10 financial services trends in 2023 no organizations can miss
As the world of finance continues to evolve, organizations must stay on top of upcoming trends in order to remain competitive and successful. In 2023, there will be a plethora of financial service innovations that no organization should miss out on.
From blockchain technology advancements to increased digital banking capabilities, it’s important for businesses to recognize these trends and develop strategies built around them so they don’t get left behind. Keep reading this blog post if you want to explore 10 specific financial services trends in 2023 that are surefire paths toward success!
1. Open Banking and Embedded Finance
Although Open Banking began as a regulation in some nations to promote fintechs and competition, banks now see Open Banking as a business opportunity rather than a compliance issue or a danger. Banks are gradually working toward offering an API marketplace that can be used by fintech companies in the market and is monetizable.
As it enables the integration of financial goods into digital interfaces that clients use on a daily basis, such as loyalty systems, digital wallets, and shopping cart apps, embedded finance will be a rapidly expanding idea. The next phase of bank expansion will be driven by these collaborations. The revolution in digital payments is being further accelerated by open banking and embedded finance.
2. Safe and Secure Banking
Banks will work harder than ever to protect themselves from fraud and cyber threats so that customers can conduct secure financial transactions. Banking institutions will concentrate on privacy-enhancing techniques as cyber dangers increase. The standard for a bank’s operations will be cyber security command centers. End-to-end secure banking transactions will be made possible by zero-trust security frameworks. Testing for chaos and vulnerabilities will be a crucial part of developing essential platforms.
The use of AI in fraud detection, money laundering prevention, and the investigation of generative AI algorithms for superior risk models will become more widespread.
3. Hyper Automated Banking
Banks will increasingly use AI techniques to achieve hyper-automation across the business process lifecycle as they implement RPA and basic workflow management systems. Customer onboarding, KYC checks, processing of the loan and insurance forms, trade processing, and settlement are just a few of the front and back office processes that will no longer require manual intervention thanks to technologies like cognitive document management and processing, forms digitization, digital signatures, and automated workflows. Business process management can use hyper-automation to cut down processing times from days to hours and minutes.
Along with business processes, enterprises will use methods like DevOps, AIOps, and Site Reliability Engineering to implement cognitive automation throughout the IT engineering and operations lifecycle.
4. Agile and Adaptive Banking
Banks should concentrate on creating agile IT infrastructures, agile IT organizations, and embracing agile approaches to manage their projects and operations if they want to stay competitive and quickly introduce new goods and features to the market. The migration of banks to a cloud-native architecture (based on microservices and APIs) has been a major priority for the industry. In the years to come, this process will pick up speed. In order to create apps quickly, businesses will start looking towards low-code and no-code solutions more frequently.
Organizations will set up shop in a paradigm that is product-centric in order to successfully adopt and reap the benefits of agile methodologies.
5. Scalable and Resilient Banking
Cloud enables banks to achieve high performance and reliability throughout operations while managing significant and varied workloads. However, the banks adopted a cautious stance due to past worries about security, privacy, and latency. However, there will be more momentum for cloud adoption in the banking sector as the solutions provided by cloud service providers become more mature.
In the areas of payments, wealth management, and corporate activities like HR, Finance, and contact center support, banks will investigate SaaS-based solutions. The public cloud now offers core banking solutions, which will be investigated. Banks will use a multi-cloud and hybrid-cloud strategy to reduce their own risk and address issues with performance, resilience, and recovery.
It is anticipated that banks would look into quantum computing as they place more focus on data processing and sophisticated AI algorithms. These may find applications in running risk algorithms with high data and computation requirements as well as product recommendation systems.
6. Green Banking
Banks must integrate sustainability into their daily priorities since it is a worldwide requirement. Banks will view it as a chance to introduce green lending solutions that can increase revenue beyond compliance. Reduced greenhouse gas emissions, the development of renewable energy, and other sustainable, environmentally friendly projects are supported by green loan products.
The market for trading carbon credits, which permits businesses or other parties to emit a specific quantity of carbon dioxide, will expand.
7. Decentralized Finance
Beyond Bitcoin and cryptocurrencies, Decentralized Ledger Technology (DLT) is becoming more widely used. By eliminating middlemen from the payment, clearance, and settlement processes, this technology will continue to upend and spread throughout the financial services sector. Blockchain will be used to tokenize loans, securities, virtual goods in the metaverse, and customer data, and make trade finance and KYC checks simple.
Greater transparency will be ensured, and fraud will be avoided. Beyond Bitcoin and cryptocurrencies, Decentralized Ledger Technology (DLT) is becoming more widely used. By eliminating middlemen from the payment, clearance, and settlement processes, this technology will continue to upend and spread throughout the financial services sector. Securities, loans, digital assets on the metaverse, client information, trade finance, and KYC checks will all be tokenized using blockchain technology. Greater transparency will be ensured, and fraud will be avoided.
8. Reimagined Experience Through Observable Customer Journeys
A bank needs to be observable in order to comprehend consumer experiences in real-time and provide individualized care. Banks will embrace observability at the technological and business process levels (customer journey tracing) (IT apps, infrastructure, and networks).
In order to have high availability and good performance, IT systems must be observable. Business transaction journey observability will assist banks in comprehending the context of the customer in their trip and providing them with contextualized assistance and advice from any channel – online, mobile, or social has enhanced the client’s multi-channel experience. Imagine a proactive call being made to a consumer who is stranded in a store with a denied purchase or a user who is having trouble completing a transaction on the web receiving contextual assistance from intelligent bots.
9. Insights and Intelligence for Financial Wellness – Transforming Customer Lives
Banks have understood the importance of assisting their clients with life planning to secure their financial security and well-being throughout the course of their lifetimes. Banks follow the events in their customers’ lives as they progress through their life stages and give them relevant product and service recommendations. AI will be used to analyze the demographics and behavioral patterns of customers in order to provide the ideal combination of financial products for each stage of life and career. Robo-advisors have made financial advice services more widely accessible to all customer segments, not only high-net-worth individuals.
10. Emerging Avenues for Banking – New Interfaces and Customer Segments
New banking interfaces and target client segments are among the new markets for banking firms.
They assert that the bank moves with the client. Given this, its new location might be the metaverse. Video banking will become more popular. Basic VR apps for banking have begun to be offered by banks. In addition to offering an immersive experience, metaverse banking might make it possible to finance and insure digital assets in the virtual world with new products. Collaboration between several VR worlds may be possible, providing more alternatives in the fields of banking and finance, transportation, entertainment, and utilities, among others.
The world of financial services is always changing, and it can be tough to keep up with the latest trends. But if you want to stay ahead of the curve, it’s important to know what’s on the horizon. Here are 10 financial services trends that we think will be big in 2023. If you’re interested in learning more about any of these trends or implementing them at your organization, contact SMARTOSC Fintech today. We would be happy to help!