The financial technology sector had a record level of investment last year. This year, it has continued to boom, but in a different environment.
Nigel Green, CEO and founder of deVere Group, said that there was an historic level of investment – around $130 billion into fintech in 2021. However, this year the environment has been more challenging due to slowing economic growth around the world, supply chain issues, red-hot inflation and the subsequent interest rate hikes.
“However, fintech continues to reshape and redefine how financial services are delivered across the board, with interest from consumers and potential investors at all-time highs”, said Nigel.
Top fintech predictions for 2023
Traditional banks will increasingly enter the fintech space
“They have been in a perpetual game of ‘catch-up’ in recent years amid evolving customer expectations, regulatory requirements and tech advances and this is only expected to pick-up momentum. Why? Two reasons: first, millennials as they are the fastest-growing cohort of clients; and second, because they are becoming the beneficiaries of the Greatest Transfer of Wealth in history,” Nigel says.
Some estimates say that over the next few decades, $68 trillion in wealth will be passed down from the baby boomers to their children and other heirs.
Nigel continues, “Millennials have grown up on technology. They are ‘digital natives’. They’ve been influenced by the enormous surge in tech as they came into adulthood – which came around the same time as the global financial crash that hit in 2008. Against this backdrop, they seemingly became comfortable using fintech to help them access, manage and use their money rather than using a traditional bank.”
According to a Facebook white paper, 92% of millennials do not trust banks and many view them as an unreliable source of information. Millennials who use their phones as their main way to bank expect easy, immediate access and control of their finances. They want to be able to transfer money and pay bills in one tap or swipe, and also review their spending habits. Banks are starting to become aware of this trend.
There will be greater regulatory scrutiny
There will be more regulations for fintech services. This is because the regulators are noticing that these services are being used in places where there are not many regulations. So the regulators want to put more rules in place so that customers are protected. They will be focusing on making sure companies are accountable and transparent.
Data will become ever more important
Data will become increasingly important. Companies will need to explore new methods to collect and use data in order to set themselves apart from their competitors.
Asia will continue to be the centre of fintech revolution
Asia will remain the centre of fintech revolution due to several key factors. These include a proactive approach to innovation by regulators; the abundance of virtual banks; the development of the wider tech ecosystem, especially application programming interfaces (API); and the inflow of Chinese financial and tech giants into this sector.
“Even though the world is “teetering on the edge” of a global recession, we expect fintech investment will continue to build momentum in 2023 because it improves customer experience and is increasingly demanded. It also helps corporates increase efficiency, increase productivity, lower operational costs, and improve competitive advantage,” concludes the deVere Group CEO.
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