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Gone are the days when people prefer physical transactions for their financial needs. Today, more people are shifting digitally and are favoring online services over traditional ones. Fintech has thus become a household name, largely because of the convenience it brings to businesses and consumers. It enabled people to manage financial transactions well, oversee procedures, and redefine their lives.
As the future looks bright for the fintech industry especially here in Canada, various innovations are set to revolutionize how the industry operates and how it intends to be relevant in the coming years.
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What Are The Current Trends in the Fintech Industry?
Over the past years, our financial transactions have been revolutionized by fintech. Here are the latest trends involving the fintech industry this 2023:
The Peak of Blockchain Technology
The influence of blockchain technology keeps on growing rapidly. Bitcoin, one of the earliest products of this technology, started it all. Since then, its usability has continued to evolve in the world of banking and finance.
Blockchain technology is essentially a data management system, a platform for creating decentralized apps and powering cryptocurrencies. It has a distributed ledger and accounting systems that facilitate auditing. It is usable throughout the financial sector and other businesses. It is entirely different from traditional databases due to its capability to distribute up-to-date versions of ledger data to all the devices on the network.
Digital Payments
After the pandemic, people from all walks of life preferred going online for their needs. True enough, the digitalization of payment transactions has become the norm.
Digital payment services, which include digital wallets, peer-to-peer (P2P) payment apps, buy now, pay later (BNPL), and QR/barcode-based payment apps, sparked a revolution in financial technology. It enabled consumers to interact quickly and securely with only a few taps on their screens. Wearable payment methods are another innovation to expect in the coming years.
AI-Powered Financial Services
Artificial Intelligence (AI) is a non-living but human-like program that is probably the world’s best-ever technological advancement to date. The fintech industry has utilized the power of AI to harness the industry’s full potential. Through this, AI in fintech has the potential to augment human intelligence for better financial decision-making.
As the fintech sector continues to manage millions of data each day, it is expected that the utilization of AI will go hand in hand with the evolution of powerful apps available in the future.
What Opportunities Will the Fintech Industry Face in 2023?
With massive growth comes massive opportunities. To chart the prospects of fintech this 2023, we must understand the potential opportunities that can further expand the power of fintech in the years to come. Some of these are as follows:
Market Expansion
Expansions driven by innovation will surely guide the fintech industry’s growth. It will continue to grow internationally in an uncertain economic environment and prospers by finding novel solutions to significant challenges. By sustaining the transition to online platforms and streamlining applications, they are loosening the rigid procedures associated with firm registration and growth.
Enhanced Customer Experience
Fintech (and finance in general) need not be entirely dull and uncomfortable. As a result of the wave of digital transformation that has significantly changed the banking industry, fintech entities will see significant growth. This will be driven in part by an enhanced customer experience that will continue to flourish, so as long as innovations will continue to expand the reach of the fintech industry.
Collaborations
Collective efforts between banks and fintech companies are anticipated to grow as the fintech sector remains robust, and startups continue to expand. Fintech companies that can forge partnerships with traditional financial institutions, local startups, and entrepreneurs are well-positioned to succeed in the rapidly-evolving financial services industry in emerging markets.
Along with these opportunities are challenges that must be addressed to ensure long-term growth. This includes regulatory compliance, which is due to the ever-changing regulatory environments in the market, and the lack of vital infrastructure, which could be problematic because of the need for a reliable digital identity system.
What Major Trends Will Shape the Future of Fintech in 2023 and Beyond?
Financial transactions in the future are more likely to be influenced by fintech developments introduced this year. This development is linked to several growing subsectors and applications that are worth understanding, some of which are as follows:
Blockchain Technology
Financial transactions can sometimes be bulky and need the involvement of a third party, like a bank, to mediate the transaction. Both money and time may be involved in this. Blockchain technology can speed up financial technology transactions by doing away with the necessity for a middleman. Although this has been slowly adopted in major markets nowadays, the continued rise of blockchain technology is one of the determining factors of the fintech industry’s growth this 2023 and beyond.
AI and Machine Learning
Employing AI-based techniques improves the company’s communication with everyone, significantly streamlining financial transactions in the process. This includes giving advice just when it is applicable, customizing offers based on prior purchases, alerting customers on certain issues, and the like. With AI, the possibilities are endless.
Open Banking
This is one of the most exciting breakthroughs the world will see in the fintech industry in the future. Fintech will be used as a tool for the account to help replace complex terms and conditions with user permission for granular data sharing. Furthermore, closing security holes to prevent intrusions at these hotspots would spur innovation in the cyber-security industry.
Embracing the Sustained Rise of Fintech
As the boundaries of the digital and physical worlds blur further, the advent of technology in the financial industry allows the fintech industry to move seamlessly between these worlds. Will the fintech industry outperform itself in the coming years?
The future looks bright for the fintech industry. Our forecast is that it will continue to become increasingly important in the evolving financial services industry, shaping our financial future this 2023 and beyond.
