Top Fintech Trends To Watch Out For In 2023

It’s no secret fintech eased out many financial and banking processes in recent years, with more and more consumers adopting digital channels to fulfil their daily requirements. The online space is now flooded with options in the banking and financing sector to improve and automate financial services with the use of technology.

Being paperless, easy and quick, fintech has seen significant growth and innovation in recent years, with numerous new companies entering the market and offering various financial services. This has resulted in increased consumer competition and choice, as well as the possibility of more efficient and accessible financial services.

We examine fintech through two critical lenses. The first is the global evolution of technology, ramping up the speed and efficiency of all financial products. The second is a more visible investment angle that is fueling this innovation by supporting entrepreneurship across various financial services segments.

Fintech Will Continue To Make Value Chain More Efficient In 2023

Going forward, it is likely that fintech will continue to evolve and play a larger role in the financial industry. Some potential areas of growth for fintech include the use of artificial intelligence and machine learning, the development of blockchain technology, and the growing popularity of robo-advisory services.

One potential area of growth for fintech is the use of artificial intelligence (AI) and machine learning (ML). These technologies have the potential to improve the accuracy and efficiency of financial decision-making and could be used to develop new products and services. For example, AI and ML could be used to automate the process of underwriting loans or to develop personalised investment portfolios based on an individual’s financial goals and risk tolerance.

Another potential area of growth for fintech is the development of blockchain technology. Blockchain is a distributed ledger technology that allows for secure, transparent, and verifiable transactions. It has the potential to greatly improve the efficiency and security of financial transactions and could be used to develop new applications such as smart contracts and decentralised finance.

Finally, robo-advisory services are also likely to continue gaining popularity in the future. These are online platforms that use algorithms and other automated tools to provide investment advice and manage portfolios for investors. 

Robo-advisory services are appealing because they are typically more affordable and accessible than traditional financial advisors, and they can offer personalised investment recommendations based on an individual’s financial goals and risk tolerance. As more and more people become comfortable with using digital tools to manage their finances, robo-advisory services are likely to become a popular choice for managing investments.

Fintech Will Remain An Investor Favourite But The Segment Mix Will Change 

From an investment point of view, the Indian fintech system continues to offer one of the most attractive avenues for investing to all institutional investors. It provides scale as well as growth. As per a Chiratae Ventures report, the Indian fintech market is the third largest in the world behind only US and China. It has seen funding of over $18 Bn since FY17. The growth momentum is nowhere close to slowing down. The estimate for 2030 stands at $1 Tn AUM and $200 Bn in revenue.

The focus of the market is however expected to change starting in 2023. As much as the last decade belonged to payments, lending tech and insurance tech are expected to carry the momentum forward. The under-penetration of financial services to a huge section of the Indian population, combined with the financial inclusiveness goal of the government is expected to bring about this change.

One key aspect to keep an eye on will be the regulatory aspect. While the last few years have seen unabated growth led by creative business models, RBI has been cognizant of the need to bring all players under the regulatory fold. 

While this led to some pain being felt by fintech players specifically in sectors like BNPL, the overall sentiment is that it will help provide guardrails for accelerated growth in 2023. Large ticket funding rounds may not return until the fourth quarter of 2023, as Indian fintech focuses inward and modifies its business models to focus on unit economics and profitability.

Overall, 2023 is expected to be an exciting year for all participants in India’s fintech sector, including founders, investors, professionals, regulators, and, of course, customers/consumers of these products and services.