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Six financial and Fintech trends to watch out for in 2023
India, November 08, 2022 /timesofindia.indiatimes.com/ Over the past decade, India has witnessed an unprecedented boom in the financial sector owing to various initiatives and innovations introduced by the country’s regulators. Increased consumer demand has transformed and boosted the country’s financial landscape. Fueling this growth is vital to achieve financial inclusion and build people’s confidence in the country’s governance.
Globally, over 10,000 Fintech startups are thriving by providing Fintech-As-A-Service, and the number is steadily increasing. The introduction of internet concepts and tools that are supported by technologies such as, Big Data, Artificial Intelligence, Machine Learning, Cryptocurrency, Blockchain and others is altering Fintech market trends. The evolving changes in the Fintech sector are having an impact on businesses the world over, and these include the payments and banking sectors. Today, businesses, startups, and companies associated with Fintech solutions recognize the significance and value that these solutions bring. In recent years, Fintech trends have ventured into new territory, assisting people and consumers find answers to various business concerns. The demand for Fintech solutions has never been greater, and the next few years will be pivotal for the evolution of the Fintech industry across multiple domains.
The following are the top Fintech trends to watch out for and perceive how they will benefit businesses.
- Contactless Payments: The payments sector grew tremendously in the past decade, and the quick shift to digital payments may be attributed to the pandemic. E-commerce payments, Tap-and-Go Payments, wearable payment devices, etc., will continue to gain popularity due to the features they offer – convenience, speed, reliability, security and efficiency. Strong adoption and frictionless customer experience are evidence of the success of contactless payment technology.
- CBDCs: With central banks exploring digital currencies as a potential solution to tackle issues such as, money laundering, proliferation of unregulated cryptocurrencies and cash dependency, CBDC implementation could help reduce transaction costs, settlement times and streamline trade finance activity. With secure monitoring and reporting features of Blockchain Technology, CBDC is poised to complement, rather than replace, current forms of money, and is envisaged to provide an additional payment avenue to users.
- Neo Banking: Neo Banking is a new type of banking platform that offers financial services without having a physical presence. It offers banking services such as account creation, money transfer, international remittances, all virtually. This type of banking system has grown in popularity because it eliminates paperwork and the need to wait in queues, while offering high interest rates for accounts. These banking systems can also adapt quickly to changing regulations and customer preferences.
- Banking as a Service (BaaS): Financial services are now delivered in the most effective and economical ways through innovations such as, Banking-as-a-Service (BaaS) platforms. With BaaS, Fintech and non-financial platforms can collaborate with banks to provide financial services. While banks will oversee regulatory compliance and business operations, the BaaS platforms will manage client acquisition and maintenance.
- AI and ML: Today, banks all over the world are chalking out strategies to integrate AI into their daily operations. The application of AI supported by Robotic Process Automation (RPA) is expected to significantly reduce bank operational costs. Usage of AI in Fintech applications will provide a host of features ranging from financial fraud prevention and interactive chatbots to autonomous management of finances and quick decision making. Backend procedures like security checks, customer onboarding, and other services can also be automated using AI.
- Open Banking: Open Banking will enable customers to better manage their accounts and control their finances. This will facilitate data networking between financial institutions and financial service providers using Application Programming Interfaces (APIs). Monitored by a series of regulations, policies and technologies, Open Banking enables creation of seamless and frictionless customer-centric products that are expected to transform the banking industry and enhance customer experience.
The Fintech sector will continue to develop and lead the way in innovation. Usage of the latest technology, infrastructure and demographics has realized the potential of the above-mentioned trends and opened opportunities for enterprises worldwide. Society is enthusiastically embracing these trends, thus accelerating financial inclusion. The final winners are the consumers, who are benefiting from the conveniences that these innovations are offering in the financial space.