The Rise of Fintech: Unveiling the Top Trends for Fintech in 2023

An economic survey conducted by the government of India revealed an 87% rate of adoption of fintech products by consumers in India and this percentage beats the global average by 23%. Another study conducted by EY suggests that the fintech market in India is projected to generate a revenue of $200 billion and accumulate $1 trillion in assets under management by 2030.

By 2030, the fintech market is projected to reach a value of $698.48 billion, witnessing significant growth from its 2020 valuation of $110.57 billion. Both startups and established organizations are actively adapting to this evolving landscape by enhancing their operations and acquiring the necessary technical skills and tools.

Without further delay, let’s get to the top trends in fintech!

Open Banking 

Statista predicted that by 2024 63.8 million people will be using open banking. Open banking grants third-party financial service providers access to consumer banking, transactions, and other financial data from banks and non-banking financial institutions through the use of application programming interfaces (APIs). 

Open banking prospects are utilized by numerous fintech businesses that provide services such as budgeting, expense tracking, financial planning, lending, and more. Open banking allows banks to grant clients financial information access to insurance companies, retailers, and other businesses. This access is crucial for verifying a client’s financial stability before offering insurance, approving a loan, or allowing payment in installments.

Neo Banking 

FinTech has contributed to the growth of neo-banks. Neobanks are exclusively digital banking platforms that operate solely online, without any physical branches. Unlike traditional banks, which often involve time-consuming and labor-intensive transactions for customers, neobanks aim to provide a streamlined online experience. They accomplish this by adding a digital layer to traditional banking, creating a technologically driven approach. Customers can easily create accounts and navigate their services without hassle. 

According to Statista, by 2025 39.1 million people will have at least one account with Neobank. 

Artificial Intelligence (AI) and Machine Learning (ML)

At the global level, AI in the fintech industry is projected to reach $26.67 billion by 2026. 

Through the utilization of AI, financial institutions can collect and analyze data pertaining to customers’ cash accounts, credit accounts, and investments. This enables them to monitor their client’s financial well-being and provide more personalized and relevant services. 

Cognitive automation, data analysis, engagement capabilities, and insights are employed by companies to enhance the quality of smart banking services. The capabilities of AI include:

• Managing client data 
• Providing recommendations on financial management strategies 
• Detecting and preventing human errors
• Ensuring banking quality control

 Additionally, AI can directly interact with customers through chatbots and self-learning applications. 

Buy Now Pay Later (BNPL)

By 2026, the global usage of Buy Now, Pay Later (BNPL) services is projected to reach deals worth $576 billion, a significant increase from the $120 billion recorded in 2021.

Buy Now, Pay Later is a form of short-term financing that allows customers future payment of goods and services. Often, this financing option does not involve interest, making it an appealing choice for many. Customers using point-of-sale installment loans typically make an initial down payment on an item and then pay the remaining balance in the future. One well-known BNPL provider is the multinational financial company, PayPal. With BNPL services, the initial payment is made at the time of purchase. It is worth noting that PayPal’s BNPL offering, does not charge late fees and refrains from reporting to credit bureaus. 

Cryptocurrency 

Approximately 45% of customers are already utilizing cryptocurrencies for international financial transfers, while more than half (52%) perceive it as a “valid choice.”

2023 is poised to be a year of increased integration and mainstream adoption of cryptocurrencies. Financial institutions and fintech companies are adopting digital assets, which will help users buy, sell, and store cryptocurrencies more easily. Also, advancements in cryptocurrency regulations and infrastructure are expected to enhance the credibility and stability of this digital asset class.

Despite challenges posed by volatile geopolitics and an economic recession, the Fintech ecosystem is displaying a promising outlook. The fintech industry is continuously evolving, driven by advances in technology and shifts in consumer behavior. 2023 will witness significant trends in AI and machine learning, blockchain, digital banking, mobile payments, cybersecurity, and fraud prevention, as well as open banking and API integration. These trends hold the potential to revolutionize the financial industry, offering customers more personalized, convenient, and secure services.