4 Fintech Trends for 2023
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Fintech trends of 2023 point towards four significant areas - potential startup caution, continued blockchain growth, involvement of AI, and expansion of embedded finance - that the industry might want to keep an eye on to make the most of their efforts.
The fintech industry has enjoyed impressive growth over the last few years and it shows no signs of stopping. According to one report, the global fintech market is estimated to reach a market value of $324 billion by 2026.
As the industry continues toward this optimistic future, it’s worth taking a look at the stepping stones to get there through the lens of current trends. Let’s explore four of the top trends that may define the fintech market in 2023.
1. New startups display more caution
In March of 2023, the Silicon Valley Bank (SVB) experienced a run on its deposits leading to a loss of $1.8 billion dollars. Unfortunately, SVB was well-known as the favorite bank of numerous startups. The upset led to a liquidity crunch for these comparatively smaller organizations and sent shockwaves throughout the entire industry.
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The Silicon Valley Bank event had a significant impact on the economy, especially for startups.
The impact was immediate. Many organizations involved in the crisis with greater than the FDIC insured $250,000 savings were severely handicapped. One startup CEO even called it an “extinction level event” for small businesses. This sudden failure creates several vacuums in the market, producing a chaotic landscape for all in the industry.
While some believe that this will not be a long-lasting issue, it’s an event that’s not likely to be forgotten anytime soon. In addition to upending the current landscape of fintech products, it may affect how fintech organizations manage their money in the future.
2. Blockchain usage continues to grow
The popularity of blockchain technology in the fintech industry is hardly news. One report indicates there was a 190% increase in its general usage between 2018 and 2020. Moreover, another source found that 45% of consumers have already used crypto for remittances. It’s hard to deny: users around the world across most markets are turning to the blockchain.
This turn toward the mainstream very much impacts the fintech industry. Banks and consumers alike will turn to fintech products to manage blockchain and crypto. However, the growth curve is likely to directly impact the competition guaranteed to evolve from this: as more and more organizations are competing for the same niche, users will have more options available to them. This may lead to a need for faster innovation and go-to-market across the industry in order to stand out from the crowd.
3. AI tools become more integrated
Artificial intelligence (AI) has become a popular topic in the technology community lately. With impressive progress exhibited to consumers through tools such as ChatGPT and DALL·E, users are becoming more and more comfortable with the concept.
As this familiarity continues to grow, so will the pressure on fintech companies to integrate it into their own technology. To illustrate this point, look at fintech startup Stripe’s move to integrate OpenAI into its product offerings.
With an industry leader taking the plunge, it’s not unreasonable to assume that others aren’t far behind. The new availability and popularity of AI tools may result in fintech organizations of all sizes including still-evolving yet already popular features in their own products. Fintech organizations without the infrastructure to accommodate these projects may find themselves falling behind the curve.
4. Embedded finance becomes more popular
Embedded finance is the practice of integrating fintech into non-fintech realms. Some popular examples include digital wallets, mobile payment apps, or budgeting platforms like Mint. There’s serious potential in the use of these tools: one study predicts that they will generate up to 230 billion dollars by 2025.
This presents a huge opportunity for fintech organizations. Such high demand will only open up new opportunities and niches to fill. It’s important that those hoping to jump on this trend move quickly to capitalize on it as the rest of the market follows. Any fintech organization that’s not currently operating on future-proof technology – that is, systems that follow MACH architecture – may find themselves unable to adapt to the changing user demands for evolving experiences.
Key takeaways
The fintech industry is one of the most volatile, and with that uncertainty comes a market that is hard to predict. However, a look at recent events and statistics can help predict a few potential trends. It’s important to remember that the key is not necessarily to be able to predict the future, but rather, to be adaptable enough to capitalize on the trends when the moment comes.
