Exploring 7 of the Latest Technological Trends in Fintech
The fintech industry is constantly evolving and improving, and 2023 is no exception. The fintech space is predicted to multiply and reach $174 billion in 2023. The banking industry has recently witnessed a massive surge in the adoption of fintech solutions as users become more tech savvy. There are several emerging technologies in the fintech space and I’ve highlighted some of the predominant ones to be seen in 2023.
Artificial Intelligence (AI) and Machine Learning (ML)
AI and ML can transform investing, payments, banking, risk management and related industries. AI involves machines’ ability to perceive their surroundings and take actions that increase their chances of success. ML involves using algorithms to learn from data and recognize patterns in it. Fintech companies can leverage both technologies to automate fraud detection and lending processes while gaining deeper insights into customer behavior. By leveraging these tools, organizations can reduce manual labor costs while increasing the accuracy and efficiency of the overall performance.
More effective chatbots
More and more financial services institutions will use chatbots to improve the customer experience and automate their processes. Chatbots allow people to focus on delivering higher quality and personalized services but interact with customers in real-time to provide them with the information they need, resulting in greater customer satisfaction.
Based on information gathered through conversations between chatbots and customers in 2022, improvements in service delivery should also be seen. Chatbots are therefore probably better at correcting grammatical errors and understanding slang and slang.
Embedded Funding
Embedded finance refers to a wide range of financial services and products accessed through a specific platform. Users can better manage their finances without having to switch between multiple websites or apps when these services are embedded within an existing app or platform. The embedded “buy now, pay later” financial model is growing fast. Customers can use this service to make purchases and then split their payments over time. Experts therefore predict that the embedded financial services market will grow by 40.4% per year in the coming years.
Voice Activated Technology
Voice support can help prevent fraud since voice is the most natural way of communicating and one of the most difficult to imitate. Customers can use AI-enabled voice assistants to offload customer support agents from handling more sophisticated customer inquiries, setting payment reminders, resetting passwords, card activations, and processing payments.
Leverage hyper-personalization to adapt to the needs of millennials.
Financial institutions have recognized in recent years that millennials’ financial goals are very different from those of older generations. They are more likely to be looking for lease, mortgage and debt management solutions than business loans. The fintech sector will take the satisfaction of needs, preferences and decisions to the next level by using AI to hyper-personalize the process, using the customer’s data to power the process. Using consumer data like past purchases, ratings, clicks, and experiences, AI helps develop patterns and draw conclusions that companies then use. This can increase the trust of existing customers while attracting new ones.
Software-as-a-Service cloud services (SaaS)
The SaaS sector is reportedly on track to reach $623 billion in 2023, with a compound annual growth rate of 18%. Businesses can use SaaS services to access and pay for cloud-hosted software applications without installing them on their computers or servers. It eliminates many associated overheads and frees up resources so companies can focus on developing customer experiences.
Additionally, using SaaS gives you access to powerful tools with enhanced data storage and management security protocols that would be difficult or expensive for individual organizations to implement.
Blockchain
Blockchain technology enables machines, organizations and individuals to securely transfer digital assets without involving a third party or central authority. Because blockchain technology is decentralized, it can be used for various financial applications, including commerce, remittances, and payments. In addition, blockchain provides much-needed security and saves money. For example, doing without expensive intermediaries such as brokers and banks can significantly reduce the costs of international financial transactions.
Final Thoughts
Fintech will remain a driving force in the future. We can expect increased use of blockchain, SaaS and AI in financial transactions by 2023-2024. Automation and integration will continue to advance. As a result, consumers will have access to tailored services better suited to their specific needs. Businesses that don’t want to risk being left behind need to be ahead of the curve as technological innovation continues to shape the world of finance!
Author’s biography:
Luigi Wewege is President of the award-winning Caye International Bank, headquartered in Belize, Central America, published author of The Digital Banking Revolution – now in its third edition, co-authored an economic research paper presented before the United States Congress, and currently serves as Lecturer at the FinTech School in California. He holds an Italian MBA from MIB Trieste School of Management with a major in International Business and a BSBA with a triple major in Finance, International Business and Management from the University of Missouri-St. Ludwig.