Fintech has been one of the main trends in the financial industry over the past decade.
With constant innovation and new approaches that change the way people live, their habits, and their interactions with financial institutions, fintech is perfect for scalable solutions. Moreover, fintech has a significant impact on the financial industry, contributing to the growth in the number of new startups and the demand for fintech software development services.
Today, it is estimated that the fintech market will reach almost $700 billion in 2030. This, in turn, makes fintech an attractive investment option since every new startup has a chance to release a revolutionary product and become a unicorn.
With the flexibility and scalability inherent in applications and solutions, fintech allows companies to gain an edge over competitors by embracing new trends and implementing them into a user-friendly product that people will accept.
All this naturally leads to the increased attention of investors looking for promising projects with a high ROI in the medium and long term.
Therefore, let’s take a closer look at some of the top trends in the fintech industry that can generate returns and are the most attractive for investors and funds in 2023.
Open banking is one of the promising trends in fintech. It is already predicted that almost 64 million people will use open banking in 2024.
Conceptually, open banking is the controlled exchange of financial information. This means that account holders can use procedures to securely exchange their financial data to interact with non-traditional financial institutions. And APIs are used to implement this in practice. They allow third-party providers to access financial data.
Among the main open banking prospects are budgeting, spending tracking, financial planning, and lending.
Now open banking is at the initial stage of its development, which means that the full potential of this trend has not yet been fully explored, thus making this vector promising and attractive for investment.
Efficient data transactions open banking offers contribute to the software and financial services improvement for the end user.
In addition, open banking makes life much easier when it comes to financial services that involve the exchange of data between different institutions. Thus, the user’s bank can provide insurance companies, retailers, and other businesses access to the client’s finances through the API, making many financial services more accessible and seamless.
With the open banking acceptance, users can enjoy fast payments for goods, services, and subscriptions, as well as have easy access to loans, regular spending and savings reports, and much more!
All this makes open banking one of the trends that you should look at in 2023-2024.
Another promising trend in fintech is neobanking.
Conceptually, these financial institutions offer traditional banking services, but these organizations do not have a physical location. The main driver of the growth in demand for neobanking was the COVID-19 pandemic. Due to the imposed restrictions and the transition of most companies to a remote mode of operation, online banking services have become a necessity.
Thus, many new fintech enterprises and startups today often focus on the neobanking concept as their main line of business. Key benefits of this approach include:
- Cost reduction. Since such an organization does not have a physical location, the company can save on renting/purchasing a commercial building. In addition, this approach often involves a smaller staff, which is also a cost-effective solution.
- Services accessibility. Online banking makes financial services more efficient, seamless, and accessible to most customers.
These two factors naturally lead to cheaper banking services, which makes the concept of neobanking attractive for both organizations and clients.
At the same time, neobanking cannot compete with the number of services from different categories that larger traditional banks provide. That’s why fintech companies focus more on improving the quality and accessibility of their existing services.
It is estimated that the neobanking market will reach a value of 2078.54 billion dollars by 2030. This is due to the demand for remote banking services and the capital raising from fintech investment funds expected in this industry over the coming years.
In its concept, RegTech is a technology used to control compliance with regulatory requirements.
Since the financial industry is among the most regulated due to many standards, rules, and requirements, companies should ensure compliance to avoid fines and legal issues. So accounting records, tax returns, income statements, and customer records are all critical.
And regulatory technology is a perfect solution when it comes to the delivery of financial documents to regulatory authorities to guarantee the accuracy of all data and the activity’s legality.
The main task of regulatory technology is to identify problems that do not comply with the rules and find solutions to fix them so that the organization’s activity meets regulations.
RegTech products automate many repetitive procedures and also provide data security monitoring. Thus, regulatory technology software warns clients and banks about fraud cases, making the financial industry safer and more transparent.
All this is essential in the case of financial institutions since rule violations here may often lead to high fines and sometimes even to the company’s liquidation since the reputation and trust of customers are crucial in the industry.
Therefore, the value of regulatory technology is that it makes it much easier for organizations to communicate with regulators. RegTech is a kind of bridge through which data can be sent without interruption. This technology also helps keep track of an organization’s compliance with rules and regulations (such as PCI) and allows monitoring and financial crime prevention.
The importance of compliance in the financial industry makes RegTech among the key fintech trends of 2023.