With the rise of the digital world and the increasing adoption of FinTech, it is no surprise why this industry continues to grow at a rapid rate. The global financial crisis of 2008 resulted in a widespread recession throughout Europe that had ripple effects on many industries. With banks tightening their lending standards, consumers turned to alternative financial services providers such as fintech companies to help them manage their money responsibly. These new players have started to take over traditional banking institutions and are now creating new products and services that cater to an increasingly digital population. So, we can see that fintech software development is in demand so far. And in this blog post, we will discuss the top five FinTech trends you should look out for in 2023.
With more than 10 million blockchain-based companies by 2021, the use of this technology will increase in the financial sector. The blockchain is basically a decentralized public ledger that is used to store data chronologically. It is decentralized because it is not kept by any single entity such as a bank but instead by a network of computers (‘nodes’). This technology is significant because it uses a decentralized platform that is not controlled by a single entity and is a secure way to store data.
The first use of blockchain technology was the rapid transfer of digital assets such as stocks and bonds. The technology is now being used in the financial sector to create new products that make the process more efficient. The government of Dubai has announced that it will implement blockchain technology for government functions. It is likely that many more financial institutions will follow this trend.
AI-Based Payments and Advice
Because of the increasing level of automation, some financial institutions are now offering customers the option to pay with artificial intelligence (AI)-enabled payments. While there are many companies that offer this feature, it is particularly popular among consumers who are looking for more personalized services. With the adoption of AI and machine learning, financial institutions can offer personalized advice that can help customers make more informed financial decisions.
With online banking, consumers can now access their accounts, send and receive payments, and get advice on investments and insurance products through natural language processing. Financial institutions are also using AI to create digital personal assistants that can answer questions, monitor spending habits, and recommend products based on a customer’s preferences. For example, customers can ask their banks for a travel insurance recommendation based on their travel plans.
AI can also be used to automate certain processes and improve customer service. For example, AI is already used to process a large number of customer requests for access to bank accounts. Beyond this, it is also used to improve risk management through smart banking, to identify potential fraud or money laundering activity, and to help customers understand their financial products and advice better than humans can.
Digital Exchange and Trading Platforms
As the internet becomes more central to people’s everyday lives and more financial services move online, the demand for digital exchange platforms will increase significantly. For example, if a user wants to transfer money from one country to another, there are many traditional options. However, this process can be tedious and time-consuming.
Instead, some financial institutions have introduced an app that lets users enter the recipient’s details and the app will take care of the rest. The app makes it easier for people to transact and is likely to become more common because of the growing adoption of FinTech. As more financial services move online, users will need digital platforms that make it easy to access and manage their finances. Therefore, it is likely that the demand for digital exchange platforms will increase. Furthermore, blockchain technology is also being used in digital exchange platforms, which can ensure the security of transaction records.
Peer-to-Peer Finance and Credit
The rise of peer-to-peer (P2P) finance and credit will also be a prominent trend in 2023. There are many fintech companies that are providing this service. Some of these companies allow users to borrow money from other users without any financial security. However, this type of credit is becoming especially popular with millennials who would previously consider it a risky option.
The first use of P2P finance and credit was when friends and family members lent money to each other. However, the technology is now being used by a number of financial institutions including banks, credit unions, and even non-financial companies.
P2P finance is convenient because it does not require a long application process or collateral. In fact, some P2P companies do not even require identification. For example, the owner of a small business can apply for P2P credit to finance the expansion of his or her business. Credit unions have been offering P2P finance and credit for decades. In fact, they are the largest financial institution to offer this service.
Businesses can apply for a loan from a credit union and the loan will be granted based on a member’s financial history and creditworthiness. Even non-financial companies are starting to offer P2P credit and finance to help their customers manage their finances better.
Hyperlocal Financial Services
With the rise of digitalization and the increasing adoption of fintech, hyperlocal financial services will also gain popularity. For example, neighborhood banks are a type of hyperlocal financial service. These banks are usually found in rural areas and focus on providing financial services to the local community. However, there is a growing trend towards urbanization and consumers are moving to cities where these banks are especially useful. Consumer reviews are a useful way to help users make better financial decisions. Therefore, it is likely that more financial institutions will start using this technology to help customers make the right decisions. However, it is worth noting that not all financial institutions are using this technology. It is beneficial for consumers to research their financial products and compare the different offers available in the market before making a final decision.
In short, the financial sector will experience significant disruption in 2023. Blockchain technology will continue to gain popularity and is likely to be implemented in many financial services. AI will also be used to provide enhanced payment services and improve customer service. On top of that, peer-to-peer finance and credit will also become more popular as financial institutions turn to digital technologies to improve the customer experience. If you are engaged in this area, or you are thinking about investing in a fintech solution, make sure you follow the latest trends in this area!