Financial Trends to Expect

As the threat of recession and rising inflation looms, the financial outlook for this year is set to be mixed. Enterprises across different industries are expected to face economic challenges, emphasising the need to stay on top of emerging business trends. To ensure survival and growth, businesses must consider innovating or amending their current operating processes. 

The last few years have witnessed several financial developments. For example, financial institutions and significant retailers began opening up to and accepting cryptocurrency payments like Microsoft, CheapAir, Lush, and Shopify. If paying without relying on banks seemed far-fetched, you can now learn how to buy Ethereum and pay with it for, say, a train ticket, hotel booking, or other goods and products. However, the FTX collapse brought scepticism and obstacles. But the advantages of decentralised finance (DeFi) remain unbeatable, and this year may witness greater decentralisation in the banking and finance industry, which may finally make traditional financial institutions outdated. 

Other financial trends are expected to shape 2023, like Saas, RegTech and the BNPL system. Staying up-to-date with new financial trends can help you make informed investment decisions and give your business a competitive advantage, so keep reading to see what trends experts are watching this year.  

SaaS Platforms

Software as a Service (SaaS) is a method of accessing software through the internet and is the most commonly used one for enterprises in the cloud market. It’s easily accessible and hands-off, as you only need a browser and an internet connection. The SaaS delivery model manages all the technical issues through vendors, meaning clients don’t have to rely on their in-house IT expertise. 

As of 2023, the SaaS space is worth more than $195 billion. As businesses grow more comfortable using the cloud for operations, this type of solution becomes more popular. Some end users can self-provision this technology independently, while others might need a third party to help with integration, security, and customisation. 

Common types of cloud computing services include the following:

  • Software as a service (SaaS)
  • Platform as a service (PaaS)
  • Infrastructure as a service (IaaS).

Financial businesses may benefit greatly from SaaS systems. Compared to traditional on-premise systems, these platforms provide various advantages, including security, scalability, agility, and cost savings. These platforms benefit businesses dealing with limited budgets that need more flexibility in terms of scaling up their operations, or with seasonal fluctuations in demand.

AI to Detect Fraud 

AI’s increased application isn’t a finance-specific trend, but, like many other industries, it has many exciting business and finance applications. It can already detect fraudulent business activities, for example, providing an extra level of security for financial firms and bringing peace of mind. The number of enterprises using AI in this way rose from 10% to 31% in 2021. 

The most recent improvement in conversational AI models is the ChatGPT, a chatbot launched by OpenAI in November 2022, that demonstrates how helpful AI could be to a business’s success in the future. ChatGPT can already write code or content, and even though human touch can improve AI’s content, it is indeed a great starting point for creativity. This way, customers can have more natural and human-like interactions with companies, helping to improve customer satisfaction and loyalty. 

There are also risks implied. For instance, if everyone uses this tool, everybody will end up having similar approaches to things. 

Digital-only Banking

Lately, digital-only banking has experienced unprecedented growth in popularity, with the number of individuals using it increasing from 196.8M in 2021 to 203M in 2022. Most consumers (61%) use digital banking services once a week. Traditional banks are no longer the only option for customers and investors. Now, digital-only banks have become all the rage. 

Among the most significant drivers behind the rise of digital-only banking is the proliferation of fintech startups. These startups are leveraging cutting-edge tech advances to offer innovative financial solutions to customers and businesses alike. 

Digital-only banks have some advantages over traditional banks that make them more attractive, like round-the-clock access and an auto-debit facility.

Data-driven Digital Banking

Many institutions are already using the data-driven approach to improve the customer experience, guide the decision-making process better, and minimise development time costs. They tap into data from internal and external sources, like transaction location, to better understand consumers’ habits and patterns. If done correctly, such practices can drive engagement and loyalty.

As people embrace digital solutions for their financial needs, it becomes crucial to choose the right provider. Customers want easier access and more secure banking on internet-powered devices and platforms that can be designed specifically for them. 

The Rise of “RegTech” 

RegTech, or regulation technology, is a form of financial technology that enables organisations to manage the ever-growing number of regulatory requirements they comply with more efficiently. The goal is to offer them automated solutions that simplify compliance processes, minimise costs, and enhance operational efficiencies. 

RegTech will benefit enterprises in many ways, like helping them stay compliant with government regulations efficiently and reducing costs associated with non-compliance. This helps businesses focus on more strategic initiatives instead of spending time managing compliance processes manually.

The wide adoption of RegTech and associated solutions is expected to be a key trend in 2023. 

Cryptocurrency Adoption

Cryptocurrencies have significantly impacted the world’s economy for several years now. An element of the 2023 financial landscape can be the “truly global” Bitcoin adoption. The increase in uptake for Bitcoin Lightning Network, Solana Pay and other similar services make cryptocurrencies viable options for many businesses. Enterprises may benefit from an entirely new income stream by increasing the number of payment channels.

Despite the FTX collapse and crypto winter, experts believe that interest in crypto payments and blockchain technology in finance will remain strong in 2023, especially for those who seek to buy anonymously or pseudonymously.

2023 Will Be an Exciting Year in the Financial Sector

With the increased adoption of artificial intelligence, cryptocurrency, SaaS, banking digitalisation, and RegTech, 2023 looks promising for the global financial sector. Data analysis, automation, and an increased focus on regulation are all trends set to improve consumer safety and investor confidence.