The top 5 fintech trends for 2023
Fintech’s digital transformation phase is over: What follows now is acceleration and innovation. Global economic uncertainty, intense market competition, increased data security threats and consumer demands will shape fintech strategies for 2023 across the board.
The fintech sector adopts technologies for different purposes. While some trends, such as the use of data-driven platforms, have earned their rightful place in the trend rankings due to their ability to increase performance, others, such as risk management technologies, are in place to reduce threats, reduce costs and address increasing data security complexity.
On the other hand, AI-powered hyper-personalized customer experiences give companies a fighting chance in a market that has become increasingly saturated with competition, while leading global institutions begin to deploy quantum computing to get a head start on the future of finance. Here are the fintech trends for 2023; let’s dive into them.
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Data-driven platforms and automation
Accenture ranks ‘data as a product’ as a top trend for 2023, but leveraging data in all aspects of business – ensuring data quality, security and ‘fit for business’ standards to drive internal and external decisions – is a trend across fintech – the market, not just the bank.
Faced with increased workloads, the challenges of attracting and retaining fintech talent, and consumers demanding agile, modern and responsible data management, fintech is turning to data edge-cloud platforms to do more with less.
Companies that master technologies that automate data processes throughout their lifecycle will stand out from the pack. From how data is generated and checked for quality, security and compliance to how it is presented in business intelligence dashboards, automation tools can speed up processes, reduce human error and increase visibility, improve production and operations.
In turn, AI-powered cloud platforms will continue to enable hyper-personalized brand and customer experiences.
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AI-powered hyper-personalized customer experiences
To attract new customers, grow loyalty programs and increase revenue, fintech leaders are using AI to deliver hyper-personalized customer experiences. Using data and technology tools such as machine learning and AI, companies seek to understand and know their customers. The more a fintech company is intimate with its customers’ behavior and desires, the better it can serve them.
ML models can be optimized to predict purchase intent using first-party data obtained with user consent through purchase history and other customer information. This data, stored in companies’ data marts, can be organized as consumer signal-based groups.
By creating signal groups—for example, “users interested in low-risk investments”—fintech companies can hyper-personalize offers, create new products and services, and better serve customers with what they want, when they want it.
Enhanced hyper-personalized customer experiences are how companies can compete in an increasingly crowded fintech global market, with hundreds of thousands of startups simultaneously seeking success and traditional large institutions modernizing to catch up.
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Payment diversity: Embedded finance, blockchain and crypto
Dominant technology payment trends for 2023 are distributed based on a simple premise; the wider the options, the wider the net. By mid-2022, The Ascent revealed that 50% of Americans had used the new Buy Now Pay Later payment method. Millennials and Gen Z are leading the adoption of new payment technologies as they grow in popularity, and BNPL is just one of many popular payment technologies.
Fintech embraces payment technology diversity, building “super apps” that offer customers conventional bank accounts, blockchain and crypto services, e-wallets, credit and debit cards, BNPL services, capital market and stock exchange, instant international blockchain transfers, AI-powered fast insurance services and more.
2023 will continue to see fintech Super Apps become the norm, with additional services, products and payment options included, such as NFTs, automatic payments or biometric instant payments and transactions.
Risk Management Technology: Compliance, Privacy and Cyber Security
The Flashpoint “Year In Review: 2022 Financial Threat Landscape” report reveals that the financial sector had the second highest number of breaches compared to other industries. Due to the wealth of valuable data that the sector houses, cybercriminals are targeting fintech companies and their users. Cybersecurity is just one component of risk management that affects the sector.
By 2023, risk management will make or break financial services organizations. Technologies that reduce, automate and prevent threats and risks are intensely sought after by companies to avoid cyber attacks, data leaks, lawsuits, negative consumer perception, loss of customers and business partners and million dollar fines.
Integrated risk management frameworks that address cyber security, compliance and governance as well as automate the complex data processes involved, while providing intelligent analysis with AI tools, are the one-stop solution. Some niche trends widely used for risk management include biometrics and password managers to reduce fraud.
On the other hand, as AI apps become widespread to evaluate credit risk and provide “instant” digital assurances, transparency becomes a must. AI analytics performance must be verified to ensure they are objective and non-discriminatory and comply with standards and regulations.
From meeting consumer privacy and data security demands to building trust and robust business operations, risk management can boost performance in 2023, while reducing costs, avoiding threats and preventing risks before they happen.
Quantum computing: The rise of the new fintech era
As recently reported by TechRepublic, leading global financial organizations and institutions such as Crédit Agricole are successfully experimenting with quantum computing. The technology, which exploits the laws of quantum mechanics to go beyond classical computing capabilities, is moving rapidly from experimental phases to testing and deployment.
The speed, accuracy, reliability and security of quantum computing capabilities is what attracts a sector like fintech, where better calculations bring more profit and less risk.
IBM Quantum, Microsoft Azure Quantum, Google Quantum AI and other cloud providers are driving the implementation of the new technology in finance. By offering fintech customers access to quantum computers in the cloud, cloud providers have eliminated the high technical requirements and expensive upfront costs of building quantum computers.
Quantum computing will disrupt all aspects of finance, including portfolio construction, profit margin analysis, asset volatility estimations, stock markets and derivatives trading, and credit risk assessment. It will also enable better factor predictions as ESG and new regulations set higher standards and increase the calculation challenges.
The fintech sector kickstarts 2023 with a turbulent economic landscape inherited from a disruptive 2022. The factors triggering global tectonic shifts – the war in Ukraine, inflation, labor market and supply chain disruptions, environmental pressures, regional socio-political tensions and more – will continue to play out the year as is coming. But as fintech opens up the world for business, technology will continue to play a leading foundational role.
While most of the fintech technology of 2023 is not new to the game, what makes this year different is the level of maturity that companies have acquired. Markets may shift and turn, consumer trends may fluctuate and regulations and standards may increase, but leading fintech organizations will continue to use technology to find solutions and new opportunities in the crises.
If other trends are of interest this year, check out 5 key 5G trends to watch and Gartner’s analysis of IT infrastructure trends.
