The Fintech sector, despite the challenges brought about by the pandemic at its outset, has bounced back on its feet and is growing at an unprecedented rate. A major reason for this growth is that it has overcome the challenges which characterized the traditional banking systems, thanks to tech integration and customer-centric policies. Information and financial assistance, including loan procurement, is more simple and more equitable, due to the existence of Fintech companies. There have also been several trends that have emerged in the recent past in Fintech. As we gear up for the new year, here are some of the trends that are likely to be seen in the sector in 2023 due to technological innovations and upskilling efforts by entrepreneurs in the industry.
Wider use of AI and ML
The current economy is undeniably data-driven. Any industry that wants to survive and grow in the present landscape and competition must make efficient use of Data Science, AI, and ML. The Fintech industry has aced this. They use data pertaining to online transactions, exam scores, and metadata about the earning potential of students enrolled in various courses in the loan underwriting process.
This decreases the chances of error and creates a system wherein even those unversed in the technicalities of finance can avail of services without any hassle. As a result of this revolutionary implementation, loan penetration has increased, and the Fintech sector has emerged as the torch bearer of equitable development.
The Fintech sector has advocated for digital banking since its inception. However, the pandemic provided the much-needed catalyst for change, and now almost every aspect of banking is done online. 2023 will see minimal transaction fees, easy P2P transfers, and negligible paperwork visits to banks, while standing in queues will be a thing of the past. Additionally, the risk of lost documents and errors due to human negligence is minimized as everything will be done using AI and Ml.
Neo banking is the next step in the growth trajectory of digital marketing. These are online banks without any physical branches. They usually function independently or in collaboration with traditional banks. Estimates suggest that the global neo-banking market is set to grow at CAGR between 2019 and 2026, generating a revenue of approximately 394 billion dollars in 2026. This will likely be highly beneficial for micro, small, and medium enterprises.
Blockchain technology makes use of data that is typically stored in categories or blocks, which is linked via cryptography. This decentralizes a system that has traditionally suffered from the demerits of centralization of power and lack of transparency. Integrating this technology, or Decentralized Finance (DeFi), into the banking system will make transactions easier, faster, and more secure.
The Fintech industry in India is revolutionizing the traditional banking sector. It has introduced reforms that have changed the face of the lending systems in the country through processes like AI & ML integration, neo-banking, digital banking, and blockchain technology. This sector is likely to further its advancement in the realm of technology, and customers can now avail of all services without any barrier of geographical location, economic standing, and financial literacy. Growth is thus more distributed and equitable.