With the collapse of the cryptocurrency market, new financial rules, and the emergence of “Digital-Only” Banking, 2022 was undoubtedly a thrilling year for the financial sector. The fintech startups are developing in line with market trends to satisfy global regulatory requirements as well as client desires and company objectives. What everyone can anticipate is powerful technological advancements shaking up the finance sector in 2023, allowing it to improve client experiences, reinforce business cases, and increase revenue. Let’s look at the fintech startups trends that will rule the market in 2023 and how they will influence enterprises, user experiences, and governmental policies around the world. What trends might we anticipate for 2023?
1. Embedded finance – main trend for fintech startups in 2023
The embedded finance ecosystem is huge and is about to expand greatly this year. Moreover, according to researchers, the embedded payment sector will expand by 40.4% yearly. Businesses can boost customer happiness and income by providing comprehensive offers throughout a client’s journey with embedded finance. Furthermore, financial services including banking, credit, investing, processing payments, lending, and insurance are included. Consider an online retailer who offers insurance through a simple, convenient, and seamless client experience. Buy now pay later (BNPL) is a field of embedded finance that is rapidly expanding across the board. With this method of payment, customers can place an order today and pay for their purchases later, typically in a series of payments.
2. What can alternative finance bring for fintech startups?
Alternative finance, often known as Alt Finance, has been around for many years, but only recently has it become more well-known. The alternative finance market has got a current value of $6.62 billion and will expand by 20% in 2023, giving it a bright future. Financial services created outside of traditional banks are referred to as alternative financing. This sector has introduced cutting-edge products and fresh ways of thinking to corporate borrowing. The non-bank providers make use of financial technology to deliver and enhance practical forms of funding in many different areas, including insurance, business loans, equity financing, and much more.
Despite the fact that traditional banks continue to dominate the market for business loans, we anticipate Alt Finance to expand significantly with a CAGR of 6.3% between 2022 and 2028. By 2026, BNPL will probably account for $576 billion in global transactions.
3. SaaS-based systems
Models for licensing conventional software products have undergone a full upheaval thanks to SaaS solutions. Due to its appeal among SaaS providers and customers, the global SaaS market has now got a value at over $100 billion and will continue expanding rapidly. Software as a Service (also known as SaaS) allows organizations to avoid the labor-intensive management and installation of complex software and hardware. The systems offer products more quickly and with better customer service, increasing user and customer satisfaction. In 2023, we anticipate that the number of low-code or no-code solutions, white-labeled SaaS, and micro-SaaS products will rise. The SaaS sector will eventually develop at an 18% yearly rate to reach $623 billion.
4. AI innovation
Banking is among the most profitable industries using artificial intelligence (AI), which has rattled the financial sector. We anticipate that the financial industry would keep implementing AI solution techniques in 2023. In addition, around 2030, AI technology will cut bank operational costs by 22%. Therefore, this could result in future savings of up to $1 trillion. Meanwhile, automation of difficult and valuable processes is made possible by artificial intelligence . Fintech companies can fight cybercrime, money laundering, and fraud by using AI to augment chatbot engagements, customize client care, and drive infrastructure decisions.
Who has access to different financial services and how will be more heavily influenced by AI algorithms used in financial software development. In 2023, it will become more widely used in the fintech sector to make judgments regarding loan issuance, negotiation, and fraud detection. However, concerns about the ethical implications of AI in such crucial decision-making are now being voiced by the public. A recent poll of IT and line-of-business executives by Deloitte found that 86% of financial services AI adopters believe that implementing this technology will be essential to their company’s performance over the next two years.
5. RegTech
One of the industries with the most regulations worldwide is the financial one. By offering cutting-edge technological solutions for compliance-related problems, RegTech should upend the regulatory environment this year. The introduction of alternative finance, blockchain technology, and AI will attract the attention of governments all over the world to the fintech startups.
Besides, businesses may now almost completely automate the compliance process thanks to the development of Regtech. RegTech will advance its solutions to help financial institutions identify and mitigate risks in the upcoming years with the aid of cloud technology, machine learning, and big data analytics. According to Juniper Research, the RegTech sector would grow by 200% between 2022 and 2026.
Conclusion
It’s difficult to predict how this year will turn out. But there is no doubt that 2023 will be a pivotal year for the financial sector, marked by technological change, new rules, and market movements. Embedded finance and alternative lending will stand out among the top fintech startups trends in 2023. AI technology will continue to upend the industry and assist companies in cutting expenses. SaaS platforms will also keep enhancing the user and consumer experience.
