The FinTech Renaissance for 2023: The Complete Capability Mapping & Trend An...

Introduction

FinTech is amongst the most alluring realms for venture capitalists that leverage the latest technologies aimed at enabling, supporting, enhancing, and automating financial services.

A lot of interesting trends are all set to emerge in the FinTech sector in 2023. The most apparent ones include digital payment, AI-ML technologies, big data, cloud computing, and blockchain. And while all these technologies have been around for a while, one thing that's not so obvious is figuring out how these trends will really impact the FinTech sector—the socio-economic and political factors that shape the way we do things and the inside stories that are all set to disrupt the sector in 2023 and beyond. So, let's delve right into the intricacies of modeling up the top FinTech trends for 2023 in this blog post.

A Conceptual Framework for FinTech: Interactions between Markets and Socio-Economic Factors viz. Policy and Development (Source: World Bank Document)

FinTech is amongst the most alluring realms for venture capitalists that leverages the latest technologies aimed at enabling, supporting, enhancing, and automating financial services.

FinTech companies are constantly innovating to meet their customer's needs and address their needs in new ways. We see this in the way they handle payments, investment advice, and other services that were previously only available to large institutions.

According to research researchandmarket.com, the global FinTech market is projected to reach $305.7 billion by the year 2023, at a CAGR of 22.17 % from $11.8 billion back in the year 2018. The prime reason for this prolific growth is attributed to the increasing technological adoption. As customers are seeking more innovative banking solutions, they're using the latest technologies, especially modern-day mobile applications.

Despite pandemic-imposed delays, 2022 was still a significant year for growth in financial technology, wherein the FinTech industry proliferated.

The road hasn't been easy, though.

The "State of FinTech" report by CB Insights revealed that in the second quarter of 2022, the FinTech funding dropped by a massive 46% YoY; also, it was about just 2/3rd of the funding that the firms received in Q1 2022 (at 33%).

On the positive side, however, Q2 of 2022 still recorded the 6th largest FinTech quarterly funding, and the funding was more than those during the pre-pandemic times. Additionally, the FinTech unicorn count at the end of Q2 was 297.

Additionally, according to an exhaustive new study by the World Bank, as central banks around the world continue to raise their interest rates in response to inflation, the world may be edging toward a global recession in 2023 and a string of financial crises in emerging market and developing economies that can have impending long-term repercussions.

The world is grappling with massive geo-political turmoil, with the Russia-Ukraine war being a vicious and prolonged affair leaving the global economy & supply chains in fiascos alongside shackling foundations for humanitarianism and financial and environmental catastrophes.

The World Bank has warned of an imminent recession stating clearly that the "pain of stagflation could persist for years" unless the global supply chains are restored. The bank has also suspicious of the Global GDP growth falling to 0.5% in 2023 (a massive 4% decline per capita). Inflation seems to hover over in the nearby horizons, as the central banks across the globe affirm the views.

The tough challenges we face today, from COVID-19 to the war in Ukraine, are a reminder that turbulent times in history have often been accompanied by innovation.

Technology-enabled innovation in financial services, known as FinTech, is one example, which has accelerated rapidly as the pandemic-induced shutdown has amplified the importance of sustainability.

Mobile contactless transactions are anticipated to increase by 92% in 2023, with global transaction volumes surpassing $49 billion, affirms Juniper research.

It is not surprising that contactless payments have emerged as the biggest sector within the FinTech industry & are increasingly becoming more popular because they make the use of financial services more accessible and more convenient.

With FinTech apps, digitized payments, and embedded services increasing prolifically and attracting venture investments, Forbes has predicted that the "venture capital market for 2023" will be "strong," to say the least, though less likely to be "meteoric," like 2021.

The trends for FinTech in 2023 are expected to be more inclusive and user-friendly.

A recent PWC study deduced that global cashless payments will surge by more than 80% between 2020 to 2025, from 1 trillion to about 1.9 trillion, and almost triple by 2030. Asia-Pacific will experience the highest growth, with a 109% increase in cashless transaction volume through 2025, followed by a 76% increase from 2025 to 2030 in Africa (78%, 64%) and Europe (64%, 39%). The US and Canada have the slowest growth rates (43% and 35%), followed by Latin America (52% and 48%).

Looking at the recent trends in the FinTech sector, it becomes interesting to figure out what FinTech trends will spring up in 2023 as the world acclimatizes to the new normal and is baffled by the challenges of an anticipated global recession.

Will FinTech customers be able to manage their finances in more convenient ways than ever before?

Will the number of FinTech unicorns surge, and will it be easier for financial institutions and companies to gain access to new markets?

As we continue to witness more innovation in the FinTech sector — it seems that 2023 will equalize win-win opportunities for both consumers and financial institutions alike.

Table of Content

Embedded Solutions Offered by Banks Surge

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Paradigm Shift to Data Coherency 
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ESG & Green Financing Evolve as a Center of Focus

Emerging Economic Markets will Flourish Globally

Unicorn Status to Become Oblivious in Prime Geographies Will Remain Key for Emerging Economies

Open Banking and Open API Will Increase In Popularity

Use of IoTs Will Continue to Proliferate: Infusing Trust Quotient into Finance

RegTech To Help Organizations Comply with Complex Industry Regulations & Gain Competitive Edge

Biometric Authentication Continues to Be the Most Popular Form of Identity Verification

AI & Big Data Will be the Keystone Technologies

Hyper-automation, Especially Robotic Process Automation (RPA), Will Replace the Crippling Manual Tasks

Blockchain or Distributed Database or Electronic Ledger

A surge in the Adoption of Cloud Computing & Cloud-Native Technologies

Use of Virtual Cards for Safe Transactions

Digital Assistants Spreading out Within Financial Management Systems

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Web 3.0 Buzz Continues to Hype
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Global Ecommerce Disruption Skyrockets Demands for Simple Payment Option

Super Apps Will Evolve to Offer Diverse Suite of Services

Convergence of Cloud Computing, DevOps & Design Thinking Concepts Will Enliven Monolithic No-Code, Low Code Application Development Ecosystems

Metaverse Digital Twins to Revolutionize FinTech

Open source, SaaS & Serverless to Emerge as Quintessential Technologies Within FinTech Businesses

 Digital-only Banks Continue to Surge as They Eliminate Tedious Physical Bank Visits & Accentuate Superior & Seamless Digital Experiences for Customers

FinTech Apps Facilitating Agency Banking, Mobile Money, and Other Innovative Banking Facilities to the Unbanked, Weak, and Vulnerable sections of Society Will Gain Precedence

Alternative Finance Surges: Converging MSME’s Access to Finance and Unlocking Immense Opportunities for Customer Finance

The proliferation of Digital FinTech in Forms like Digital Assets, Digital Investments, and Digital Payments will Continue to Disrupt the Conventional Business Models, Applications, Processes & Products, Spurring the Development of New Ones

World Prepares for CBDCs and Crypto Regularization

Neo-banking Revolutionizes Banking Sector: Bridges the Gap Between Traditional & Digital Banking to Match up the Evolving Customer Expectations, Especially Those of Gen Z

Sector Funding To Evolve Despite Mixed Signals Across Wealth Tech, Payments & Banking

Omnichannel Payment Players will Surge in the Payments Tech Space: Evaluated by ESP (Execution, Strength, and Positioning) Ranking Metrics

HR tech-based start-ups are Likely to Dominate Top Equity Deals, Especially in the US

1. Embedded Solutions Offered by Banks Surge

In 2023, an increasing number of banks will provide embedded solutions.

As more banks look to become service providers to non-bank and non-financial institutions looking to deliver a customer experience or service proposition involving financial services as a component of a more extensive offering, embedded finance has become an increasingly popular trend over the past year is poised to continue growing.

Embedded finance is defined as the integration of technology into banking products and services, including those provided by other entities. In other words, it's banking that isn't traditional banking—it's just using technology as a way to provide services.

This means that these types of services may look very different from what you know today. For example, some banks offer customers the option to pay their loans with cryptocurrency by using their phones to scan QR codes on their payments through a digital wallet application. Other banks are using artificial intelligence (AI) algorithms to predict how customers will behave based on their financial history and current behavior patterns. These AI algorithms can then be used to determine whether the customer is likely to default on his loan payments or not.

According to research by Future Market Insights, the demand for embedded banking solutions is estimated to grow at 22.1% CAGR between 2022 – 2032, compared to the cumulative CAGR of 13.5% between the period of 2017– 2021. With the growing demand for Banking-as-a-Service (BaaS), the adoption of embedded banking has proliferated.

As banks increasingly offer banking-as-a-service (BaaS), financial institutions are becoming more and more integrated.

The rise of embedded finance solutions has led to an increase in demand for BaaS. To meet this demand, banks are increasingly offering these services themselves. By partnering with financial institutions that can aid with the setup of such solutions as well as provide insights into customer needs, we've been able to greatly expand our offerings in this area.

BaaS complements embedded finance. BaaS allows financial institutions to offer bundled offerings that include a wide range of services, from loan origination to customer support.

BaaS vendors provide a regulatory and technological setup that allows third parties to operate banking systems while associating their own brand name to the BaaS backend via a proprietary API system. As a result, third parties can focus solely on providing information, discovering new customer experiences, and building their own brands.

Banks are getting increasingly involved with the blockchain to help their customers. In fact, many BaaS providers build platforms on terms that have been approved or licensed by partner banks such as Solaris Bank. Furthermore, advanced BaaS providers who do not adhere to the old model of traditional banking services provide customers with an innovative, friendly, and seamless experience. Owing to this, they naturally become the preferred choice for emerging FinTech players or technology vendors.

2. Paradigm Shift to Data Coherency

The digital age has made data a crucial business component, and FinTechs are no exception. FinTechs need to use data analysis applications to make sense of their customers' information, both in terms of volume and quality.

FinTechs are facing a paradigm shift to data coherency. The traditional FinTech business model is based on the idea of providing financial services to customers through a combination of innovative business models and technology. FinTechs have access to large pools of customer information as valuable data points, which can be used to gain insights and drive business decisions.

Data analytics applications can be used to generate insights for diverse elements of FinTech business models.

In this way, FinTechs can combine innovative business models with technology to enhance financial services. FinTechs, owing to the highly digital nature of their work and the burgeoning mobile access of their customers, can access large pools of customer information as valuable data points. Their ability to harness these data points to gain insights and drive business decisions can help them outrun their competitors. To that end, data analysis applications can be used to generate insights for diverse elements of FinTech business models. Here are a few areas in which data analytics can play a critical role:

-Customer behavior analytics

-Customer segmentation, satisfaction, and sentiment analytics

-Product development analytics

- Brand management

FinTechs use data analysis applications to gain insights into their customers' needs, preferences, and behavior. These insights help them understand who their customers are and where they are engaged with the brand—and what might be driving those behaviors. By using analytics tools and techniques, they can segment their customer base into groups that are most likely to engage with them in different ways, which allows them to focus marketing efforts on those segments that are most likely to convert into paying customers.

3. ESG & Green Financing Evolve as a Center of Focus for FinTech

ESG and green finance are two of the most important trends to watch for in FinTech. It's clear that they're becoming more mainstream as investors, consumers and companies alike recognize their importance to sustainability and a more sustainable world. Since they majorly are interlaced for a common cause for the greater good, i.e., sustainability, we thought of discussing them together.

Along with more conventional financial indicators, ESG (Environmental, Social, and Governance) standards examine the company's environmental, social, and governance activities.

The concept has been more popular over the past ten years against the backdrop of escalating environmental problems and widespread financial scandals. An increasing number of businesses and investors are now concentrating on the ESG criteria to promote responsible growth.

The term "green finance," sometimes known as "sustainable finance," refers to a group of financial rules, standards, norms, and products that support environmental goals, particularly through easing the energy transition.

Adopting green finance coupled with FinTech innovation can promote green economic growth by raising the level of development of the green and sustainable economy, which is a key benchmark for the majority of nations.

Sustainability, of late, has evolved as a market imperative within the FinTech sector. Given the regular occurrence and systematic nature of trade and payment transactions, integrating sustainability-tracking capabilities into core transaction banking services can significantly enhance a company's performance on ESG measures.

According to finextra.com, the rapid growth of ESG investing is building on the much older socially responsible investment (SRI) movement, which now accounts for more than $20 trillion in AUM or about one-fourth of all professionally managed assets globally.

Moreover, an EY report published in 2020 revealed that 52% of banks globally view environmental catastrophes as threats to their business continuity models. This is a huge sensitization and paradigm shift towards the green economy from what was revealed in 2019, when only 37% acknowledged the impact of climatic hazards on business.

According to federalreserve.gov, finding new ways to bring financial inclusion to the more than 63 million people who are underbanked and without standard credit files is necessary to overcome the economic gaps exposed by the pandemic. Many of these customers can be verified as creditworthy using additional data sources.

Green finance strategies are able to do more than just influence public opinion in a favorable way. They help organizations have both a good impact on the environment and financial success by incorporating sustainability into decision-making.

But how can FinTech play a role in accelerating the adoption of ESG and green finance? What does it mean for FinTech players?

Green Financing on the Rise Globally

Green finance is a broad term that encompasses all financial products designed to help companies and consumers reduce their environmental impact. While green bonds have been around for some time, they are only recently becoming more mainstream.

Green loans are an alternative form of lending in which borrowers get money from lenders but pay back the loan with interest over time rather than paying it all off at once via a cash infusion. In addition to being environmentally friendly, these low-risk investments also offer investors higher returns (compared with traditional bank loans) while helping individuals become less reliant on high-interest credit cards or other forms of predatory lending practices that can lead them into debt traps when they least expect it—or worse yet!

Green Bonds & Green Loans

Green loans and bonds are new financing methods that combine the benefits of traditional debt, or traditional bank loans, with environmental sustainability. They have been designed to support projects that reduce greenhouse gas emissions while also delivering long-term economic benefits to investors. The funding can be used for both public and private sector projects across a variety of sectors, including transportation, energy efficiency, buildings, and waste management.

Green finance is expected to grow exponentially over the next few years as more companies begin tapping into its potential for growth opportunities in Europe (which has already seen significant growth) as well as elsewhere around the world where there aren’t currently many resources available yet but could benefit greatly once they do get built out later on down the line.

Green Securities Evolve

Green securities have been around for a while, but they are becoming more popular in funding projects supporting the transition to a green economy. For example, you can buy green bonds that help finance renewable energy projects and other environmental efforts. Some companies even offer loan products based on their sustainability credentials—and these loans are issued by traditional financial institutions like banks or insurance companies.

Green securities include:

Green bonds (bonds backed by environmentally friendly projects)
Green loans (loans used as collateral for investments in environmentally conscious businesses)

Why Fintech is So Critical for green finance and ESG

Fintech is a key enabler for the growth of green finance. As companies and investors seek to diversify their portfolios, ESG and green finance are becoming more attractive options. Fintech can bring in new investors and consumers by providing them with easy-to-use tools that make it easier for them to access these financial products. It also helps manage ESG risks better through processes like due diligence or risk management software, which reduces costs associated with analyzing data or monitoring transactions.

Finally, Fintech can accelerate the adoption of ESG and green finance by streamlining processes across multiple touchpoints (such as trading platforms) so that all parties working on projects have access to information about how much money has been raised for each initiative over time - something vital when trying to determine if project success is being driven by human capital alone.

How Fintechs can Accelerate the Adoption of ESG and Green Finance by Consumers, Investors, and Companies

In order to accelerate the adoption of ESG and Green Finance, Fintech can help build the infrastructure that will support it.

Fintechs are companies that provide financial products and services through software applications or electronic platforms. Fintechs include apps like Venmo, Cash App, Paypal Zettle, and M-Pesa; mobile payment systems like Apple Pay; money transfer services such as TransferWise; peer-to-peer lending platforms such as LendingClub; cryptocurrencies like Bitcoin or Ethereum; Robo advisors (financial technology “Robo” is short for “robotic”).

How Fintech Players are Shaping Up the Future of ESG and Green Finance

The future of ESG and Green Finance is bright. Fintech players are playing a key role in accelerating adoption, helping companies to access capital and investors to invest in ESG and Green Finance.

Fintech players can help companies and investors track their ESG performance, measure their impact on sustainability over time, benchmark against peers or competitors, evaluate their business model for ESG effectiveness (including carbon footprint), manage risks related to climate change mitigation strategies, etc.

There are tremendous opportunities for Fintech players to play a key role in accelerating the adoption of green financing and impact investment.

Green finance is a promising area for fintech innovation. There are tremendous opportunities for Fintech players to play a key role in accelerating the adoption of green financing and impact investment.

Fintechs can help consumers access ESG/green finance products, such as loans or bonds that combine financial returns with environmental benefits. They also provide tools that enable companies to measure their environmental impact and take steps toward curing these impacts with new technologies or processes (for example, through carbon trading). In some cases, businesses may want to use their own data about how much energy they consume in order to calculate how much money it would cost them if they switched suppliers (and thus what kind of return on investment the company could expect from its own investments). Fintechs can also help investors make better decisions when selecting funds based on ESG criteria by providing information about which funds meet those criteria most closely—and whether those funds are cheaper than others might be expected, given their rating level.

ESG and green finance are all set to be predominant FinTech terms for 2023. It is clear that Fintech is poised to play a key role in accelerating the adoption of ESG and green finance, and vice versa. These new trends can revolutionize how companies, consumers, and investors engage with financial markets and provide solutions for issues like climate change. There are tremendous opportunities for Fintech players to do just this.

4. Emerging Economic Markets will Flourish Globally

There’s immense potential for financial technology (FinTech) companies to thrive and flourish in emerging markets, specifically in parts of Africa, Southeast Asia, Latin America, and the Middle East, which will be the epicenter for the growth. These regions are considered emerging economies due to their potential for rapid growth and the opportunities they present for the development of a common trade market and banking-as-a-service capabilities. However, these regions often face challenges such as a lack of quality infrastructure, a mismatch between labor demand and supply, and weak investment regulations.

Although accurately identifying these zones is a difficult undertaking, they have the resources required for rapid development and offer the profit potential for the expansion and development of a common trade market, banking-as-a-service capabilities, and, ultimately, the financial market. The lack of good, inexpensive, and accessible hard and digital infrastructure, the mismatch between labor demand and availability, and lax investment laws continue to be problems in many of these locations. Government, banks, and FinTech firms are collaborating to promote digital access and the advantages of the digital economy, for instance, by encouraging infrastructure-sharing programs more vigorously.

FinTech businesses have grown significantly in these areas over the years, promoting equality among economically disadvantaged or marginalized people by igniting innovation for the financial sustainability of these areas. Financial inclusion is steadfastly persistent in many emerging markets, leaving vast swaths of low-income populations unbanked or underbanked despite the near-universal availability of financial services in industrialized economies. FinTech businesses have started to capitalize on the massive unmet demand that this represents by using cutting-edge technologies to supply these services in novel ways. These businesses are beginning to prosper in developing areas, but many nations still need to address regulatory difficulties, including lax consumer protection laws. FinTechs will continue to grow if these obstacles can be managed and more strides are made toward achieving ubiquitous access to digital infrastructure.

FinTechs in emerging markets are particularly innovative and expansive in their offerings. They have developed solutions that are tailored to address the needs of different customer segments, including those living at the “bottom of the pyramid” who do not have access to formal financial services. This includes mobile money solutions, peer-to-peer lending, and other online payment options. Additionally, FinTechs are exploring new technologies such as blockchain and artificial intelligence to provide more innovative services for customers.

In addition to providing greater access to financial services for those living at the bottom of the pyramid, FinTechs in emerging markets are also creating an environment of financial inclusion. By providing affordable and convenient solutions, these companies are enabling individuals to build wealth and create business opportunities for themselves. This is especially important in regions where traditional banking services may be too expensive or difficult to access.

FinTech companies have been able to overcome some of these challenges by promoting infrastructure-sharing initiatives and fostering inclusivity among marginalized economic groups. This has sparked innovation and financial sustainability within these regions. Despite the high levels of financial inclusion in advanced economies, many emerging markets still have high levels of financial exclusion, leaving a large portion of their populations unbanked or underbanked. FinTech companies have begun to address this unmet demand by using innovative technologies to deliver financial services in new ways.

Overall, FinTechs in emerging markets is transforming the way people access and use financial services. By providing greater convenience and affordability, these companies are enabling individuals to become financially included and build wealth for themselves. If regulatory issues and access to digital infrastructure can be addressed, FinTechs will continue to scale and spread across many countries. These developments offer great promise for the future of financial services in emerging markets and present opportunities for financial inclusion for the marginalized economic groups in these markets.

5. Unicorn Status to Become Oblivious in Prime Geographies, Will Remain Key for Emerging Economies

Unicorn FinTechs have been the driving force behind the global financial technology revolution.

According to CB Insights, as of Q3 2022, there are 307 unicorn FinTech companies worldwide, with a combined valuation of over USD 570B.

According to CB Insights, these unicorns are concentrated in several regions across the globe, as shown below:

The birth of FinTech unicorns was curtailed to single digit only 6 in Q3, 2022, lowest since 2020. While 3 (50% of these new unicorns were born in the US alone and the highest valuation among them of $2 B was of the crypto firm 21.co; Asia and Latin America became the dwelling geographies for 2 unicorns and 1 unicorn respectively.

While these markets have seen huge success in recent years, many are now reaching maturity and becoming less attractive for unicorns. As a result, unicorn FinTechs are likely to become more saturated in prime geographies such as the US, UK, and China.

However, this does not mean that emerging markets will be left behind. Despite their lower investment levels compared to the US and other major markets, emerging economies are still key to the continued success of FinTechs.

In fact, there are several key advantages for startup FinTechs in emerging market countries such as India and Brazil; lower costs, larger markets, faster technology adoption, and a better understanding of local needs. This means unicorn FinTechs will remain key in these markets even if they become less prominent in the primary geographies.

Therefore, while unicorn FinTechs may become more concentrated in prime geographies, they will remain important for emerging markets and continue to drive the financial technology revolution forward.

6. Open Banking and Open API Will Increase In Popularity

Open banking is a system that allows third-party financial service providers to access financial data from banks and other financial institutions with the customer's consent. This can be done through the use of APIs, which are essentially a set of rules and protocols that allow different software applications to communicate with each other.

Open banking has the potential to increase competition in the financial services industry, as it allows new entrants, such as fintech companies, to easily access and use customer financial data. This can lead to the development of new and innovative financial products and services, which can benefit consumers by offering them more choices and potentially better deals.

Open APIs, on the other hand, are a specific type of API that are designed to be easily accessed and used by third-party developers. This can facilitate the development of new financial products and services, as well as enable the integration of existing services with new ones.

Open banking and open API initiatives will continue to become more popular as governments, banks, and businesses in the FinTech sector realize their potential. Open banking enables customers to easily share financial data with third-party providers while maintaining security and trust. Similarly, open APIs allow developers to access specific functions within a bank’s systems directly through a secure interface. This allows for faster development and scalability of new products.

The advantages of open banking and open APIs are numerous. Banks can help increase efficiency by allowing them to access customer data quickly and securely, reducing the cost of manual processes. Additionally, customers are offered a much wider range of services from FinTech companies, as they are able to access financial data in a secure and convenient way. This can include services such as budgeting tools and loan applications.

For businesses, open banking and APIs offer the potential to create innovative new products, allowing them to better serve their customers with faster payment processing and improved customer experience. Additionally, this provides an opportunity for FinTech companies to gain access to customer data in order to develop tailored products, as well as extract valuable insights from the data.

Ultimately, open banking and APIs will continue to be important for the FinTech sector, allowing banks and businesses alike to create more innovative and efficient services that benefit both customers and businesses. This is likely to have a profound impact on the industry and will be integral to its future growth.

Open banking and APIs also offer potential benefits to consumers, as they allow customers to easily control which financial data is shared with third-party providers. This offers greater assurance over their digital security and privacy, as well as convenience in controlling how their financial data is used. Furthermore, open banking and APIs will provide customers with access to a wider range of services and products, allowing them to make more informed decisions about their finances. Additionally, they can help reduce the costs associated with manual processes and data entry, which are often borne by consumers.

In conclusion, open banking and open APIs will continue to rise in popularity and become increasingly important for the FinTech sector as they provide new opportunities for innovation and competition. This could lead to a broader range of financial products and services being available to consumers, potentially leading to better deals and more choices. Not only do they offer banks, businesses, and consumers numerous advantages, but they also provide a secure and convenient way of accessing financial data. This has the potential to revolutionize how customers manage their finances and how companies develop innovative products and services. As such, open banking and APIs are likely to be major contributors to the growth of the FinTech sector in the future.

7. Use of IoTs Will Continue to Proliferate: Infusing Trust Quotient into Finance

The Internet of Things (IoT) refers to the interconnected network of devices that are able to collect and exchange data using the internet. As the use of IoT devices continues to proliferate, they are expected to become an increasingly important trend in the fintech industry.

One of the ways in which the proliferation of IoT devices is expected to impact the fintech industry is through the use of these devices to facilitate financial transactions. For example, IoT devices such as smartwatches and smart home devices can be used to make payments, track financial transactions, and manage finances.

There are several evolving trends in the Internet of Things (IoT) that are expected to revolutionize the fintech industry in the coming years. Some of these trends include:

Increased use of IoT devices for financial transactions

As IoT devices become more prevalent, they are expected to play a greater role in facilitating financial transactions. For example, smartwatches and smart home devices can be used to make payments, track financial transactions, and manage finances.

Enhanced security and fraud prevention

The use of IoT devices can help to increase security and reduce the risk of fraud in the financial industry. For example, IoT devices can be used to authenticate the identity of users and verify the authenticity of transactions.

Personalized financial services

IoT devices can collect data about a person's financial habits and preferences, which can be used to personalize financial services and products. This could include personalized investment recommendations or customized insurance policies.

Improved financial inclusion

The use of IoT devices could help to increase financial inclusion by providing access to financial services and products to underserved populations. For example, mobile banking apps and other financial services can be accessed through smartphones, which are increasingly common even in developing countries.

In addition to facilitating financial transactions, the use of IoT devices is also expected to increase the trust quotient in the financial industry. This is because IoT devices can be used to enhance security and reduce the risk of fraud. For example, IoT devices can be used to authenticate the identity of users and verify the authenticity of transactions.

Overall, the proliferation of IoT devices is expected to have a significant impact on the fintech industry in the coming years, and it is likely to be one of the key trends to watch in 2023 and beyond.

8. RegTech To Help Organizations Comply with Complex Industry Regulations & Gain Competitive Edge

Regulatory technology, or RegTech, is expected to emerge as a key fintech trend in 2023, as it can help organizations comply with complex industry regulations and gain a competitive edge.

RegTech refers to the use of technology to streamline and automate the compliance process. It involves the use of software and other tools to manage regulatory requirements and reduce the burden of compliance on organizations.

One of the key benefits of RegTech is that it can help organizations stay compliant with constantly evolving regulations. It can also help organizations identify and address regulatory risk before it becomes a problem.

RegTech involves the use of software and other tools to manage regulatory requirements and reduce the burden of compliance on organizations.

RegTech is disrupting the financial services industry in several ways:

Automating compliance processes

RegTech is helping to automate compliance processes by using technology to manage and track regulatory requirements. This can help to reduce the burden of compliance on financial institutions and free up resources that can be used to focus on other areas of the business.

Reducing regulatory risk

RegTech can help financial institutions to identify and address regulatory risk before it becomes a problem. By using technology to track and monitor regulatory requirements, financial institutions can ensure that they are in compliance and avoid costly penalties and fines.

Improving the customer experience

RegTech can help to improve the customer experience by making it easier for financial institutions to comply with regulations. This can result in a more streamlined and efficient customer experience, as financial institutions are able to focus on delivering high-quality products and services rather than being bogged down by compliance issues.

Increasing competition

RegTech is increasing competition in the financial services industry by enabling new entrants to enter the market and offering alternative products and services. This is leading to more choices and lower prices for consumers.

RegTech is disrupting the financial services industry by automating compliance processes, reducing regulatory risk, improving the customer experience, and increasing competition.

In addition to helping organizations comply with regulations, RegTech can also give organizations a competitive edge by enabling them to respond more quickly to changing regulatory environments and identify opportunities for innovation.

Overall, the use of RegTech is expected to become increasingly important in the fintech industry in 2023 and beyond, as it can help organizations to navigate complex regulatory landscapes and stay competitive in an increasingly regulated industry.

9. Biometric Authentication Continues to Be the Most Popular Form of Identity Verification

Biometric authentication refers to using biological characteristics, such as fingerprints, facial recognition, and iris scans, to verify an individual's identity. Biometric authentication is increasingly being used in the fintech industry to verify the identity of users and reduce the risk of fraud.

One of the reasons why biometric authentication is popular is because it is more secure than traditional forms of authentication, such as passwords and PINs.

Biometric characteristics are unique to everyone, making it difficult for someone to impersonate another person. Biometric authentication technology is enhancing the ease and security of payments by using unique biological characteristics, such as fingerprints, facial recognition, and iris scans, to verify the identity of users.

One way biometric authentication is improving the ease of payments is by making it faster and more convenient for users to make transactions. Instead of having to remember passwords or enter PIN numbers, users can simply use their biometric characteristics to verify their identity. This can be especially convenient for mobile payments, as users can make transactions using their biometrics without entering any additional information.

In addition to improving the ease of payments, biometric authentication also enhances the security of payments by making it more difficult for fraudsters to impersonate users. Biometric characteristics are unique to everyone, making it difficult for someone to impersonate another person. This can help to reduce the risk of fraud and increase customer confidence in the security of digital payments.

Biometric authentication technology is enhancing the ease and security of payments by making it faster and more convenient for users to make transactions and by reducing the risk of fraud.

In addition to being more secure, biometric authentication is also convenient for users. Using biometric authentication can be faster and easier than traditional methods, as users do not need to remember passwords or enter PINs.

Biometric authentication is expected to continue becoming a popular form of identity verification in the fintech industry in 2023 and beyond. It is likely to be an evolving trend as technology improves and new biometric authentication methods are developed.

10. AI & Big Data Will be the Keystone Technologies

Artificial intelligence (AI) and big data are expected to continue to be important technologies in the fintech industry in 2023 and beyond, as their use continues to grow and evolve as companies are looking forward to continuing to grow, evolve and improve efficiency, reduce costs and enhance customer experience. Here are a few ways in which these technologies are likely to impact the fintech sector:

Personalization

AI and big data can be used to analyze customer data and identify patterns and trends. This can be used to offer personalized financial products and services that are tailored to the specific needs of individual customers.

Fraud detection and prevention

AI can be used to analyze patterns of behavior and identify unusual or suspicious activity, helping to prevent fraud and protect customer assets.

Automation

AI can be used to automate many tasks and processes, such as identifying potential customers and generating personalized marketing campaigns. This can help fintech companies to operate more efficiently and cost-effectively.

Risk assessment

Big data can be used to gather and analyze large amounts of data to help fintech companies assess risk and make informed decisions.

Also, AI & Big Data are at the heart of several mainstream technologies that play a pivotal role in revamping the FinTech sector.

Data storage and management

This includes technologies such as databases, data lakes, and data warehouses, which are used to store and manage large amounts of data.

Data processing and analysis

This includes technologies such as big data platforms, machine learning algorithms, and data visualization tools, which are used to process and analyze data to identify patterns and trends.

Machine learning

This includes technologies such as supervised learning, unsupervised learning, and deep learning algorithms, which are used to train AI systems to recognize patterns and make predictions based on data.

Natural language processing (NLP)

This includes technologies that enable AI systems to understand and process human languages, such as voice recognition and text-to-speech systems.

Robotics and automation

This includes technologies such as robotic process automation (RPA), which are used to automate tasks and processes.

Overall, AI and big data power the FinTech realm to gather, process, and analyze large amounts of data to make informed decisions, automate processes, and enhance the customer experience.

11. Hyper-automation, Especially Robotic Process Automation (RPA) Will Replace the Crippling Manual Tasks

It is possible that hyper-automation (HA) and robotic process automation (RPA) could be used to replace manual tasks in the fintech industry. Hyper automation refers to the use of a combination of technologies, including artificial intelligence (AI), machine learning, and automation tools, to automate processes and tasks. RPA involves the use of software bots to automate repetitive, rule-based tasks that are currently performed by humans.

Both technologies have the potential to increase efficiency and reduce costs by automating manual tasks, freeing up human workers to focus on more complex and value-added activities. However, it is important to note that the adoption of these technologies will depend on various factors, including the specific needs and resources of individual fintech companies, as well as the willingness and ability of their employees to adapt to new technologies.

In general, the use of hyper-automation and RPA in fintech is likely to continue to grow and evolve as these technologies become more advanced and cost-effective. However, it is important for fintech companies to carefully consider the potential impacts and implications of these technologies and to ensure that they are implemented in a way that is fair and ethical for all stakeholders.

12. Blockchain or Distributed Database or Electronic Ledger

Blockchain technology, also known as distributed ledger technology or electronic ledger technology, is a decentralized, distributed database that allows multiple parties to record and verify transactions without the need for a central authority. It is likely to be a prominent fintech trend in 2023 and beyond, as it has the potential to transform various aspects of the financial industry.

Here are a few ways in which blockchain technology is likely to impact the fintech industry in 2023:

Improved transparency and security: Blockchain technology allows transactions to be recorded in a secure, transparent, and immutable way, which can help to reduce the risk of fraud and errors.

Enhanced efficiency

Blockchain technology can help to streamline various processes and reduce the need for intermediaries, which can save time and reduce costs.

Increased accessibility

Blockchain technology has the potential to enable financial inclusion by making it easier for individuals and small businesses to access financial services, especially in areas where traditional financial infrastructure is limited.

New business models

Blockchain technology could enable the development of new business models and financial products, such as decentralized finance (Defi) platforms and stablecoins.

Thus, the adoption of blockchain technology in fintech is likely to continue to grow as more companies and organizations recognize the benefits it offers. It is important for fintech companies to stay up-to-date on the latest developments and trends in blockchain technology in order to stay competitive and take advantage of the opportunities it presents.

13. Surge in Adoption of Cloud Computing & Cloud-Native Technologies

The adoption of cloud computing and cloud-native technologies is likely to be a significant trend in the fintech industry in 2023 and beyond. Cloud computing refers to the delivery of computing resources, such as storage, processing power, and networking over the internet rather than on local servers or devices. Cloud-native technologies are designed specifically to be used in cloud environments and are optimized for agility, scalability, and reliability.

Here are a few ways in which the surge in adoption of cloud computing and cloud-native technologies is likely to impact the fintech sector:

Improved scalability

Cloud computing allows fintech companies to scale up or down their computing resources as needed, which can help them to better meet the changing needs of their customers and business.

Enhanced security

Cloud service providers typically invest heavily in security measures to protect their infrastructure and data, which can help to reduce the risk of data breaches and cyber attacks for fintech companies.

Cloud computing also helps to improve security as cloud service providers offer enterprise-grade security features such as encryption and two-factor authentication. Additionally, it is easier to detect and respond to any security threats as cloud-based solutions can be accessed from anywhere.

Reduced costs

By using cloud computing, fintech companies can avoid the upfront costs and ongoing maintenance associated with owning and operating their own IT infrastructure.

Greater agility

Cloud-native technologies are designed to be highly flexible and adaptable, which can help fintech companies to respond quickly to changing market conditions and customer needs.

In particular, the adoption of cloud computing and cloud-native technologies is likely to continue to grow in the fintech industry as companies look to take advantage of the benefits these technologies offer. It is important for fintech companies to carefully consider their cloud strategy and ensure that it aligns with their business goals and needs.

14. Use of Virtual Cards for Safe Transactions

Virtual cards, also known as digital cards or virtual debit cards, are a type of payment method that allows users to make online transactions without using a physical card. They are typically linked to a user's bank account or credit card and can be used to make purchases or withdraw money from ATMs.

Virtual cards have gained popularity in recent years due to the convenience and security they offer. They can be easily created and managed through a mobile app or online platform and can be used for one-time transactions or for recurring payments. Since virtual cards are not linked to a physical cards, they are less vulnerable to fraud and identity theft.

One of the main advantages of virtual cards is their ability to provide a layer of security and protection when making online transactions. When a user makes a purchase with a virtual card, the merchant only receives the virtual card number, expiration date, and security code. This reduces the risk of sensitive financial information being exposed or stolen.

Virtual cards are also a useful tool for managing expenses and budgeting. Users can create separate virtual cards for different purposes, such as travel, groceries, or entertainment, and set limits on how much can be spent using each card. This can help individuals and businesses better track and control their spending.

It is expected that the use of virtual cards will continue to grow in popularity in the coming years as more people and businesses adopt digital payment methods. Many financial institutions and fintech companies are now offering virtual card services, and it is likely that we will see further innovation and development in this area in the near future.

15. Digital Assistants Spreading out Within Financial Management Systems

Digital assistants are software programs that use artificial intelligence (AI) to perform tasks and assist users. In the context of financial management, digital assistants can be used to help individuals and businesses manage their financial affairs more efficiently and effectively.

One way that digital assistants are being used in financial management systems is by providing personalized recommendations and advice to users based on their financial goals and needs. For example, a digital assistant may analyze a user's spending habits, income, debts, and investments and suggest how to save money, pay off debt, or invest in the future.

Digital assistants can also help users automate their financial tasks, such as setting up budget plans, paying bills, and tracking expenses. By automating these tasks, users can save time and reduce the risk of human error.

Another way digital assistants spread within financial management systems is by integrating with a wide range of financial products and services. For example, a digital assistant may connect to a user's bank account, credit card, investment portfolio, and other financial accounts and provide a holistic view of their financial situation. This can help users make more informed decisions about their finances and achieve their financial goals.

It is expected that the use of digital assistants in financial management systems will continue to grow in popularity in the coming years as more people and businesses adopt digital technologies to manage their finances. Many financial institutions and fintech companies are now offering digital assistant services, and we will likely see further innovation and development in this area in the near future.

16. Web 3.0 Buzz Continues to Hype

Web 3.0, also known as the Semantic Web, is a concept that refers to the next generation of the World Wide Web, where data is more interconnected and can be understood and processed by machines. The goal of Web 3.0 is to create a more intelligent and intuitive web that can better understand and respond to the needs and intentions of users.

One of the main technologies driving the development of Web 3.0 is the use of semantic tags, which allow data to be more precisely defined and classified. This enables machines to better understand the meaning and context of data and to more accurately interpret and respond to user queries.

In the financial technology (fintech) industry, Web 3.0 technologies have the potential to revolutionize the way financial services are delivered. For example, Web 3.0 technologies could create more personalized and intelligent financial advice, automate financial tasks, and improve the security and privacy of financial transactions.

It is expected that the buzz around Web 3.0 will continue to grow in 2023 as more fintech companies and financial institutions adopt these technologies to improve their services and better meet the needs of their customers. Web 3.0 has the potential to significantly enhance the way financial services are delivered, and it will likely become a predominant fintech trend in the coming years.

17. Global Ecommerce Disruption Skyrockets Demands for Simple Payment Option

The global ecommerce industry has experienced significant growth in recent years, and this trend is expected to continue in the coming years. One factor driving this growth is the increasing demand for simple and convenient payment options.

Consumers today expect to be able to make purchases online quickly and easily, without having to enter lengthy payment or shipping details. They also want to have a wide range of payment options available to them, such as credit cards, debit cards, mobile payments, and digital wallets.

In order to meet this demand, many ecommerce companies and financial institutions are turning to fintech solutions to provide simple and convenient payment options for their customers. These solutions may include digital wallets, mobile payments, and other payment platforms that allow users to make purchases with a few taps on their phone or computer.

It is expected that the demand for simple payment options will continue to grow in the coming years, as more people around the world embrace ecommerce and the convenience it offers. This trend is likely to drive further innovation and development in the fintech industry, as companies seek to offer the most user-friendly and secure payment solutions possible.

18. Super Apps Will Evolve to Offer Diverse Suite of Services

A super app is a mobile application that offers a wide range of services and features within a single platform. Super apps are designed to be a one-stop shop for users, allowing them to access various services such as social networking, messaging, ride-hailing, food delivery, and more, all from a single app.

In recent years, one of the main trends in the fintech industry has been the rise of super apps, which are becoming increasingly popular in many parts of the world. Many super apps, such as WeChat in China and Gojek in Indonesia, have evolved to offer diverse services beyond just messaging and social networking. These services may include financial services such as mobile payments, peer-to-peer lending, and investment options.

It is expected that super apps will continue to evolve and offer a wider range of services in the coming years, including more financial services. This trend is likely to be driven by the increasing demand for convenience and simplicity, as well as the growing adoption of mobile technology worldwide.

As super apps continue to expand and offer diverse services, they are likely to become a predominant trend in the fintech industry in 2023 and beyond.

19. Convergence of Cloud Computing, DevOps & Design Thinking Concepts Will Enliven Monolithic No-Code, Low Code Application Development Ecosystems

The convergence of cloud computing, DevOps, and design thinking concepts is expected to drive significant changes in the application development ecosystem in the coming years. These trends will likely enliven the monolithic no-code and low-code application development frameworks, making it easier and more efficient to build and deploy applications.

Cloud computing refers to delivering computing services, such as storage, processing, networking, and analytics, over the internet. By moving application development and deployment to the cloud, companies can reduce their IT costs and improve the scalability and availability of their applications.

DevOps is a software development methodology emphasizing collaboration and communication between development and operations teams. It aims to shorten the development cycle and increase the speed and reliability of software deployments.

Design thinking is a problem-solving approach that emphasizes empathy, experimentation, and iteration. It can be used to develop innovative and user-friendly products and services.

By combining these concepts, companies can create a more agile and efficient application development process, allowing them to quickly and easily build and deploy applications that meet the needs of their users. This is likely to be a key trend in the fintech industry in 2023, as more companies seek to leverage the benefits of cloud computing, DevOps, and design thinking to improve their application development processes.

20. Metaverse Digital Twins to Revolutionize FinTech

A metaverse is a virtual world that is created and maintained by computers, in which users can interact with each other and with virtual objects and environments in real time. Digital twins are digital representations of physical objects or systems that can be used to simulate and analyze their behavior.

The convergence of these two technologies is expected to revolutionize the fintech industry in the coming years as more companies adopt metaverse digital twins to improve the efficiency and effectiveness of their operations.

One way metaverse digital twins are likely to be used in fintech is by enabling companies to test and validate new products and services in a virtual environment before they are released to the market. This can help reduce the risk and cost of product development and allow companies to quickly bring new products and services to market.

Another potential application of metaverse digital twins in fintech is the creation of virtual financial services, such as virtual banks and virtual insurance agencies. These virtual services could enable users to access financial products and services anywhere in the world, anytime, without needing physical branches or offices.

It is expected that the use of metaverse digital twins will become a prominent trend in the fintech industry in 2023 and beyond as more companies seek to leverage this technology to improve their operations and better meet the needs of their customers.

22. Digital-only Banks Continue to Surge as They Eliminate Tedious Physical Bank Visits & Accentuate Superior & Seamless Digital Experiences for Customers

Open source, SaaS (Software as a Service), and serverless technologies are expected to emerge as quintessential technologies within the fintech industry in the coming years. These technologies have the potential to significantly impact the way financial services are delivered and consumed, and they are likely to become important trends in the fintech industry in 2023 and beyond.

Open source refers to software that is freely available for anyone to use, modify, and distribute. It is often developed collaboratively by a community of developers, and it is typically licensed in a way that allows users to access and modify the source code. In the fintech industry, open-source technologies are likely to be used to create financial services that are more transparent, secure, and flexible.

SaaS is a delivery model in which software is provided as a service over the internet rather than being installed on a user's computer. SaaS applications are typically subscription-based and are accessed through a web browser. In the fintech industry, SaaS technologies are likely to be used to create financial services that are more scalable, accessible, and cost-effective.

Serverless technologies refer to a computing model in which applications are executed in response to events without the need to provision or manage servers. Serverless technologies are likely to be used in the fintech industry to create financial services that are more agile, flexible, and scalable.

It is expected that the adoption of open source, SaaS, and serverless technologies will continue to grow in the fintech industry in the coming years as more companies seek to leverage these technologies to improve the efficiency and effectiveness of their operations.

23. FinTech Apps Facilitating Agency Banking, Mobile Money, and Other Innovative Banking Facilities to the Unbanked, Weak, and Vulnerable sections of Society Will Gain Precedence

Fintech apps that facilitate agency banking, mobile money, and other innovative banking facilities to the unbanked, weak, and vulnerable sections of society are expected to gain precedence in the coming years. These apps are designed to provide financial services to individuals and communities that may not have access to traditional banking facilities, and they have the potential to significantly improve the financial inclusion and stability of these groups.

Agency banking refers to a model in which financial services are provided through third-party agents, such as retailers or post offices, rather than through traditional branches. Agency banking can help bring financial services to underserved communities, and it can also help reduce the costs and risks of traditional banking.

Mobile money is a financial service that allows users to make and receive payments, transfer money, and access other financial services using their mobile phones. Mobile money is often used in areas where traditional banking is unavailable or impractical, and it can help improve financial inclusion and stability for individuals and communities.

Other innovative banking facilities that may be provided to the unbanked, weak, and vulnerable sections of the society include micro-loans, micro-insurance, and other financial products and services that are tailored to the needs of these groups.

It is expected that fintech apps that provide these types of financial services will gain precedence in the coming years as more companies seek to leverage technology to improve financial inclusion and stability for underserved communities. This trend is likely to be a significant one in the fintech industry in 2023 and beyond.

24. Alternative Finance Surges: Converging MSME’s Access to Finance and Unlocking Immense Opportunities for Customer Finance

Alternative finance, also known as non-traditional finance, refers to financial products and services that are provided outside of the traditional banking system. Alternative finance has gained popularity in recent years due to the increasing demand for more flexible and accessible financial solutions, particularly among small and medium-sized enterprises (SMEs).

One of the key ways in which alternative finance is expected to surge in the coming years is by providing increased access to finance for SMEs. Many SMEs struggle to access traditional forms of financing, such as bank loans, due to strict lending criteria and lengthy application processes. Alternative finance options, such as crowdfunding, peer-to-peer lending, and invoice financing, can provide these businesses with the funding they need to grow and succeed.

Alternative finance is also expected to unlock immense opportunities for customer finance in the coming years. For example, alternative financing options such as point-of-sale financing, rent-to-own, and layaway plans can help consumers access products and services that they may not be able to afford upfront. These types of financing options can also help businesses increase sales and customer loyalty by offering flexible payment options to their customers.

It is expected that alternative finance will continue to grow in popularity in the fintech industry in 2023 and beyond as more companies seek to leverage these innovative financial solutions to meet the needs of SMEs and consumers. This trend is likely to be driven by the increasing demand for more flexible and accessible financial products and services.

25. Proliferation of Digital FinTech in Forms like Digital Assets, Digital Investments, and Digital Payments will Continue to Disrupt the Conventional Business Models, Applications, Processes & Products, Spurring the Development of New Ones

Digital fintech, which refers to financial technology that is delivered and accessed through digital channels, has the potential to significantly disrupt the traditional financial services industry. This is because digital fintech allows for the automation and digitization of many financial processes, making them more efficient and accessible to a wider range of customers.

One example of digital fintech that has already had a significant impact is digital assets, such as cryptocurrency. These assets are digital representations of value that can be bought, sold, and traded online. They are decentralized, meaning they are not controlled by any central authority and are often used as an alternative to traditional fiat currencies. The proliferation of digital assets has disrupted the traditional financial system by providing an alternative way for people to store and transfer value.

Another area where digital fintech is disrupting the traditional financial system is in the realm of digital investments. Digital investment platforms, such as Robo-advisors, allow individuals to invest their money online without the need for a traditional financial advisor. This has made investing more accessible and affordable for many people and has disrupted the traditional financial advisory model.

Digital payments, such as mobile payments and online banking, have also disrupted traditional financial processes by making it easier for people to make and receive payments electronically. This has reduced the need for cash and check payments, which can be slow and insecure.

In a nutshell, the proliferation of digital fintech in the form of digital assets, digital investments, and digital payments are likely to continue to disrupt traditional business models, processes, and products in the financial sector. It will also spur the development of new products and services that take advantage of the capabilities of digital technology. In 2023 and beyond, digital fintech is likely to play an increasingly important role in the financial sector as it continues to evolve and mature.

26. World Prepares for CBDCs and Crypto Regularization

Central bank digital currencies (CBDCs) are digital versions of fiat currencies issued by central banks. They can be used for various purposes, such as making payments, storing value, and serving as reserve currency. CBDCs can potentially disrupt the traditional financial system by providing a more efficient and secure way for people to store and transfer value and by potentially reducing the role of traditional intermediaries such as banks.

Cryptocurrency regulation refers to the laws and policies that govern the use and trading of cryptocurrencies, such as bitcoin. As the use of cryptocurrencies has grown, governments and regulatory bodies worldwide have begun to take notice and consider how to regulate this new asset class.

The trend toward adopting CBDCs and the regularization of cryptocurrencies is likely to continue in 2023 and beyond. This is because these technologies have the potential to significantly change the way the financial system operates, and governments and regulatory bodies want to ensure that they are used safely and responsibly.

The adoption of CBDCs and the regularization of cryptocurrencies could be disruptive to the financial sector in several ways. For example, they could reduce the need for traditional financial intermediaries, such as banks, and change how financial transactions are processed and settled. They could also create new opportunities for financial innovation and change how value is stored and transferred.

Evidently, the trend towards the adoption of CBDCs and the regularization of cryptocurrencies is likely to be a significant development in the fintech sector in 2023 and beyond, as it has the potential to significantly disrupt traditional business models and processes.

27. Neo-banking Revolutionizes Banking Sector: Bridges the Gap Between Traditional & Digital Banking to Match up the Evolving Customer Expectations; Especially Those of Gen Z

Neo-banking, also known as digital banking or online banking, is a type of banking that is conducted entirely through digital channels, such as mobile apps and websites, rather than through traditional brick-and-mortar branches. Neo-banking has revolutionized the banking sector by bridging the gap between traditional and digital banking and by providing customers with more convenient, flexible, and accessible banking options.

One of the main ways in which neo-banking has revolutionized the banking sector is by meeting the evolving customer expectations of younger generations, such as Gen Z, who are increasingly digital natives and expect to be able to conduct all of their financial transactions online. neo-banking allows these customers to manage their accounts, make payments, transfer money, and perform other banking tasks from anywhere and at any time, using their smartphones or other devices. This is particularly important for Gen Z, who are more likely to use their smartphones for banking than any other age group.

In addition to meeting the expectations of younger generations, neo-banking has also helped to modernize and streamline the banking sector overall by offering new features and services that were not previously possible with traditional banking. For example, some neo-banks offer budgeting tools, investment options, and personalized financial advice to help customers manage their money more effectively. Others offer features like instant payments, which allow customers to transfer money to each other in real-time, or virtual debit cards, which allow customers to make online purchases without having to use a physical card.

neo-banking offers digital services such as payments, deposits, withdrawals, budgeting, investments, and loans. These services are offered through mobile applications or websites and can be used on desktop computers or smartphones with internet access. Customers typically only need to provide basic information like name, address, and phone number in order to open an account and begin using these services.

Real use cases that demonstrate the effectiveness of neo-banking include:

• Monzo, a UK-based banking application that allows customers to open an account in minutes and manage their finances easily by tracking spending and setting budgets.

• N26, a German banking app that helps its users track spending and manage their finances through real-time notifications. N26 offers a range of banking services through its mobile app, including checking accounts, debit cards, and investment options. N26 uses a combination of cloud computing, AI, and ML to provide its customers with personalized financial recommendations and to detect and prevent fraud.

• Revolut, a UK-based banking app that offers multi-currency accounts with low fees and quick transfers.

The technology stack for building digital banking infrastructure includes the following:

• Cloud Computing – to store customer data securely and enable scalability of services. neo-banks also rely heavily on cloud computing to store and process customer data, as well as to host their mobile apps and websites. Cloud computing platforms, such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP), provide scalable, secure, and cost-effective solutions for neo-banking.

• Artificial Intelligence (AI) & Machine Learning (ML) – to provide tailored services and customer support as a predominant and dynamically evolving customer satisfaction parameter. AI and ML technologies are used in neo-banking to provide personalized recommendations, detect fraud, and automate various tasks, such as categorizing transactions or generating financial reports. Some popular tools and frameworks for building AI and ML solutions in the neo-banking sector include TensorFlow, PyTorch, and scikit-learn.

• API Integration – to enable access to third-party payment systems, such as Apple Pay or PayPal. An API is a set of protocols, routines, and tools for building software applications, and it allows different software systems to communicate with each other and exchange data. In the context of neo-banking, API integration can be used to enable access to third-party payment systems, such as Apple Pay or PayPal, which allows customers to make payments using their phones or other devices.

• Blockchain – for secure digital wallet payments and identity verification. Some neo-banks use blockchain technology to enhance security and transparency in their operations. Blockchain allows for the creation of secure, decentralized databases that can be used to track transactions and other data without the need for a central authority.

• Data Security – to protect customer data and confidential information. Data security is a critical concern for neo-banks, as they handle sensitive customer data, such as financial information, personal identification, and account details. To protect this data and ensure the privacy of their customers, neo-banks use a variety of security measures, such as firewalls, intrusion detection systems, and antivirus software.

• Cryptography – to encrypt data and ensure privacy. Cryptography is the practice of encrypting data to protect it from unauthorized access or tampering. In the neo-banking sector, cryptography is used to encrypt data transmitted between the bank and its customers, as well as to secure data stored on servers and other devices. This helps to ensure that customer data is kept confidential and secure and that it cannot be accessed or altered by unauthorized parties.

• Mobile apps and websites – These are the primary channels through which customers access neo-banking services. Mobile apps and websites are typically built using a combination of languages and frameworks, such as HTML, CSS, and JavaScript for the front end and Java, Kotlin, or Swift for the back end.

Indeed, neo-banking has revolutionized the banking sector by bridging the gap between traditional and digital banking and by meeting the evolving customer expectations of younger generations, such as Gen Z. neo-banking is likely to continue to be a key FinTech trend in 2023 and beyond, as more and more customers adopt digital banking solutions and as neo-banks continue to innovate and offer new and improved.

28. Sector Funding To Evolve Despite Mixed Signals Across Wealth Tech, Payments & Banking

Sector funding refers to the investment of capital into specific industries or sectors of the economy. In the context of wealth tech, payments, and banking, sector funding refers to the investment of capital into companies that develop and provide financial technology solutions in these areas.

One trend in sector funding in recent years has been the mixed signals across wealth tech, payments, and banking. On the one hand, there has been significant investment in these sectors, with companies in these areas receiving significant amounts of funding from investors. On the other hand, there has also been uncertainty and volatility in the funding landscape, with some companies struggling to secure funding or facing challenges in raising capital.

One significant factor contributing to the mixed signals in sector funding is the rapid pace of technological change and innovation in the financial technology sector. New technologies and business models are constantly emerging, making it difficult for investors to accurately assess the potential of different companies and industries. This can lead to varying levels of funding across different sectors, with some areas receiving more investment than others.

Going forward, it is likely that sector funding will continue to evolve beyond the mixed signals of the past, especially after the deterioration in the last two quarters of 2022, as investors become more comfortable with the rapidly changing landscape of financial technology. In 2023, some significant FinTech trends that may impact sector funding include the increasing adoption of digital currencies and the growing use of artificial intelligence in financial services. These trends may lead to increased investment in companies developing technologies and solutions in these areas and may also drive changes in the overall funding landscape.

29. Omnichannel Payment Players will Surge in the Payments Tech Space: Evaluated by ESP (Execution, Strength, and Positioning) Ranking Metrics

Omnichannel payment players refer to companies that provide payment solutions that are accessible across multiple channels, such as online, in-store, and through mobile apps. These types of payment players are expected to surge in the payments tech space as consumers increasingly expect to be able to make payments using the channel of their choice.

Payment technology is rapidly evolving as digital platforms continue to reshape the payments landscape. The emergence of omnichannel payment players has become a major trend in the FinTech space, and they are quickly becoming a critical part of the payments ecosystem.

One way to evaluate the strength and positioning of omnichannel payment players is through the use of ESP (execution, strength, and positioning) ranking metrics. These metrics take into account a company's execution capabilities, its financial and operational strength, and its positioning in the market. Companies with high ESP scores are likely to be well-positioned to succeed in the highly competitive payments tech space.

Execution is the first component of the ESP ranking metric, and this refers to how well a player has been able to execute its services. This includes evaluating their ability to build an effective product offering, provide reliable customer service, and ensure seamless integration with other payment providers or financial institutions.

Strength is the second component, and this looks at how well a player can scale its services and operate on a large scale. This includes whether they have strong financial backing, robust operational infrastructure, and innovative technology that allows them to accommodate larger volumes of transactions quickly and securely.

Positioning is the third component, and this looks at how well a player has been able to position its services in the marketplace. This includes evaluating its ability to establish partnerships with other payment providers, acquire new customers, and maintain competitive rates for its services.

These three components are important to consider when evaluating the potential of any omnichannel payment players. By understanding their Execution, Strength, and Positioning, we can better understand the FinTech trends that are emerging in the payments tech space.

For example, Square is an omnichannel payment player that has been able to execute its services effectively. The company has built a powerful product offering which includes its Cash App, POS hardware, and online storefronts. It has also been able to provide reliable customer service and seamlessly integrate its services with other payment providers. Square's strength lies in its financial backing, robust operational infrastructure, and innovative technology, which allows it to quickly and securely handle large volumes of transactions. Finally, the company has positioned itself well in the marketplace by establishing partnerships with other payment providers, acquiring new customers, and maintaining competitive rates.

Another real-world example of an omnichannel payment player is PayPal, which allows users to make payments online, in-store, and through its mobile app. PayPal has a strong execution track record, as evidenced by its successful expansion into new markets and the wide adoption of its payment solutions. The company also has strong financial and operational strength, as evidenced by its strong financial performance and its position as a market leader in the online payments space. These factors have contributed to PayPal's high ESP score and its success as an omnichannel payment player.

By evaluating the Execution, Strength, and Positioning of payment players such as Square, we can gain a better understanding of the FinTech trends that are driving payments technology today. Evaluating these three components will help us better understand how omnichannel payment players are rising in the payments tech space and what this means for the industry.

In the coming years, it is likely that the trend of omnichannel payment players surging in the payments tech space will continue as consumers increasingly demand convenient and flexible payment options. This trend may also drive changes in the overall payments landscape as traditional payment providers seek to adapt to the increasing demand for omnichannel payment solutions.

30. HR tech-based start-ups are Likely to Dominate Top Equity Deals Especially in the US

Human resources (HR) technology start-ups are likely to dominate top equity deals in the US, especially in the wake of the COVID-19 pandemic. The pandemic has caused a huge permanent need for remote workforce management and recruiting solutions, as companies have had to rapidly adapt to remote work and virtual hiring practices.

The COVID-19 pandemic opened up a huge opportunity for HR tech-based start-ups to become major players in the marketplace. The need for remote workforce management and recruiting solutions has grown exponentially, leading many companies to invest heavily in these technologies.

As companies shift away from physical workplaces, HR tech can provide both employers and employees with more efficient ways of managing workflows and operations. This is especially important during an economic downturn, where many companies are looking for cost-effective solutions that can help them stay competitive.

B2B companies have been particularly impacted by the pandemic, as they rely heavily on consumer spending, which may actually fall in the face of an ongoing economic downturn or looming recession. To combat these issues, many of these B2B companies are turning to HR tech-based start-ups to provide them with the tools they need to remain competitive and maintain their workforce. This trend is likely to continue as the pandemic persists, creating a surge in demand for efficient remote workforce management and recruiting solutions.

The increased demand for these kinds of solutions is already having a major impact on top equity deals. In 2020, more than $2 billion was invested in HR tech start-ups, with prominent venture capitalists such as Andreessen Horowitz and Kleiner Perkins leading investments in several of them. This trend is only likely to continue in 2021 and beyond, with more investors turning their focus to HR tech-based start-ups.

One reason why HR tech start-ups are likely to dominate top equity deals is that they provide solutions that are in high demand, especially in the current environment. With more companies shifting to remote work and virtual hiring, there is a greater need for HR tech solutions that can help with things like employee communication, performance management, and virtual onboarding.

Another reason is that HR tech start-ups tend to be B2B companies that are not reliant on consumer spending, which may be impacted by an ongoing economic downturn or looming recession. Instead, HR tech start-ups provide solutions that are necessary for businesses to function, regardless of economic conditions.

Evidently, HR tech-based start-ups have the potential to become major players in the top equity deals in 2021 and onward. This will be a defining FinTech trend for 2023, as companies continue to invest heavily in these start-ups to remain competitive and stay ahead of their competitors. The pandemic has highlighted the importance of having efficient remote workforce management and recruiting solutions, and HR tech start-ups are well-positioned to take advantage of this new trend.

There are already several examples of HR tech start-ups that have gained significant investment in recent years. For example, in 2020, the HR tech start-up Gusto raised $200 million in a Series E funding round, valuing the company at $4 billion. Another example is the HR tech start-up Lever, which raised $50 million in a Series D funding round in 2020, valuing the company at $800 million. Some other real-time examples include Greenhouse Software, which recently raised $50 million in a Series D funding round, and Lever Software, which raised $80 million to expand its enterprise recruiting software. These companies have demonstrated the potential of HR tech start-ups in providing cost-effective solutions to companies during an economic downturn and will serve as examples for other start-ups that are looking to make their mark in this space.

HR tech-based start-ups are likely to dominate top equity deals in the coming years, as they provide solutions that are in high demand and are not reliant on consumer spending, and this trend is only expected to become more prominent as companies invest heavily in remote workforce management and recruiting solutions. With a slew of real-time examples providing inspiration for aspiring start-ups, we can expect to see even more investments in these kinds of businesses in 2023 and beyond.

To Sum It All

The FinTech industry is experiencing a renaissance in 2023, with numerous technological and economic trends emerging that have the potential to reshape the industry.

The audience should remain cognizant of these prevailing trends and explore opportunities in light of them. Keeping an eye on technological advancements, regulatory changes, and customer expectations should help organizations stay ahead of the curve in the FinTech sector. Moreover, given the large impact, these trends are expected to have, it is important for the audience to consider ways to take advantage of them and capitalize on their potential for growth and expansion. Ultimately, by keeping a close track of all these trends, organizations can ensure that they remain competitive, stay at the forefront of the FinTech industry, deliver state-of-the-art products and services and continue to provide value-added services in the FinTech space.