Fintech is one of the areas of the economy that is growing the fastest. To stay competitive, businesses need to adapt to new customer habits like digital wallets and online banking. At the same time, fintech solutions help companies change to meet the needs of customers that are always changing.
Fintech funding hit its lowest level in five quarters in Q2 2022. It was 39% lower than its high point in Q4 2021, when it attracted 21.5 billion dollars in investment rounds around the world.
About 90% of Americans now use fintech services. Global lockdowns and quarantines have made digital financial processes more customer-focused. Fintech businesses are told to use the newest technologies and follow the latest Fintech trends to provide great service and make sure customers are happy.
Fintech trends that were big in 2022 will still be important in 2023. Use these top Fintech trends for 2023 to make sure your fintech app development company stays on top of the game.
Table of Content
what is fintech?
Fintech is the combination of business and technology.
Financial technology (FT) includes a wide range of new online tools that make banking and business easier to do.
Artificial intelligence, data, and security technologies are used by fintech companies to make money services cheaper, easier to get to, and safer.
Fintech has been used as a general term for money for a long time. At first, banks and lenders used it to refer to their money. Later, credit cards made it more popular during the middle of the 20th century. All of these cases do the same thing, which is to make transactions between businesses and consumers easier and faster.
Our goal with fintech—financial technology that uses AI, blockchain, big data, and novel models to make financial tools more useful and cost-effective—is to provide better financial tools.
The most important fintech trends to keep an eye on in 2024
Fintech trends are spreading around the world. Some have been around for a while, while others are just starting to appear. We did a lot of study on these points to find the ones that will shape Fintech trends in the future by 2023. Based on our list, we think fintech goods should quickly add features.
Finance Solutions That Are Built In
To make financial goods and services easier for customers to find, these embedded finance solutions add them to non-financial apps or products, like websites or mobile apps. For example, when people buy something online, they might use digital wallets or fintech-based payment methods like online savings accounts to finish the transaction.
Financial services understood they didn’t need traditional banks to get money to run their businesses, which led traditional banks to offer integrated finance solutions and the rise of digital-only banks.
More businesses will realize that embedded finance solutions can save them time and money, which will lead to more growth in fintech trends that year. More businesses will use fintech solutions to get customized banking services in 2023.
A market research company called Dealroom just put out a study saying that the embedded finance market will grow to $7.2 trillion by 2030, which is more than all of the money that fintech startups, global banks, and insurers put together. This estimate says that lending, insurance, and payment services like branded cards will be the main drivers of this rise.
People have learned that they can do anything at home because of the pandemic, and the financial world has noticed. FinTech has made it possible for neo-banks, which look like traditional banks but don’t have real locations, to pop up all over the place.
Neo Banks are like regular bank offices in every way, but they are cheaper and easier for customers to get to, and they have all the same features. A lot of new FinTech companies only use neo-banking methods to cut costs and make things easier for both businesses and customers. This method is good for everyone.
Neobanks are fintech companies that are meant to lower the costs of making fintech apps for banking services. Compared to bigger banks, neobanks tend to focus on providing fewer types of services at better quality levels in order to save money.
Statista says that by 2025, 39.1 million people, up from 20 million now, will have at least one account with a neobank. Neobanks offer instant transfers, quick registration, IBAN/ACH accounts, full online banking access, instant transfers, and handy ACH accounts that make remote work easier. This makes them a good choice for people who work from home these days.
As digital transformation continues to grow every year, the next wave will focus on finding unmet banking needs for people who weren’t possible to reach or didn’t exist before. Once more, the main digitization work in banking has been completed. Now, we should focus on using that digitization to make and offer new goods or services in real time on any device.
An omnichannel method is shown by adding banking services to messaging apps on social media and the Internet of Things (IoT). Big banks will need to make sure that banking works across all modes, not just mobile, if they want to keep customers happy throughout their interactions with them.
In the future, banks and fintechs should also put “humanizing” banking at the top of their lists. Now that the goal of scale and economy has been reached. To make banking more human again, technology needs to be used to collect data, analyze it, and come up with useful ideas using machine learning (ML) and artificial intelligence (AI).
Data can help bring back some of the human touch that was once important in bank relationships. By 2023, financial services need to be open to change and flexible enough to keep coming up with new ideas.
Model of “Buy Now, Pay Later”
“Buy now, pay later” (BNPL) plans have become very popular according to fintech trends. Customers can buy goods or services and not have to pay interest or fees until they make the payment later. Instead, businesses pay the service provider a fee to let their customers use this option.
BNPL is being used by more and more people to pay for things. Because BNPL lets people make payments without having to pay anything up front or using a credit card, it has become a popular option for people who don’t have access to credit cards but want to avoid getting into debt and making payments they don’t need to.
A lot of BNPL companies also offer extra services, like the ability to pause payments or divide purchases into smaller payments.
Use Open Banking
One of a kind fintech trend is open banking, which mixes banks and financial technology to let different institutions share data. Open Banking is a part of the Second Payment Services Directive (PSD2) that lets real businesses share online with banks that know how to store their data in a standard, safe way.
By letting users safely send financial information to third parties, open banking gives FinTech users more control and freedom over their money. As a result, it makes things easier for customers and lets businesses enter new markets, offer new online services, or make platforms more reliable by exchanging data.
Open Banking solutions can help financial institutions, payment-focused businesses, FinTech workers, banking institutions, API industry leaders, customers, and even underserved communities run more smoothly.
Open Banking solutions also give you control over how your financial data is stored, let you send money directly to people, and let you share that data with third parties when you need to.
With all of these new features, the rate of open banking adoption has slowly gone up, just like the rate of mobile payment adoption. It had more than 6 million users by May 2022; 5 million of them signed up in November 2021. It’s really interesting that the number of active users has grown so much since March 2021, when it only rose 3-4%.
So, the world market for open banking is expected to grow at a rate of 26.9% per year from 2022 to 2030, reaching $135.17 billion by 2030.
Neobanks are competing with each other more and more. There are 77 challenger banks in Europe, 64–54 in North America, and 32–54 in Latin America. This has created online alternatives to traditional banks that let people open accounts without having to pay monthly fees or account maintenance fees. The competition between Neobanks has made it even more important for them to be different from each other.
Neobanks, also called “digital banks,” are completely online and don’t have any real locations. They offer the same services as regular banks, like savings accounts, debit/credit cards, and loans, through mobile apps or websites, like PayTM bank’s services.
Digital-only banks today offer more than just debit cards and basic checking. This trend will mostly come from non-FinTech companies with existing customer and employee bases that could benefit from banking services.
Large businesses may offer banking services to their workers that take out taxes and collect pay while also letting workers borrow money based on their past earnings.
Cost-management tools for businesses have also come out with banking platforms just for small companies. These platforms include credit lines for managing cash flow, deposit accounts, and business cards all in one package.
Neobanking transaction rates are expected to keep going up and hit $4.53tn by 2023 and $8.86tn by 2027, which is an annual growth rate of 18.255%.
Systems for biometric security
Mobile banking and other digital financial services are getting easier to use, which is great because it makes things more convenient. However, this makes people worry about security, since hacking is on the rise every day.
Digital services make life easier and more personal by requiring account identification. However, this also makes them easier for cyberattacks on financial institutions, which have grown by 61% since 2022 (mainly phishing attacks). Biometrics and multi-factor identification may become necessary because of this.
Businesses must take all the necessary security steps to build a successful Fintech company. Biometric identity is the best way to protect against financial crime. This is why!
Biometric technology gives people peace of mind because they know their information is safe. However, its market is changing dramatically because of certain factors.
As biometric technology for verifying identities improves, biometric sensors that need to be touched will become less common. Touch fingerprint readers will lose market share to contactless options.
Based on the numbers:
- 61% of people who use FinTech solutions would rather use biometric security than type in passwords;
- 70% think biometrics will work faster;
- Eighty percent of them plan to use fingerprint or face recognition to get into their banking apps.
- Banks that haven’t added fingerprint technology to their apps yet could lose as many as half of their customers.
- A person might have around 100 passwords on average, which means that four out of five people forget them within 90 days.
Biometrics for banking and financial services is on the rise, and the market is projected to reach $15.2 billion by 2030, growing at a rate of 14.4% per year.
Solutions for RegTech
As digital technologies spread, officials keep a close eye on FinTech companies to make sure they run safely and securely. Compliance practices, or the steps a company takes to follow the laws and rules that apply, are very important in this case.
RegTech, or “Regulation Technology,” can help with compliance in an automatic way. RegTech solutions will be common in the industry by 2023, thanks to cloud computing, machine learning growth, and data analytics. Don’t miss out! It’s an interesting trend in fintech.
Finance companies should make the most of the fact that they work in a business with so many rules. Regulations are meant to find legal risks and help businesses run safely and quickly, while also making them more accurate and productive.
By buying these solutions, you can be sure that you are following the rules, which will give you peace of mind. They will also make your operations easier, which will free up your staff to work on more important projects.
Look at your legal needs to see where RegTech solutions can make the biggest difference, then think about how they could be used in those areas.
Check how easy it is to integrate for the best benefits.
Find out about the vendor’s history and reputation to make sure they will provide good customer service and help.
Ask for a demo of the product to learn more about what it can and can’t do and to see if it fits your business.
When planning changes that could affect your business as it grows, think about how they will work as it does. This will lower the costs and problems that come with making progress in the future as it grows.
Virtual Bank Cards
Neobanks, such as Revolut, Monzo, Monobank, and N26, offer digital credit and debit cards that you carry around in an e-wallet instead of your wallet.
Customers who use virtual credit cards can pay in shops using NFC, online, or anywhere else without having to worry about fraud that can happen with regular credit or debit cards. When people use virtual cards to buy things, they usually have to authorize the transaction through their banking apps. If a virtual card is lost or stolen, a new one can be issued right away.
Neobanks like Revolut, Monzo, and N26 use virtual cards so that customers can send money to other people, buy things inside apps, and pay for things online before they get their real cards. Some rival banks also offer “disposable” virtual cards that have information that changes every time they are used. This is done to stop fraudsters from using these virtual accounts.
With the fast growth of artificial intelligence, more buyers may benefit from computerized financial advice. Personal financial managers and robo-advisors use AI to show their clients how to best spend their money.
Robotic advisors have become a disruptive force in the business and have made a lot of money for their creators. Robo-advisors can: Using AI programs to look at data, they can
Quickly look over huge amounts of data and be more flexible in responding to changing conditions than human advisors can.
Give investors the best financial options so they can reach their goals.
Alternative investing instruments have made it much easier for investors to make money, even if they don’t have a lot of money to spend at first. This makes them especially appealing to new investors who need access to traditional advice.
It’s a great piece of FinTech that can be used in many different ways in the financial world. For example, it can be used to manage virtual deals between buyers and sellers and sign them using cryptographic keys—no lawyers or paper documents are needed!
In finance, smart contracts let people sign contracts without using third-party services like banks or loan officers. This means that buyers and sellers can come to an agreement without banks having to act as a go-between.
DeFi finance apps could help make smart contracts more consistent in the future. Let’s say you need a mortgage. With smart contract-based loans, you don’t have to go to a bank to get the loan; the money can come to you in minutes or less!
Rewards and Loyalty
Gen Z is one of the groups using credit cards at the fastest rate, and they are also driving record numbers of online retail sales. In 2023, brands need to connect with this group of customers, but it will be hard to do so. People in Gen Z are looking for good deals and are good with technology. They grew up in a world where things could be ordered at any time, so speed is very important to them.
Fintech trends show that younger cardholders are more likely than older cardholders to cash in their rewards quickly and in smaller amounts, rather than hanging on to them for longer. Younger people want to be able to save their money right away and also make a statement with it. In 2023, Fintech trends will show that people will give back their earned rewards to charities or groups they care deeply about.
Hyper-personalized customer experiences powered by AI
Fintech businesses are using highly customized customer experiences powered by AI to get new customers, grow their loyalty programs, and make more money. AI has become much more important in Fintech, letting companies learn more about their customers. For businesses to better serve their customers, they need to know them well.
ML models can be trained to guess what people want to buy by using first-party data from a user’s purchase history and customer information saved in a company’s data mart, which can then be grouped based on consumer signals.
Fintech companies can make their products and services more relevant to each customer at all times by building signal groups. For example, they could create a group for people who are interested in low-risk investments.
To compete in the global fintech market, which is getting more and more crowded with hundreds of thousands of companies all trying to make it big, businesses need to offer personalized customer experiences. At the same time, big institutions that have been around for a long time change to stay ahead of the market.
Computing with quantum
TechRepublic recently wrote about how Credit Agricole and other major global banking institutions are successfully testing quantum computing. This technology, which uses the rules of quantum physics to be more powerful than regular computers, moves quickly from the testing and deployment stages to the experimental stages.
Quantum computing processing powers are appealing to fintech businesses because they are fast, accurate, reliable, and safe. These qualities lead to better calculations that make more money with less risk.
Quantum computer products from IBM Quantum, Microsoft Azure Quantum, and Google Quantum AI are the best in the business world. By letting fintech users use cloud resources, they got rid of a lot of the technical requirements and high start-up costs that came with making quantum computers.
Quantum computing will change every part of finance, from building and analyzing portfolios to trading, figuring out profit margins, predicting credit risk, and analyzing asset price changes. This is because ESG regulations are making calculations harder and setting higher standards.
Fintech trends have already moved into 2024, but the economy is still unstable from 2022. The year ahead will see more of the things that cause global tectonic shifts, such as the war in Ukraine, inflation, problems in the job market, problems in the supply chain, environmental pressures, and social and political tensions in the area. Technology will continue to be a major force, especially since Fintech is opening up new business opportunities around the world.
The excellent financial software creation services offered by Appic Softwares make it simple for companies to add finance to their websites. When businesses use embedded finance, their financial processes run more smoothly and they can grow.
So, what are you waiting for?
What are some important FinTech trends to keep an eye on in 2024?
Blockchain technology, personalized features powered by AI, and the growth of decentralized finance (DeFi) are all expected to become more popular in 2024. On top of that, digital currencies might become widely accepted as a way to trade.
In 2024, what will blockchain do for Fintech?
Blockchain will change the way money moves by making deals faster, safer, and cheaper. For example, it will make cross-border payments and supply chain finance faster and more clear than they were before.
In 2024, what part will Artificial Intelligence (AI) play in this field?
AI will make personalized financial services possible, make it easier to spot fraud, and improve the customer experience. Chatbots and robo-advisors will become even more popular as tools for customer service or investment advice.
Could you talk about how the Decentralized Finance (DeFi) systems are expected to grow by 2024?
DeFi platforms are still growing very quickly. They offer decentralized loan, borrowing, and trading services, while traditional banks struggle to keep up with the easier-to-use and more open solutions that these newcomers provide.
What changes do you think digital currencies will make by 2023? How will they affect Fintech companies?
Digital currencies, like cryptocurrencies and central bank digital currencies (CBDCs), will be used more in Fintech goods to help more people get access to money and make it easier for everyone to do so.
Are there any new rules or regulations that Fintech will have to deal with in 2024?
As Fintech continues to grow quickly, officials may have more trouble protecting consumers, stopping money laundering, and handling the risks that come with new technologies like DeFi and cryptocurrency.