that their customers face.

How Digital Transformation is Impacting the Fintech Industry?

According to PR Newswire, the global fintech industry is growing exponentially and is predicted to be valued at $305 billion (£267 billion) by 2025. Mobile banking and other digital financial services have become popular as they are at one’s fingertip. This is not just a great accomplishment but also raises many security-related queries.

Embedded Finance Reflects a New Reality in India in 2023

If you’ve cashed a check from your phone or sent money to a friend via Venmo, you’ve seen fintech in action. Most of these types of applications build on existing technologies to make money matters easier and faster. There are many ways to determine whether an outsourcing provider will be a good fit for your needs. First, examine the company’s website to determine if its experience is a good match. Be sure to check customer reviews on the site and elsewhere, such as Google. Ask for feedback from colleagues if you know anyone who has used the service.

Thus, it becomes easier to pinpoint problematic cases or even reveal fraud. By many rates, the country is at the forefront of innovation in this regard. In fact, the country’s leadership in the area has reached almost all FinTech categories. There are more internet users (800 million, 98.6% of them using mobile) than the combined population of the US, Russia, Mexico, and Japan—and more than any country in the world. You see, financing companies see the purchasing of innovative products and teams as being safer, faster, more cost-effective and simpler than taking the in-house development route.

Find out why many of the top wealth management firms rely on the Envestnet | Yodlee for their financial data. Gain a competitive edge in portfolio management with timely and comprehensive de-identified fintech industry data analytics which informs investment and risk management decision-making. Take financial control and manage your business debit and credit cards and spend easily, all from the same account.

Common Outsourced Services in the Fintech Industry

This provides yet an additional layer of security to every party involved. Empowering financial institutions, FinTech innovators, developers and entrepreneurs with powerful data solutions. Revolutionize financial services with our innovative APIs, Apps, and Analytics products. How retail and financial institutions can leverage data analytics for increased opportunities. While incorporating new financial technology creates risk, proactive executives can find a wealth of opportunity to use risk to power their company’s performance. On top of the concrete efficiencies, businesses can also get complete real-time spend visibility.

On-demand pay, also known as earned wage access is taking the market by storm.According to Payments Dive, US employees alone withdrew $9.5 billion in pay using these types of platforms in 2020. The trend will continue due to inflation and financially stressful situation. Nearly80% of workerssay that they would take a job with an employer that provides on-demand pay over an employer that does not. We expect rapid development of new green FinTech, as well as the implementation of good practices among those products, that don’t necessarily agree with 100% green approach.

In fact, AI is expected to account for 35% of all trades by 2025, although it may only be able to replace human investment advisors partially. Despite the impending recession, this fiscal year 2023 appears to be a promising one, with many dominant and emerging trends showing significant growth potential in the coming year. The report provides a detailed global Fintech Technologies market analysis based on competitive intensity and how the competition will take shape in the coming years. This study presents the analytical description of the global Fintech Technologies industry along with the current trends and future estimations to determine the imminent investment pockets. Autonomous finance utilizes the power of machine learning and artificial intelligence to handle users’ funds.