Financial Sector Tech Trends in 2023
At the turn of the new decade, there are many developments in the finance field that have surprised us. Whilst many predicted technologies would aid the banking sector, the dramatic change we have seen has surpassed most experts’ predictions.
At FJP Investment, we believe it is essential to be ahead of the technological curve to stay competitive. As we look forward to 2023, there are a number of new trends that have either begun to emerge, or we predict will surface over the next 12 months. The first of which is the transformation of international payments.
Technology to ease international payments
In the world of smartphones allowing instant access to almost anything we need; consumers are growing increasingly tired of the waiting times faced when making international transfers.
Payment providers and banks will be fighting to provide faster cross border payments for their clients, as well as attracting new customers with this technology.
This, in turn, should drive the wider adoption of blockchain and distributed ledger technologies. This enables financial institutions the ability to transfer low-value payments in real-time at a massively reduced cost.
The ability to move money around with the same ease that we communicate over the internet will be significant for the financial providers over the coming 12 months and beyond, the companies that choose to invest in this technology will benefit.
Banking as a service
With a need to keep costs down but also rise to the changes of technological innovation becoming essential in recent years, financial institutions are expected to shift to cloud-based providers in an effort to reduce their only internal IT costs.
Cloud-based solutions are an effective way to cost-effectively plug into the emerging Fintech innovations and blockchain networks that they otherwise would not be able to do. Cloud-based technologies will, as a result, create a competitive advantage in the longer term for forward-thinking financial services that embrace this digital innovation.
With a host of new entrants in the finance market, banks will need to update banking technology to avoid being displaced by agile, cloud-based service providers.
Cross currency solutions
This year, we expect to see greater cross-currency payment solutions, particularly for travellers and tourists.
With the number of travellers reaching the highest point we have ever seen, the growing demand for cross-currency, real-time payments without extortionate conversion fees is at an all-time high.
This could even be done without the use of a card, with many traveller’s fear losing their card being usually the best or only form of paying abroad. With the rise in online banks, most payments can now be made over a mobile device. For tourists visiting a different country, using a different currency, payments can be made through a mobile offering an alternative to the traditional chip and pin.
To extend on this, immediate cross-border payment of, for example, dollars to pounds, can be made and received to the merchants account in real-time. Many online banks such as Revolut and Mondo have already introduced such features and are proving to be very popular with consumers, with both banks seeing the greatest rise in new customers when compared to traditional finance providers.
Such payment services are likely to have a major impact on the property sector in the coming year and companies that do not implement these services will inevitably lose ground on competitors.
Micropayments to become easier
As technological innovations continue to bring down the cost for international payments, from a business point of view, micropayments are becoming more viable.
Micropayments have traditionally been confined to messaging apps, but as large tech companies are beginning to introduce their own payments services, micropayments will inevitably expand beyond this.
In 2023 it is expected that developers will rush towards digital assets and blockchain to achieve real-time micropayments for in-app use, something most consumers are becoming to expect these days.
This can be applied across a number of industries, gaming being a strong example. The ability to create a new payment model to stream online content will be a game-changer headed into 2023.
A shift to high volume payments
Unfortunately, a lot of what has been stated above, specifically regarding cross border payments, is not suited to small enterprises. International payments are typically slow and can occur high costs with frequent use, not taking into account emerging markets.
Of course, this is currently a huge setback for small businesses. However, with the emergence of new blockchain technologies, these challenges can begin to be addressed, enabling small to medium-size enterprises to invoice and receive payments from overseas immediately, in smaller amounts, with absolute certainty.
This adoption of blockchain will be a huge boost to smaller companies looking to improve cash flow and reduce the costs of running a business internationally, freeing up some money for reinvestment and further growth.
We expect then that as this technology advances, so too will the rise of smaller businesses operate at larger scale, to a larger audience. The ability to enter emerging markets in terms of processing immediate payments will improve access to these markets and thus the businesses themselves. There are a lot of advancements that happened in FinTech over the years, and for sure these won’t be the last. Head on to TechMGZN and stay updated on tech news.