With sustained pandemic outbreaks, war-induced energy crises, and crypto market crashes, 2022 proved to be a challenging year. As a result, the financial industry needed to adapt constantly to a changing environment.
This narrative will be built on in 2023, as it will relate to how people live and interact with one another. Now is the perfect time to capitalise on the trends that popped up during the pandemic while keeping an eye on consumer preferences and expectations.
2023 Trends to Watch
You should keep an eye out for the following trends in the year ahead:
1. Prevalence of digital-only banking
Banking-as-a-Service (BaaS) is gaining traction. Due to the pandemic, consumers now have a greater choice of where to bank, including traditional retail banks, credit unions, online-only banks, and neobanks. According to a recent study, 49% of consumers are “very” or “extremely” interested in digital-only banking.
2. Increased investment in blockchain
With its fast processing times, global reach, and low transaction fees, blockchain continues to revolutionise financial transactions. According to IDC, the banking industry has the highest distribution of blockchain market value, with 29.7%.
Between August 2021 and May 2022, 23 banks invested in blockchain-related entities, and we expect this trend to continue in 2023.
During the next decade, blockchain technology can boost the global economy to $1.76 trillion, and PwC predicts that 2025 will be the tipping point when blockchain technologies are adopted at scale across economies worldwide.
3. Use of AI for large transactions on the rise
Bank operating costs are expected to be reduced by 22% by 2030 thanks to artificial intelligence. AI’s ability to operate on unstructured data makes it a good candidate to combat cybercrime and financial fraud threats.
In the coming years, digital transactions will increase dramatically, making manual reviews unnecessary for the payment industry. As a result, large transactions will increasingly be handled by AI in banks and other financial institutions. Additionally, AI tools will be used to monitor unusual behaviour in employees, such as logging into banking systems outside of regular working hours, to prevent fraud.
4. Digital wallets to drive fintech payments
Global payments are increasingly reliant on eWallets in all their forms. The number of people using mobile eWallets to make payments increased from 900 million to 1.48 billion during the pandemic worldwide
And with nearly half of Brits making purchases via their smartphones weekly (43%), mobile payments are now the most common form of payment.
According to our predictions, this trend will continue to grow in 2023, and fintech companies will increasingly utilise these devices to gather customer insights and make better decisions.
5. Tighter collaboration between fintechs and banks
Banks and fintechs that operate exclusively online are bound to be prime targets of financial fraudsters. When customers encounter problems, they often can’t settle everything online and end up losing money.
The solution is a partnership between fintechs and traditional banks that allows customers to switch between the two at their convenience. According to PwC, 82% of financial services providers will increase partnerships in the next five years as established names in banking seek to gain a foothold in fintech innovation.
6. Growth of real-time transfer payment rails
Payment rails are methods of transferring money between businesses or financial institutions that do not involve the use of cash. The most common ones are SWIFT and SEPA (Single European Payment Area).
Faster Payments sets the standard for domestic payments in the UK. Businesses can settle transfers in seconds, but it is limited to payments under £250,00, so not everyone will find it useful.
In addition to customer demand for quicker payment settlements, financial institutes and governments are investing heavily in real-time payment solutions, with the Federal Reserve’s FedNow system, a federally backed real-time network, being launched in 2023.
In response to the continued growth of embedded finance, fintech companies will have to continue to modernise their payment infrastructure to meet the expectations of digital natives.
How to stay on top of the latest trends
Our mission at Trust Payments is to improve businesses’ sales and customer experiences by aggregating core technology and orchestrating new payment workflows. For more than 20 years, we’ve supported over 15,000 businesses to integrate speedy and seamless payments, boost customer loyalty, and manage their data to support their growth.
Contact us so we can help you stay ahead of the competition.
