Digital banking, biometric payments and more regulation – fintech predictions for 2023
Like any other industry, the financial sector is undergoing digital transformation. While banking and finance have historically been fairly traditional, pressure from more nimble startups has led larger companies to look to technology to stay competitive.
The impact of the COVID-19 pandemic has prompted more people to bank online as well. Here are the key trends that experts expect to see in the fintech sector in 2023.
Will Milewski, SVP, cloud platform engineering at Hyland, believes digital banking will become even more common. “Legacy industries such as banking and finance have always been slow to adopt new technologies, but as we enter this new era of digital transformation, cloud platforms are critical to the success of any financial institution. In 2023, we will continue to see this flourish as more and more niche fintech companies emerge and more customers take their banking digital.”
Conor Murray, CEO and co-founder of JP Morgan’s value-based investment fintech OpenInvest, also sees large banks adopting new technology solutions. “More than ever, large banks are delivering new, digitally-driven offerings to their customers, and many are looking outside to find the latest solutions. By acquiring startups and providing incentives and infrastructure for startups to exist within them, legacy financial institutions can increase the speed of innovation to give customers the features they need to manage their money in ways that reflect a more modern lifestyle.”
This view is echoed by Nigel Green, CEO and founder of the deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organisations. “They have been in a perpetual game of ‘catch-up’ in recent years amid ever-evolving customer expectations, regulatory requirements and technological advances, and this is only expected to accelerate. Why? Two reasons: First, the millennials who are the fastest growing group of customers; and secondly, because they are becoming the recipients of the largest transfer of wealth in history.”
Green also believes we will see more regulatory scrutiny. “This will come as fintech services are increasingly embedded in unregulated entities. As such, watchdogs around the world will seek to further protect customers by increasing regulation, with a particular focus on accountability and transparency.”
Elizabeth Kowal, CEO of MineralTree, believes there will be more regulation as well, but that the effect will be limited. “More regulations are on the way to limit the possibility of fraud from happening as we know it today. However, this means that finance managers and employees need to be more vigilant about how fraudsters will evolve. New protections only last for a short period of time before bad actors learn new ways to trick people. Businesses must minimize manual processes to ensure security. And employees must be reminded to trust nothing; double-check phone numbers; carefully review all links before clicking on them; do not accept payment instruction changes from an email alone.”
Victor Fredung, CEO of Shufti Pro expects biometric payments to become the norm:
It’s clear that fintech is booming with the variety of repayment plans and online financing options available today, and all of these different platforms require user verification. With options including biometrics and blockchain, all while maintaining a seamless user experience, what does the future of fintech look like in 2023?
Thanks to Apple’s Face ID, biometric payments are quickly becoming the norm for consumers who value speed and security. Despite being a relatively new technology, 92 percent of users believe biometric recognition is more convenient than passwords, and a majority trust facial recognition as a secure way to authorize transactions. We’re already seeing global payment companies piloting ‘pay with your face or hand’ schemes, and as the technology becomes more mainstream, it’s only a matter of time before card payments are a thing of the past – a bit like how we view payments. with cash now. But because we will see this become the norm in just a few years, the security behind biometric transactions must be flawless so that privacy is not compromised.
André Ferraz, CEO of Inconia, believes that instant payment systems will bring new risks. The introduction of instant payment systems in specific international markets has set a precedent for the US, which plans to launch FedNow in mid-2023. As seen abroad, the instant payment service will attract cybercriminals armed with complex social engineering tactics looking to profit from the speed and flexibility of instant payments gives to transactions. Just as the recognition of widespread Zelle fraud has started the shift of responsibility back to the banks, the rollout of FedNow is likely to continue the pendulum swing and perhaps even begin to hold receiving banks accountable for instant payment fraud, like what is currently happening in Brazil, two years after its launch of PIX, its open banking system.
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