Table of Contents
India’s Growing Fintech Market
With a robust ecosystem of startups and established businesses developing cutting-edge financial solutions, India has a reputation for being a global fintech pioneer.
Indian fintech companies use technology like artificial intelligence, machine learning, and cloud computing to replace traditional financial services in various industries, including lending, insurance, digital payments, and wealth management.
From RBI’s guidelines for auto-debit to the launch of the digital rupee, the past year saw a lot of reforms in the fintech industry, with a report from EY predicting the revenue from fintech to be around $200 billion in 2030.
And with the new year here, it’s time to look at the fintech trends that will rule the market in 2023 and how they will affect businesses, user experiences, consumer demand, and government sectors worldwide.
The ABCD of Fintech
There are four main pillars that have helped fintech develops most of its latest tech solutions. Coincidentally, they come under an acronym “ABCD”. These technologies are more or less the foundation of fintech across the world.
A- Artificial Intelligence
The foundational services that the majority of financial institutions offer have been automated by AI. It facilitates more effective data analysis for financial firms and is frequently included in cloud computing technologies.
Better customer service chatbots, personalized recommendations, and advanced predictive analysis are now possible thanks to AI and machine learning (ML) capabilities.
B- Blockchain
Blockchain technology, also called distributed ledger technology, is the underlying technology in cryptocurrencies like Bitcoin and Ethereum.
Blockchain establishes an anonymous, decentralized, and extremely secure chain of data. It is also easy to maintain a record of financial transactions with blockchain technology.
Though blockchain is considered extremely secure, not all financial transactions are fully and always secure. Sometimes, your transactions are at risk of data loss. So, if you own a business, especially in the fintech industry, you must learn how to prevent fraudulent transactions.
C- Cloud Computing
Cloud computing, often called ‘the cloud,’ is an internet-based technology that provides computing and IT services to businesses.
When it comes to the fintech sector, cloud computing has reduced the cost of acquiring previously capital-intensive IT equipment and services. Thanks to cloud computing, financial organizations can now flexibly scale their server consumption based on their growth rates.
D- Data or Big Data
Be it client information or transaction history, data is practically the foundation of every business organization. As a result of the ability to store more data and process information more effectively due to different technologies, it has now led to a revolution in many fintech processes.
FinTech companies have enhanced operations for various enterprises thanks to the digitization of data and growth in analytic skills.
Five Fintech Trends to Look Out for in 2023
1. Neobanking
Neobanks are traditional banks, except they don’t have physical locations. After the pandemic, both businesses and customers prefer digitalized versions of almost everything, even banks.
Many new FinTech companies primarily focus on the Neo banking concept, as opposed to conventional bank branch structures. As a result of increased cost savings and accessibility, it is a strategy that benefits both businesses and customers.
| “According to a report by EY, Indian neo banks saw a 5x increase in funding last year, and by 2023, that amount is expected to reach $215 billion.” |
The fact that more and more of India’s young working population appreciate the personalized financial solutions that neo-banks offer makes this industry very lucrative.
2. Payment Gateways
Due to the number of transactions and the steadily increasing number of merchants, the market for payment gateways is rapidly growing. Currently, at $17.2 billion, it is predicted to be worth $9 billion in 2025.
Payment gateways create a link between customers and merchants to speed up bank-to-bank transactions. The ease of the payment process provided by payment gateways will take precedence among fintech trends in 2023.
And when you choose a payment gateway for your business, make sure you look for multiple factors like security compliance, customer support, pricing, same-day settlement features, and more.
NTT DATA Payment Services offers an advanced payment gateway solution to businesses of all kinds.
3. RegTech
RegTech is a type of technology used to track compliance with regulations. Regulatory technology, or Regtech, finds issues that don’t adhere to the regulations and fixes them, so they function as part of the system.
Automating repetitive tasks, monitoring data security, and warning users and bank employees of fraud are all achieved through this specialized software.
RegTech facilitates communication between organizations and their regulatory bodies so that data can be transmitted continuously, compliance is tracked, and financial crimes are investigated.
4. Rewards and Loyalty
The record-breaking amount of digital shopping we’ve recently witnessed throughout retail is being driven by Gen-Z, the group of credit card users with the fastest expanding demographic.
Younger generations prioritize having an impact in addition to wanting instant access to their benefits. Beginning in 2023, the industry will start to follow a trend where earned incentives are donated to charities or other organizations that matter to consumers.
So if you run a business with Gen-Z as one of the major target audiences, make sure to learn how to retain your customers through rewards and loyalty programs that actually make a difference.
5. Embedded Finance
Since 2020, the embedded finance market has experienced rapid growth. The COVID initiative proved to be an important accelerator for the growth of e-commerce, financial digitalization, and shifting consumer expectations.
The adoption of embedded financing in emerging markets is projected to increase in 2023. Embedded finance might give consumers who were previously marginalized in the traditional financial system more leverage. This is expected to be led by inclusive fintech businesses.
Experience Quick and Easy Payments with NTT DATA Payment Services
As the fintech industry is rapidly growing, businesses all over the world are incorporating advanced technologies to send and receive payments. If you are a business owner in the early stages of growth, having a secure and smooth payment gateway is a must for your business.
NTT DATA Payment Services offers a complete payment solution to advance your business both offline and online. From online payment gateway and POS machine to IVR payments and Bharat QR Scan and Pay, we ensure maximum comfort, convenience, and safety for all your payments.
Conclusion
Global businesses and customers can now access new and better opportunities thanks to the new financial solutions, technology, and trends.
To make India the center of the Fintech world, fintech companies are transforming and redesigning themselves constantly. Over time, transparency and strong regulation will enhance the fintech industry and enable the Indian economy to flourish at its potential rate by fueling economic growth.
FAQs
1. What is next in fintech?
AI or Artificial Intelligence is the next biggest thing in fintech. Thanks to AI software, transactions are now moving very quickly. Financial institutions are using it to manage massive transactions. AI also offers excellent customer convenience.
2. What is the biggest opportunity for fintech in the next 5 years?
Payment innovations are the biggest opportunity for fintech institutions in the next 5 years. These include identity verification technologies, contactless payments, mobile wallets, smart speaker systems, artificial intelligence, and machine learning for security.
3. What are the 4 categories of fintech?
The 4 categories of fintech are- digital lending, payments, blockchain, and digital wealth management.
4. What are the biggest risks of fintech?
Technology reliability, cyber threats, data privacy and security, and regulatory compliance are some of the biggest risks of fintech, as predicted for 2023. The risk profile of fintech also includes unforeseen market occurrences and computational bias of underlying algorithms.
5. Will 2023 be a better year for the stock market?
Most experts predict consumer sentiment will improve in 2023, and the Indian stock market will perform spectacularly in important sectors, including banking, automobiles, real estate, and company stocks with strong foundations.
