FinTech 2023: Some trends and innovations to expect in the coming year

Curated by: Sergio A. Martínez

But what awaits this sector in 2023? From mobile payments to digital investing, FinTech is making it easier for people to manage their finances in a way that suits their needs. And as the sector continues to grow, it is only going to become more prevalent in the lives of the average person as the global economy becomes increasingly digitized. This is creating a need for efficient and secure digital financial solutions in all regions, especially in developing countries that are continuing to grow in wealth. Access to technology means these countries are starting to turn to FinTech companies for financial services and infrastructure. 

In more local markets, as more baby boomers reach retirement age, there is going to be a growing demand for financial products that can help them manage their money in a way that meets their unique needs. Combined, these factors are all helping to drive the growth of the FinTech sector, resulting in some interesting, and maybe unexpected developments to keep in mind when 2023 arrives here, so let’s look at some of the trends that await this sector in the coming year.

#1: The rise of alternative finance

In the past, if you wanted to borrow money, your options were pretty limited: taking a loan from a bank, perhaps a friend or relative, or even dubious “payday” businesses with sky-high interest rates. But thanks to the rise of alternative finance, there are now many more options available, so it’s now possible to apply for a loan online, or even use options like cryptocurrencies as collateral. This has made borrowing money easier than ever before, giving people more choices in how they obtain funding. As a result, this “alternative finance” has made it possible for everyone to access the money they need, regardless of their financial situation.

After all, just a few years ago, the financial sector was dominated by a handful of major banks, but that is no longer the case. Driven by the FinTech sector, alternative finance has opened options outside of traditional banking systems, which can include peer-to-peer lending, crowdfunding, and even cryptocurrency. And for many people, these alternative finance models offer a modern and convenient way to access the financial services they need. However, it also comes with its fair share of risks; with less regulation than traditional banks, for example, alternative finance providers are not always held to the same standards, so doing the research before using any type of alternative financial service is still advised, although the industry seems to be having some advancements in this regard. But despite the risks, the rise of alternative finance will change the financial landscape in a big way next year.

#2: The decline of the “unicorn”

In recent years, the term “unicorn” has been used to describe privately held startups valued at over $1 billion. These companies have become the stuff of legend, and their founders are often treated like celebrities ready to disrupt entire industries and traditional business models with innovative approaches or technology never thought of before. However, there are signs that the unicorn craze is beginning to fade, and as more and more companies reach the $1 billion mark, the achievement is starting to lose its luster. In addition, many “unicorns” have failed to live up to the hype, with several high-profile flameouts in recent years, like the financial incidents of Theranos and FTX. As a result, it’s becoming increasingly clear that the days of the mythical unicorn company are numbered.

Once the poster children of the startup world, their high valuations were often based on unrealistic growth projections, with their business models dependent on low-cost labor and regulatory arbitrage. As a result, “unicorn companies” are not sustainable in the long term, and cracks have started to show; next year we will probably be leaving behind this experiment in favor of more responsible, considered investments, especially when it comes to a sector that bears so much responsibility such as FinTech. So, for investments in 2023, the shift in power between startups and established brands and models is going to be massive.

#3: An explosion in passive income

In a world where nearly everything is moving online, it’s no surprise that FinTech is experiencing a boom. From simple apps that help you track your spending to complex investment platforms, there are now more ways than ever to manage your money. However, as the industry continues to grow, one of the most significant trends will be the rise of passive income opportunities. With so many people working remotely or facing unemployment, earning money without active effort will become increasingly appealing. 

There are already several ways to build passive income through FinTech platforms, from investing in digital currencies to lending money through peer-to-peer applications. And as the industry continues to evolve, we can expect even more options to emerge. After all, there’s no denying that we’re in the midst of a financial revolution, and technology has allowed us to access a world of financial opportunities that were once out of reach. So, as our options continue to grow, so does the need for ways to make our money work harder for us, which is where the popularization of passive income comes in; by investing in things like real estate or index funds, we can earn money without having to actively work for it. And as the world of FinTech continues to evolve, there will be more and more opportunities for us to build these kinds of income streams, which will be a growing sector as the recession ebbs and flows through the next year.

A year of change

Only time will tell if 2023 will be the “Year of FinTech.” For one thing, the industry is becoming increasingly mainstream, with more and more people using FinTech products and services daily. In addition, the industry is attracting an increasing amount of investment, indicating that there is significant interest in its potential. So, as the industry is continuing to evolve and innovate, with new ideas and products, such as contactless payments to AI-powered financial advice, being developed all the time, and after the pandemic accelerated the shift to digital channels, there’s no turning back. It’s time to embrace the future of finance.

The Key Takeaways

• 2023 is going to be a very interesting year for FinTech, with plenty of technologies and innovations finally exploding into the mainstream.
• Several factors go into these trends, such as how the bar of accessibility is lowering, and how certain demographics will need solutions outside of traditional finance.
• This will result in some trends that the sector needs to watch closely, such as the rise of alternative finance, the death of the “unicorn” companies, and the popularization of passive income.
• With FinTech finally entering the mainstream, 2023 will see this industry establishing itself as a normal part of our daily lives.

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