2023 – Six finance and fintech trends India needs to watch out for

Over the past decade, India has witnessed an unprecedented boom in the financial sector due to various initiatives and innovations introduced by the country’s regulators. Increased consumer demand has transformed and strengthened the country’s economic landscape. Driving this growth is crucial to achieving financial inclusion and building people’s confidence in the country’s governance.

Globally, over 10,000 Fintech startups are thriving by offering Fintech-As-A-Service, and the number is steadily increasing. The introduction of Internet concepts and tools supported by technologies such as Big Data, Artificial Intelligence, Machine Learning, Cryptocurrency, Blockchain and others are changing Fintech market trends. The evolving changes in the Fintech sector are impacting businesses worldwide, and these include the payments and banking sectors. Today, businesses, startups and companies linked to Fintech solutions recognize the importance and value that these solutions provide. In recent years, Fintech trends have ventured into new territory, helping people and consumers find answers to various business problems. The demand for Fintech solutions has never been greater, and the next few years will be crucial for the development of the Fintech industry across multiple domains.

Following are the top Fintech trends to watch out for and see how they will benefit businesses.

1. Contactless payments: The payments sector has grown tremendously over the past decade, and the rapid shift to digital payments can be attributed to the pandemic. E-commerce payments, Tap-and-Go payments, portable 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 proof of the success of contactless payment technology.
2. CBDCs: With central banks exploring digital currencies as a potential solution to tackle issues such as money laundering, proliferation of unregulated cryptocurrencies and cash dependence, CBDC implementation can help reduce transaction costs, settlement times and streamline trade finance activity. With secure monitoring and reporting capabilities of Blockchain technology, CBDC is poised to complement, rather than replace, current forms of money and is envisioned to provide users with an additional means of payment.
3. Neo Banking: Neo Banking is a new type of banking platform that offers financial services without having a physical presence. It offers banking services like account opening, money transfer, international transfers, all practically. This type of banking system has grown in popularity because it eliminates paperwork and the need to wait in lines, while offering high interest rates for accounts. These banking systems can also quickly adapt to changing regulations and customer preferences.
4. Banking as a Service (BaaS): Financial services are now delivered in the most efficient 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 offer financial services. While banks will oversee regulatory compliance and business operations, the BaaS platforms will manage customer acquisition and maintenance.
5. AI and ML: Today, banks around the world are devising strategies to integrate AI into their day-to-day operations. The application of AI supported by Robotic Process Automation (RPA) is expected to significantly reduce the bank’s operating costs. The use of AI in Fintech applications will provide a range of functions ranging from financial fraud prevention and interactive chatbots to autonomous management of finances and rapid decision making. Backend procedures such as security checks, customer onboarding and other services can also be automated using AI.
6. 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 (API). Overseen by a range of regulations, guidelines and technologies, Open Banking enables the creation of seamless and frictionless customer-centric products that are expected to transform the banking industry and improve the customer experience.

The fintech sector will continue to develop and lead the way in innovation. Using the latest technology, infrastructure and demographics has realized the potential of the above trends and opened up opportunities for businesses worldwide. Society is enthusiastically embracing these trends, thereby accelerating financial inclusion. The ultimate winners are the consumers, who benefit from the conveniences that these innovations offer in the financial realm.

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