Technical trends that will define Fintech in 2023

Sergio Tang is the Chief Transformation Officer at Vivela, a growth expert, speaker and speaker – helping ship and scale products in Latam.

The fintech industry is constantly evolving and improving, and 2023 is no exception. The fintech space is predicted to multiply and reach $174 billion by 2023.

The banking industry has recently experienced a massive increase in the adoption of fintech solutions as users become more tech-savvy. From embedded finance to SaaS services, there are several technology trends that will shape the fintech industry in 2023.

Today I’m going to explore the top six trends that will define the future of the fintech industry in 2023 and beyond, and that will help businesses and consumers make their lives much more accessible and stress-free.

AI and machine learning

The first trend that will undoubtedly shape the future of fintech is AI technology. AI and ML can revolutionize banking, payments, investments, risk management and more.

AI is a broad term used to describe machines with the ability to perceive the environment and perform actions that maximize the chance of success. ML is an application of AI that uses algorithms to learn from data and identify patterns in it.

Fintech companies can leverage both technologies to automate processes such as loan origination or fraud protection, while providing more accurate insights into customer behavior.

By leveraging these tools, companies can reduce the costs associated with manual labor while increasing overall performance accuracy and efficiency.

Built-in economy

Within the fintech industry, embedded finance has gained more traction recently and is poised to become the dominant trend in 2023.

The term “embedded finance” describes a broad category of financial services and products that can be used within a specific framework or platform. Users can better manage their finances without switching between multiple apps or websites when these services are built into an existing app or platform.

Also, “Buy Now, Pay Later” is the fastest growing embedded finance model. Customers can make their purchases first and spread the payments over time with this service. As a result, experts predict that the embedded financial services market will grow by 40.4% annually over the next few years.

SaaS

SaaS (software as a service) is another hot trend to watch out for in 2023. It is said that the SaaS sector is moving in the right direction and will reach the $623 billion milestone in 2023 with a compound annual growth rate of 18%.

With SaaS services, businesses can access and pay for software applications hosted in the cloud without installing them on their servers or computers.

This eliminates many associated overhead costs and allows organizations to focus their resources on developing customer experiences instead.

In addition, using SaaS provides access to powerful tools with enhanced security protocols for data storage and management that would be difficult or expensive for individual firms to implement themselves.

Open bank

Open banking is a financial technology that allows customers to securely share financial information with third parties, giving them more control and flexibility over their finances.

It offers convenience for customers and opportunities for businesses to access new markets, create innovative products and services, and increase efficiency through data exchange.

Open banking opens up many opportunities for banks, payment companies and other fintech firms that want to exploit the potential of customer data. Through open banking, customers have greater control over where they store their financial data while being able to quickly transfer it between different organizations or give third-party providers access to their data when needed.

Open banking can revolutionize how people manage their money and interact with financial institutions as it provides unprecedented transparency, choice and control.

IoT

IoT enables physical devices connected to the internet to collect data, analyze it and then act on it without human intervention. The implications for fintech are huge as IoT has made banking more secure, efficient and convenient.

Banks can use sensors built into their products to monitor customer activities and automate responses based on preset preferences or behaviors – such as fraud detection algorithms or automatic payments triggered by changes in customer spending patterns.

In addition, voice recognition technology is used for authentication purposes, simplify login processes and improve security by making accounts more difficult to hack.

Blockchain

As technology continues to rapidly evolve, blockchain is one of the most exciting trends in fintech. Blockchain is a digital ledger that records and verifies various types of transactions.

It allows individuals, organizations and machines to transfer digital assets securely without relying on any central authority or third-party intermediary. This decentralization means that blockchain technology can be used for various financial applications, such as payments, transfers and commerce.

In addition to its security benefits, blockchain has potential implications for cost savings due to its distributed nature. For example, reducing the need for costly intermediaries such as banks or brokers can drastically reduce the costs associated with international financial transactions.

Furthermore, since all transactions are stored on an immutable public ledger, there is increased transparency that can help improve trust in financial systems worldwide by reducing fraud and delays in settlement times.

Conclusion

Fintech will continue to be a driving force for the future. By 2023-2024, we can expect greater use of blockchain, AI and IoT in financial transactions. Automation and integration will become more sophisticated. As a result, consumers will have access to more tailored services that better suit their individual needs. As technological innovation continues to shape finance, businesses must stay ahead or risk being left behind.

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