The financial services industry has undergone a tumultuous few years. A large number of financial institutions witnessed traditional models of working and business disrupted by the COVID-19 pandemic, the rapidly changing tech landscape, and a new breed of agile, tech-driven businesses. Kavan Choksi points out that the rapidly growing number of customers who expect instant service and support is among the biggest drivers behind the growth of FinTech firms.
Kavan Choksi discusses a few of the major trends in the FinTech industry for 2023
COVID-19 pandemic clearly showed the value of being agile and adaptive. Modern FinTech companies that were able to rapidly innovate by implementing new technologies managed to negate some of the adverse effects of the pandemic and got a distinctive competitive edge. The future of the financial services industry is steadily changing and evolving with digitization taking over the sector.
Here are some of the FinTech trends expected to gain traction in 2023:
- Agile and adaptive banking: For a FinTech firm to be agile, it has to stay competitive while also having the capacity to launch new and innovative products with greater speed and efficiency. Companies that manage to stay nimble and flexible are the ones to stay afloat even during turbulent times. Agile and adaptive banking puts emphasis on a product-centric model that helps businesses to face a range of critical challenges in their industry.
- Open banking and embedded finance: Next on the list of trends are embedded finance and open banking. Open banking is a process that has existed for quite a long time. Its potential, however, has been recognized by financial institutions pretty recently. On the whole, this whole concept is meant to accelerate digital experiences, broaden access to alternative asset marketplaces and allow for swift on-boarding. Open banking has the capability to deliver a range of opportunities to the financial sector as it grants almost an unprecedented access to banking customers.
- Hyper-automated banking with Robotic Process Automation (RPA): Hyper automation has been in use in the financial services industry for a long period of time. Today it is majorly leveraged to improve the speed of financial and banking transactions. This technology can additionally go a long way in cutting down the operational costs of a business while also reducing the impact of human errors. RPA with hyper-automation free ups the time of the company staff to a good extent, and shift their responsibility to the core activities of the FinTech firm. As this technology reduces the odds of human errors, it invariably lowers the chance of data breaches as well.
Kavan Choksi says that Buy Now Pay Later (BNPL) 2.0 is another popular trend cropping up in the FinTech domain. Even though the credit system has existed for decades, the whole concept of buying something by splitting the purchase into interest-free installments is a comparatively new process. BNPL was commonly used for high-value items traditionally. But now this trend has spread to other categories of goods and entering new industries, such as finance. The second version of BNPL allows customers to make online purchases through virtual and physical credit cards, and almost any purchase can be deconstructed into installment-free payments.