Exploring 7 of the Latest Technological Trends in Fintech
The fintech industry is constantly evolving and improving, and 2023 is no exception. It is predicted that the fintech space will multiply and reach $174 billion in 2023. The banking industry has recently experienced a massive surge in adopting fintech solutions as users become more tech-savvy. There are several emerging technologies in Fintech, and I have highlighted some of the most predominant ones that will be witnessed in 2023 below.
Artificial Intelligence (AI) and Machine Learning (ML)
AI and ML can transform investments, payments, banking, risk management, and related industries. AI involves machines’ ability to perceive their surroundings and take actions that increase their chances of success. ML involves employing algorithms to learn from data and identify patterns in it. Fintech firms can use both technologies to automate fraud detection and loan origination processes while providing more accurate insights into customer behavior. By leveraging these tools, businesses can cut manual labor costs while increasing overall performance accuracy and efficiency.
More effective chatbots
More financial service institutions will use chatbots to improve customer experience and automate their processes. While allowing humans to focus on providing higher quality and personalized services, chatbots interact with customers in real-time to provide them with the information they require resulting in greater customer satisfaction.
Based on information gathered in 2022 through conversations between chatbots and clients, improvements in service delivery should also be seen. Chatbots are thus more likely to be better at correcting grammatical errors and understanding slang and conversational language.
Embedded finance refers to a wide range of financial services and products accessed through a specific platform. Users can manage their finances better without switching between multiple websites or apps when these services are embedded inside an existing app or platform. The “Buy Now, Pay Later” embedded finance model is growing rapidly. Customers can use this service to make purchases and then split their payments over time. As a result, experts predict that the market for embedded financial services will grow at 40.4% per year in the coming years.
Voice assistance can help to prevent fraud because the voice is the most natural mode of communication and one of the most difficult to imitate. Customers can use AI-enabled voice assistants to free up customer support staff to handle more challenging customer inquiries, setting payment reminders, passwords resets, card activations, and handle payments.
Use hyper-personalization to adapt to millennials’ needs.
Financial institutions realized that millennials’ financial goals are completely different from those of the older generation in the last few years. They are more likely to seek rent-to-own agreements, mortgage, and debt management solutions more than they will seek business loans. The fintech sector will take the satisfaction of demands, preferences, and choices to the next level by using AI to hyper-personalize the process, with the customer’s data being used to operate the process. Using consumer data such as past purchases, reviews, clicks, and experiences, AI helps to develop patterns and draw conclusions that are then used by businesses. This may increase trust among existing customers while also attracting new ones.
Software-as-a-service cloud services (SaaS)
According to reports, the SaaS sector is on track to reach $623 billion in 2023, with a compound annual growth rate of 18%. Companies can use SaaS services to access and pay for cloud-hosted software applications without installing them on their computers or servers. It eliminates many associated overhead costs and frees up resources for organizations to focus on developing customer experiences.
Furthermore, using SaaS gives you access to powerful tools with enhanced data storage and management security protocols that would be difficult or expensive to implement for individual businesses.
Blockchain technology enables machines, organizations, and individuals to securely transfer digital assets without involving a third-party intermediary or central authority. Since blockchain technology is decentralized, it can be used for various financial applications, including trading, transfers, and payments. In addition, blockchain will provide much-needed security and save money. For example, the absence of expensive intermediaries such as brokers and banks can significantly reduce the costs of international financial transactions.
Fintech will remain a driving force in the future. We can anticipate increased use of blockchain, SaaS, and AI in financial transactions by 2023-2024. Automation and integration will become more advanced. As a result, consumers will have access to more tailored services that are more tailored to their specific needs. Companies that do not want to risk being left behind must stay ahead of the curve as technological innovations continue to shape finance!