Fintech is still disrupting the financial industry. While there is still a lot of work to be done to streamline and mainstream this sector, there has been significant progress and growth in recent years. More companies and venture capital investments are aligning themselves with fintech, and major tech brands like Apple and Google have launched products in this space. As we move into 2023, here are three top trends that we believe will shape fintech:
Increased use of blockchain solutions: A recent survey by the Stellar Development Foundation and Wirex showed that there is an increased use of cryptocurrency solutions as a way of sending money across borders. The survey covered the US, the UK, Mexico, and Singapore, and found that in developed and emerging markets, cryptocurrency was increasingly used for remittances. More than half of the surveyed individuals felt that they paid too much to legacy remittance providers, while 37% said they did not know how much they paid in fees. Over 80% of surveyed consumers said they were aware of crypto payments, while 45% said they had already used it for remittance. In addition to cryptocurrency payment solutions, blockchain technology has a wide range of use cases in the fintech industry, such as decentralized finance (DeFi). Despite market downturns, the DeFi market cap currently stands at slightly over $38 billion, and more fintech companies are betting on the long-term growth of this industry. A good example is Creditum.io, a fintech company focused on providing fast and frictionless payment solutions, which recently acquired a license to operate as a fully-functional financial company and intends to launch products within the wider Defi ecosystem across Europe.
Artificial intelligence (AI): AI will be a key driver of fintech growth in 2023. Data shows that by 2026, the global market size for AI in fintech will reach over $26 billion, with a continuous annual growth rate of over 23% from 2021 to 2026. Fintech companies will use AI and machine learning (ML) for intelligent decision-making, powering chatbots, providing customer support, and fraud detection. This will make the customer onboarding process easier and increase efficiency within these fintech companies.
Increase in buy-now-pay-later (BNPL) solutions: The BNPL industry is thriving, with estimates showing that it will reach over $500 billion by 2026, up from around $120 billion in 2021. BNPL made up about 2% of global ecommerce in 2021, meaning that for every $100 spent, $2 was from BNPL. The significant growth in this sector can be attributed to the increasing number of merchants accepting these products, as well as partnerships between big ecommerce brands and BNPL companies.
Conclusion: This list is not exhaustive, but it offers a glimpse into some of the areas that fintech players should keep an eye on as we move into the new year. The fintech space is constantly evolving and brands need to create game-changing products within this space, as there is plenty of room for expansion.
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