You might have started writing down your new year’s resolutions in your brand new 2023 journal, full of hope and optimism, and chanting “new year, new me” for the 20th year in a row! Not to be a downer, but our new year’s resolution tends to go down the drain in two weeks max. So, instead, let’s focus on things we can actually keep track of in 2023, i.e. emerging fintech trends.
1. Embedded Finance
What is that? Well, it’s any non-financial company that offers financial services or products. Does that mean that Zara is going to be your go-to shop and bank?! No. It’s more like Zara offering you a branded credit card or a payment plan. Some companies have been embedding finances into their business before they became a trend. Like car rental insurance, airline credit cards, and recently, e-commerce companies started using banking-as-a-service (BaaS). BaaS is basically a retailer offering banking services directly on their websites without re-directing customers to a bank.
The BNPL business is most likely to boom in 2023. I mean, which millennial would afford their previous lifestyle when the $ is eating the EGP like Ms. Pac-Man on crack! Before granting users a loan or allowing them to split payments, the Fintech sector should develop technological solutions that assess their financial stability. Additionally, in order to attract customers, these solutions shouldn't use deceptive advertising and should make the terms very clear.
3. AI Tech
The financial industry and AI have been going strong since the beginning of their relationship. AI automates complex and tiresome financial operations which saves both money and time. Financial institutions use AI to combat cybercrime, money laundering, and fraud. It also helps with customer service through support chatbot interactions. Using AI saves A LOT of money, by 2030, AI is expected to reduce bank operating costs by 22%. That’s $1 trillion in savings! So, no wonder that the majority of financial services AI adopters reported that adopting AI will be critical to their business's success in the next two years.
4. Alternative Finance
We’ve talked about alternative finance (ALT Fin) before and the hype is not dying down anytime soon. ALT Fin has become a financial system within the financial system. Everyone needs money for something and it’s just easier to get when there’s less paperwork. With a generation with an entrepreneurial mindset, innovation is inevitable. And innovation comes with a risk that traditional banks won’t cover it which is why ALT Fin steps in to support the emerging businesses’ ecosystem. And as we ring in the new year, new innovations are bound to come along with it!
Hopefully, 2023 will be an exciting year for fintech! So, here's to more fintech and disruption.