Future of Fintech: What to expect in 2023 and beyond
The impact of fintech on the traditional banking and finance industry has been monumental. It has consistently disrupted the status quo even in the face of economic downturns and regulatory shifts. Fintech's reach extends beyond just payments as startups in this sector aim to revolutionise areas such as direct lending and investment banking. In fact, India is currently the third largest fintech market, with over 7,300 startups in the segment, supported by an overall funding volume of around US$ 30.2 billion, which is expected to reach US$ 200 billion in revenue by 2030.
The key to success in the fast-moving world of fintech is the ability to stay ahead of the competition through practical skills and knowledge rather than relying solely on academic credentials as is often the case in traditional banking. As fintech continues to evolve, it will be those who are able to adapt and lead the charge who will come out on top.
Why work in fintech?
As the financial industry continues to evolve, the fintech sector has emerged as a highly lucrative career option. This is in large part because the banking sector is a major source of revenue and even in a recessionary environment, banks are still performing well. Thanks to rising interest rates. However, even traditional banking systems are facing several technological challenges as they work to implement real-time payment systems. These include the need to move to the cloud and comply with ISO 20022 requirements, among other trends. To address these challenges, banks are investing heavily in technology and hiring more IT personnel. One way they are doing this is by partnering with fintech firms.
Gain the right experience
Technology has played a crucial role in the growth of the digital economy, and financial services providers in India have increasingly adopted it to enhance reach, customer service, and operational efficiency. Fintech has made banking and finance more intuitive, personalised, and empowering. The convergence of financial services and exponential technologies is essential for building a strong digital economy and driving India's transformation. There are numerous opportunities for those seeking to launch their career in the fintech industry, whether at established multinationals or start-ups. Start-ups may have the edge when it comes to technical expertise and the ability to develop cutting-edge technologies, while larger organisations may have access to resources such as innovation labs that can provide support for building a strong foundation and staying agile in this rapidly changing field. Both paths can lead to success in fintech.
Learn the right tools
In 2023, cybersecurity and automation remain key trends in fintech. Cybersecurity is a top priority as financial technology use increases the risk of cyber-attacks while Robotic process automation (RPA) is also popular as it automates tasks like verification and improves efficiency. Biometric identities, like fingerprint or facial recognition, enhances customer security and convenience. Blockchain technology, which enables secure record-keeping, is used by fintech firms for various purposes such as tracking transactions and preventing fraud.
These advancements significantly impact the fintech industry and will continue to shape it in the future. They also create new opportunities in areas like cybersecurity and data analytics. For example, there are opportunities in commercialising blockchain, and programmers with blockchain expertise are in demand to solve the problems facing its integration into business models.
Low-code technologies have gained attention in the fintech industry to efficiently develop financial applications, particularly those related to payments.
Be a part of the change
The ever-changing nature of fintech is seeing big data and automation being superseded by AI and ML. Blockchain technology has the potential to bring more transparency to existing financial systems, as well as make transactions more secure and efficient. Data shows that blockchain deployments will enable banks to realise savings on cross-border settlement of transactions of up to US$27 billion by the end of 2030, through cost reduction of more than 11%.
Legacy solutions used by banks are not suitable for complying with the increasingly stringent regulations being implemented worldwide. Analysts today are spending 90% of their time on data collection and organisation and only 10% on data analysis. This has made Regulatory Technology (RegTech) to become an integral part of the Fintech ecosystem to address this issue and come up with solutions which can tackle the latest and most complex regulations, lawsuits and regulatory remediation areas faced by financial institutions (FI) while also reducing the cost of compliance. With 10 - 15% of the workforce devoted to Regulatory compliance, RegTech is set to become a major factor in facilitating compliance management and minimising regulatory risks in the future.
Curate the perfect customer experience
Technology has greatly improved the customer experience in the payments industry. Customers can now easily make payments through internet banking, mobile payments, and other types of transactions that are securely and efficiently connected. The advent of the "All Customer Access to All Financial Services" model is also providing customers with access to a wide range of financial products and services, regardless of their location or financial status.
For instance, data analysis opportunities can help gather and evaluate customer information, which can help them better understand customer preferences and deliver a more personalised customer experience. The opportunities for growth and development are endless, and the potential for high rewards is great. Fintech offers a chance to build a challenging and rewarding career. Fintech companies are often at the forefront of emerging technologies and working in this sector can provide access to the latest innovations, allowing you to stay ahead of the curve.