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Fintech trends in 2023: RegTech, compliance, AI, and more

Fintech trends in 2023: RegTech, compliance, AI, and more

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December 14, 2022

It’s been an interesting year for the industry. Between an extended pandemic, a war in Europe, and a global recession, we’ve faced stressors nobody was used to. Naturally, you’re wondering what comes next. What’s FinTech in 2023 going to look like? 

We sat down with our Fintech software teams and asked that exact question. In this article, we’re going to give you a glimpse into the sector’s future – as seen through the eyes of seasoned tech professionals. 

Let’s jump in. 

RegTech

RegTech became a known part of the Fintech landscape fairly recently. What is that, exactly, where’d it come from – and why should it matter to you? 

As the name suggests, regulatory technology is a branch of Fintech that uses tech to manage regulatory processes. RegTech companies usually solve monitoring, reporting, and compliance-related challenges.

Though the term goes all the way back to 2008, the sector has been skyrocketing in recent years. And it’s expected to continue doing so. According to Custom Market Insight’s report, the RegTech market is projected to reach a whopping 44 billion by 2030. For reference, it was a mere $8.2 billion last year. 

So what’s changed? 

Simple. RegTech’s growth is tied to the advancement of Fintech itself. More services are going digital – and while that’s great, it also creates additional risk. An unregulated digital financial landscape is a breeding ground for fraud, hacks, data breaches, and other security hazards. 

As a result, financial institutions are facing ever-increasing pressure. The emerging Fintech trend is a natural, and predictable, response to that. 

Artificial Intelligence 

A Mordor Intelligence report projects that AI in Fintech is going to grow 25% during the next five years. 

Artificial intelligence is on the rise across the board. And the financial technology sector is primed to take advantage of everything it has to offer. 

There are two main ways the 2023 Fintech industry can benefit here. 

AI decision-making 

If you’re in Finance, you know how many crucial decisions need to be made on a daily basis. Banking has always been data-driven – and it takes a lot of manpower to aggregate, analyze and use that data. 

Today, institutions are struggling to do all that and stay competitive while minimizing operational costs. 

Algorithmic AI decision-making is among the trends in Fintech emerging as an answer to that. Artificial Intelligence tools are constantly analyzing real-time data and making instant decisions. That’s a massive help to any finance professional and goes a long way toward saving time and optimizing the workload. Suffice it to say, financial AI isn’t going anywhere. 

Conversational AI

Making split-second decisions isn’t the only way AI can be of use to banks. Chatbots are quickly becoming an invaluable asset for customer support departments. 

Financial institutions deal with a lot of frequently asked questions. Usually, a client would need to stay on the phone and wait for an operator. This raises two main issues. Banks need to hire many operators, and response delays reduce customer satisfaction. 

Using NLP techniques, Fintech experts have been optimizing chatbots to take a lot of work off the operators’ plates. Banks get to streamline their support process, and clients get instant help. At the same time, operators can focus on more complicated issues with the time they save. 

Contactless payments 

Contactless payments have been a part of Fintech for a while, but they really took off during the pandemic. A study showed an 11% rise in cashless, contactless transactions between January 2020 and October 2021.

And the trend seems to be here to stay. A 2021 report predicts that such transactions will grow by 92% by 2023, reaching a global volume of over 49 billion. 

Contactless payments may have become mainstream as a quarantine safety measure. But by now, people have realized the ease, convenience and speed they bring to transactions. As such, they’re a Fintech trend that’s going to continue its upward trajectory throughout 2023. 

DeFi and blockchain

Crypto fans have had a turbulent year. Since last year’s peak, close to $2 trillion have left the market. 

But don’t let that fool you. The downtrend seems to have more to do with overarching economic conditions than anything else. The underlying blockchain tech is still making strides and proving useful in various ways. 

For example, sending money internationally is currently slow, complicated, and expensive. That’s one of the main things Defi addresses – by making instant, peer-to-peer transactions instant and free. A recent study showed rising awareness of crypto’s usefulness for cross-border payments.  

But that’s not all. In October, Google announced a new partnership with leading crypto platform Coinbase. Not only will the two share infrastructure and tools, but Google will start accepting crypto payments. 

All in all, Decentralized Finance is shaping up to be a big part of the 2023 Fintech world. 

Digital-only banking

Digital banks are among the fastest-rising Fintech industry trends, replacing traditional banking across the board. 

It makes sense. Convenience drives adoption and online banking is redefining comfort. You don’t need to waste time going to a branch, no waiting in line, and paperwork is simpler than ever. 

But that’s just the tip of the iceberg. Alongside all their accessibility options, banks like Revolut offer a variety of features. Between global transactions, low fees, instant peer-to-peer transfers, and even investment opportunities, demand is surging. In fact, the number of global users of digital-only banks is expected to hit 2.5 billion by 2024. 

With that in mind, we can conclude that Fintech’s shift toward online banking is going to continue.  

How you can prepare for 2023 

As you can see, 2023 is shaping up to be an eventful year for trends in Fintech. Some market factors, like AI, have been a long time coming. Others, like Defi, only recently gained serious traction – so they may be harder to adapt to. 

So what can you do? 

The simplest answer is often the best one. Just make sure you’re ready to meet market demand where it grows near you. Is your company trading-oriented? You should probably make sure your team is well-versed in blockchain development. And if you’re in consumer finance, AI engineers might help you manage data and handle customer queries. 

Riding the next big wave as it happens usually takes a number of talented developers. It’s possible you – like many companies out there – realize you don’t have enough people with the right skill set. 

If that happens, you might benefit from a custom software development partner. There are many providers specializing in different sectors. The right partner with domain knowledge relevant to your project can tip the market’s scales in your favor. 

Wrap Up 

Ultimately, being prepared for the future in any industry comes down to having your finger on the pulse. The newly emerging solutions and technologies bring a plethora of opportunities for those ready to seize them. 

Whatever happens to Fintech in 2023, a well-managed development team with the right expertise will be ready to capitalize on it. You can build your own team, or you can outsource it – it’s entirely up to you. But whatever you choose, we’d recommend you get ready for an exciting year. 

Dilyan Dimitrov

A reader who loves writing, a marketer who loves tech, a nerd who loves sports. Dilyan, our resident writer, half-jokes that his days are filled with everything you can think of - except free time. He joined our team several years into his copywriting career - and he seems to feel at home here. Because, as he puts it, “there’s always cake at the office”.  If he doesn’t have his nose buried in a book, you can typically find Dilyan writing his latest piece, tinkering with his PC, or off swimming/cycling somewhere.

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