financial services To Watch Out will be described in this post. Edouard Billion, Managing Director of Edenred Payments Europe (PPS), and Lynne Darcey Quigley, CEO and Founder of Know-it, joined us to talk about the top 10 trends reshaping fintech over the coming year and the factors that are fueling these changes.
10 Financial Services To Watch Out For In 2023
In this article, you can know about 10 Financial Services To Watch Out For In 2023 here are the details below;
Our roundup also examines the newest innovations in technology and digital payment services, as well as developments in BNPL, embedded finance, and other areas.
Darcey Quigley summarises the present market by saying, “There are a number of reasons why last year was hard. Due to post-pandemic complexity, war-induced energy crises, cryptocurrency market crashes, rising inflation, and skyrocketing interest rates, businesses worldwide have gotten used to responding to unexpected situations.
“Yet, despite all of these difficulties, the UK fintech market has expanded gradually and given firms options to stay on the cutting edge and provide easier, more accessible financial services.”
1. The cost-of-living Crisis
“In 2023, fintechs will need to continue assisting their clients by assisting them in thriving during current challenging economic times and the cost-of-living problem.
“Fintechs have always been on the cutting edge of innovation and are perfectly situated to assist clients survive in difficult times by offering them more awareness and control over their spending.
Fintech companies are better understanding shifting consumer wants and new behavioural patterns thanks to both innovative services and the usage of payment data.
“Consumers are adopting fintech to govern their finances and are seeking for novel new ways to do it.
For instance, using prepaid cards to limit their spending and utilising digital wallets to impose restrictions on certain spending categories.
“Traditional banks are increasingly observing fintechs to learn what they are up to and how they might use some of these concepts.
In 2023, more of these offerings will be made available through partnerships, mergers, and buyouts. Also check financial new year’s resolutions
2. Adapting business models
“Like customers, fintechs must also deal with this stark new economic reality inside.
At this time of economic turmoil, the payments industry is proving to be extraordinarily resilient, according to McKinsey’s most recent Global Payments Report.
Certainly, many countries are seeing levels of inflation and interest rates that have not been seen in decades.
And as a result, consumer and corporate behaviour, as well as payments dynamics, are changing.
Despite this, fintech companies must and will adapt.
I predict that many more fintech companies will change their emphasis from sheer expansion to a profitability strategy.
3. Green finance and sustainability
“Green finance will continue to be a popular topic in the financial services industry, where the need to concentrate on environmental consciousness has rapidly expanded in the past few of years.
Green finance will enter a new phase this year that will make sustainable banking engrained in daily life, moving beyond the status of a trendy term.
“Fintechs and financial service providers will work together more on cutting-edge sustainability initiatives like tracking carbon footprints and assisting customers in making moral decisions.
Green mortgages, which are intended to reward people who buy energy-efficient homes or make renovations to their current homes that boost their energy efficiency, are a perfect illustration of this.
Green mortgages already account for 15% of the market, and UK MPs have urged the government to submit green mortgage policy recommendations by the end of February in order to “speed up” efforts to increase energy efficiency in UK households.
Interest in green lending programmes will only rise as younger generations of customers look for more ethical and climate-conscious ways to invest.
Financial service providers need to innovate in sustainable practises now to guarantee that their product has enduring appeal and genuinely benefits both customers and the environment. Also check MS Excel Interview Questions
There is also the chance to develop goods and services that new entrants to the market may make use of to assist them in innovating at the level of their consumer offerings.
Either incorporate your partners into your system or don’t.
Or you might have a core system that you own and maintain — that’s your USP — and then you have bits and pieces that you require assistance from others for various nations and regulations.
Startups seeking to scale may see partnerships and acquisitional entrepreneurship as a chance to advance.
4. BNPL programmes expanding:
Is growing, and several businesses are now offering them.
As prices rise due to inflation, customers are able to purchase products and services more inexpensively thanks to various credit options like buy now, pay later (BNPL).
“Recent study has shown that more consumers will use BNPL services to offset their prices.
According to the Intelligence Market Research, the BNPL market has had a significant increase in growth as a result of technological developments and a significant increase in global internet access.
Consumers can use the BNPL system to make payments simply scanning a QR code, which is only one of several advantages it offers.
However, the excessive late fees imposed by BNPL service providers as well as the costs levied by banks and credit providers who provide BNPL services may hinder market growth in the upcoming years.
“The BNPL market is getting stronger and stronger.
We are eager to help fintechs innovate their BNPL products even further.
5. The rise of invoice financing
“Every firm is aware that there can occasionally be a large gap between income and cash flow, particularly when your clients demand lengthy payment terms and wait until the very last minute to pay.
By taking out a loan against the invoice value, invoice financing might assist you in closing that gap.
Invoice financing, in which your company borrows money against amounts that are due on invoices you’ve given to clients, is a short-term loan secured by invoices.
These trade receivables are then offered as collateral. “Invoice finance is frequently used in the construction, retail, transportation, and consumer goods sectors.
Because you can obtain cash right away without having to wait for your clients to pay you in full, using invoice finance can be seen as one of the many choices for business financing. Working capital is preserved as a result, and issues with the company’s credit and cash flow are prevented. It can then be used as a substitute for funding slow-paying accounts receivable or to satisfy urgent cash requirements.
Invoice financing will play a significant role in the fintech market of 2023 as cash flow continues to determine many organisations’ chances of success. The Know-it platform offers invoice finance, which enables customers to borrow up to £5 million, or 95% of the value of their outstanding invoices.
6. The rise of cloud computing
“Cloud technology has played a crucial role in helping SMEs and large organisations in recent years and will play a major role inside fintech in 2023.
Businesses may reinvent themselves and set the road for a technology- and data-first work culture that fosters business continuity and digital transformation by utilising cloud computing.
Fintech services have made extensive use of applied agile technologies. Bank structures are intricate and have distinct functional areas.
Modern banks, in particular neobanks, are streamlining their organisational procedures and guaranteeing accountability in the face of widespread digitalisation by implementing agile technologies. Cloud computing is fueling the exponential expansion of the financial sector.
While UK SMEs seek consistent growth in 2023, scalability and adaptability should be their guiding principles.
Know-it is a cloud-based platform that can be accessed via a web browser from any location in the world. This allows businesses to always stay on top of their credit management to safeguard their business cashflow, which will be crucial during 2023 as we navigate a recession.
7. Trend three: The rise of embedded finance
“Embedded finance is one fintech innovation that will take off in 2023.
Embedded finance benefits both the provider and the user.
For users, this technology makes purchasing easier, faster, and more accessible.
Embedded financing offers a way to promote consumer loyalty to the provider with all-in-one purchases in addition to giving the providers a way to keep solid ties with the add-on providers.
“Embedded payments have made the payment process simpler for businesses and end-users, removing obstacles and further satisfying our desire for even more ease given the world we live in.
Yet, certain integrated lending platforms that could cause a credit crisis have only recently started running credit checks on users who want to use the facility. These platforms have remained unregulated for a sizable amount of time.
8. The rise of AI
“Artificial intelligence has long been a vital asset for fintech organisations.
Robotic process automation (RPA) improves the speed and accuracy of tasks such as report drafting and financial data management (RPA).
The removal of human intervention from everyday tasks allows for the reduction in staff.
“As a result, financial institutions are using adaptive AI, which may change to work in a certain industry.
It self-adapts to the conditions displayed by learning from prior encounters with human-machine contact.
According to Gartner, businesses who employ adaptive AI will have a 25% advantage over rivals utilising more traditional AI models by 2026.
RPA and AI are rapidly altering the way businesses operate, having a significant influence on productivity and providing organisations with deeper insights from large volumes of data.
Know-it enables organisations to fully automate the credit control process, better understand their clients, and make sense of their sales ledger.
This makes it simple for businesses to increase cash flow, decrease debtor days, and mitigate credit risk.
9. The rise of PaaS
“Retaining clients is a priority for every organisation.
Many businesses have been using platform as a service to raise and maintain their retention rates (PaaS).
Customers can develop new add-ons for the product they initially purchased as part of the PaaS concept.
As a result, SaaS/PaaS providers will be able to provide customers with a far more individualised experience, which should boost their growth rate and customer retention.
Know-it is continually changing as a result of feedback from our users.
We have a tonne of new features and additions planned for release very early in 2023.
10. Making Tax Digital (MTD)
“Since MTD was announced in 2015, the majority of firms have adapted successfully to these changes by putting new tools and processes into place.
When it comes to filing taxes, businesses have been able to adopt new tools and technology as well as a digital approach.
“This move may have seemed intimidating to some at first, but many people will have quickly realised the advantages of automating and preserving a digital record of invoices, transactions, and tax filings.
“The new Making Tax Digital penalty points system will go into effect in January 2023, so anticipate this to be a big talking point as we start to see the businesses that have been sluggish to adapt these new technology, frequently make mistakes, and miss deadlines penalised. “Fintech companies are recognised for their game-changing inventions, and 2023 will be no different. Although some fight it, others totally embrace it. Fintech companies should more robustly construct their financial services in order to protect against shocks and disruptions similar to the one that happened in 2022. Despite this, the opportunities are endless.