Major FinTech Trends Emerging in 2023

The financial technology sector is rapidly evolving, with traditional methods of banking now being replaced with digital solutions.

FREMONT, CA: The banking industry is constantly changing as traditional banking methods are being replaced with digital ones to speed up, simplify, and streamline processes for businesses and consumers.

Buy Now Pay Later 2.0

Despite recent concerns about buy now, pay later, the online trend that allows customers to divide their payments into interest-free instalments is still on the rise.

While typically used to split payments for expensive purchases, BNPL services swiftly came to be linked with online fast fashion firms that catered to Gen Z and Millennial consumers. Collaboration with the fast-food delivery app Deliveroo to enable users to "eat now, pay later, BNPL has come under increased fire.

Although many conventional banks are moving toward virtual cards, enabling clients to make in-person payments and online purchases.

BNPL will be more regulated in the UK in 2023, even though it is anticipated to grow even more, as the government will implement regulations forcing lenders to conduct affordability checks before loan approval. To guarantee that commercials are understandable and do not deceive consumers, the financial marketing guidelines for BNPL are also about to alter.

The phrase BNPL has experienced a 130 per cent spike in searches since 2017; for the past five years, the peak month for worldwide search volume has been December, just before Christmas, when families are under extra financial stress.

Virtual Cards

The use of virtual cards will continue to rise in 2023 due to the expansion of digital banks in recent years. Revolut, a digital bank, is currently the subject of, on average, 1.3M monthly searches worldwide, up 143 per cent since 2017.

The phrase virtual card has grown 216 per cent in the last five years and is currently at its peak. The change in company expense management is spearheaded by virtual cards, which Nick Root describes as the future of financial spending. Virtual cards' rising popularity may be largely attributed to their stronger security features, which help prevent misuse by hackers and fraudsters.

Additionally, they innovate how businesses manage employee business spending. To ensure that no one spends more than what is allotted to them, funds can also be given to team budgets, and purchases can even be restricted.

Embedded Finance

Searches for the term have increased dramatically over the past five years—by a startling 488 per cent. Embedded finance is also anticipated to grow in

2023. The distribution, trust, and enhanced user experience will be key factors in embedded finance's success.

In addition, data indicate that the term Banking as a service has increased globally by 176 per cent. An ecosystem known as banking as a service is one in which authorised financial institutions let non-banking businesses access their services frequently via the use of APIs.

Clients can create entirely new financial services using the BaaS platform or integrate existing financial services into their products. Use cases range from setting up standard card programmes, white-label payment processing, or embedding multi-currency IBAN accounts into apps to generating in-app payment methods, building the next neobank, or creating new virtual card issuing solutions.

Distribution is no longer a problem with the introduction of API-led banking services. Any digital organisation can now offer a financial service without the hassle and complexity that providing financial services used to bring. This layer of friction has been removed.

Cryptocurrency Will Become an Everyday Way to Pay

It anticipates that more financial institutions will start to accept cryptocurrencies as payment in 2023. Mastercard recently declared that it is eager to implement plans to turn cryptocurrency into an everyday payment. As a link between the big banks and the cryptocurrency trading platform Paxos (used by PayPal), Mastercard will take care of the major obstacles, such as finance and regulatory compliance.

Additionally, Google last week disclosed a collaboration with Coinbase that will let users pay to select cloud services with cryptocurrencies starting in early 2023. Businesses are beginning to accept cryptocurrencies as a means of payment as more and more individuals start investing in them.

With searches for the phrase pay with crypto rising by 136 per cent since 2017 and with major companies like Google getting on board, analysts anticipate that more banks and financial institutions will follow suit in 2023.

Contactless Wearables

With wearable technology, users can make purchases of goods and services more quickly than with the Internet of Things, which is making waves in the FinTech industry. In addition to cell phones, smartwatches and bracelets are used to make purchases rather than bank cards.

One wearable that swept the globe in 2022 and demonstrated a rising tendency is the Apple Watch. Additionally popular are smart rings, with worldwide searches for the ground-breaking accessory rising by 180 per cent. According to the forecast, this trend will continue to increase in 2023, and as a result, fintech businesses will use these connected devices more frequently to gain customer data and make better judgments.

Regtech

As the number of digital products rises, the risk of data breaches, cyberattacks, and money laundering also rises. Regtech can help with these issues. A collection of businesses known as regtech works to address problems brought on by an automated, technology-driven economy.

By offering cutting-edge technological solutions to compliance problems that develop in the FinTech sector, the Regtech sector is anticipated to upend the regulatory landscape.

Despite being a 2008 invention, searches for Regtech have climbed by 184 per cent over the past five years. In addition, Grand View Research projects that the technology market will grow by 52 per cent by 2025, reaching a value of USD 55.28 billion.