Five trends set to transform fintech banking in 2023

Klarpay is a Business Reporter client

Over the past five years fintechs have been the talk of the town, with their innovative use of technology, user-friendly interfaces and improved technological capabilities to streamline payment processes and compliance.

However, according to Moody’s, there has been a decline in venture capital funding for fintechs. That doesn’t mean fintech is on the slide – it’s a sector that continues to evolve and adapt to the changing market. There are still plenty of opportunities for growth and innovation in the industry. To survive and thrive, fintech companies continue to embrace new trends, innovate, and develop solutions to solve emerging needs.

Driven by changing consumer behaviour and the proliferation of fintech innovation, the payments and business banking industry have undergone a massive transformation in recent years. As the global economy shifts towards an interconnected future, online businesses demand their banking partners provide payment services digitally, instantly and easily. With brick-and-mortar institutions being rigid and slow to adapt, fintechs often outpace traditional institutions when it comes to serving the fast-paced environment of online business. Here are some of the trends in payment technology that are likely to shape the future.

The introduction of instant payment schemes globally is a significant development in the world of banking and finance. The regulation-mandated changes in Open Banking have paved the way for the widespread adoption of instant bank-to-bank payments, which promise to improve the user experience by making transactions faster, more convenient and more secure.

Although the rollout of instant payments is still ongoing, with only a certain percentage of banks currently offering this service, it is expected to reduce costs and enhance the overall efficiency of the financial system. As more banks join instant payment networks, consumers and businesses will gain access to a more streamlined and frictionless payment system.

Artificial intelligence (AI) is one of the most disruptive technologies in the world today. The payments industry is already making extensive use of AI/ML technologies in a wide range of applications.

Targeted marketing, process automation, and consumer profiling are just a few of the many applications of AI/ML technology in the payments sector. The use of AI and ML in preventing fraud is also becoming increasingly widespread, as it can be used to automatically identify fraudulent behaviour and possible threats.

For instance, AI can be used to analyse financial transactions and flag any suspicious activity or even help financial institutions make better-informed business decisions and manage risk more effectively through predictive analytics. The main benefits of AI include removing bad actors and reducing costs for financial institutions, which can be passed on to consumers, all the while improving payment turnaround times.

Stablecoins are becoming popular due to their potential to mitigate the high volatility of traditional cryptocurrencies, offering benefits such as fast, low-cost transactions, increased security, transparency, and global accessibility. As they become more mainstream, they are expected to play a significant role in the future of payments, as an alternative to traditional methods, with more efficient, borderless and accessible means of exchange.

However, there are regulatory and legal challenges that need to be addressed, particularly around money laundering and transparency. Inclusion is another significant factor; provisioning a stablecoin address can be done in a few clicks, compared with the often-cumbersome onboarding processes of traditional banks.

Specialisation in niche industries is becoming an increasingly important trend in today’s business world. With technological advances and changing consumer behaviours, many companies find it advantageous to specialise in serving a niche market. This is particularly true for fintech companies, which are finding success by focusing on serving specific businesses such as marketplaces, PSPs, advertising networks or specific sectors of e-commerce.

By specialising in a particular area, fintechs can develop deep expertise and tailor their products and services to meet the unique needs of their clients.

Although not entirely new, the use of application programming interfaces (APIs) have opened new doors for transactional banking. APIs function as bridges, enabling communication between different platforms, along with the performance of tasks. When it comes to online businesses, merchants need to manage diverse pools of liquidity and repetitive tasks when processing payments and reporting. Thanks to APIs, online businesses today can connect and fulfil these complex tasks seamlessly and in real time. However, there are still many banks that offer no API integrations.

As consumers increasingly embrace new ways to pay online, digital businesses in particular will require even more innovative, interoperable and omnichannel payment solutions – solutions which are currently not supported by traditional brick-and-mortar banking institutions. It is here that fintech companies such as Klarpay are offering innovative alternatives to a range of traditional services, effectively bridging the current gap between online business and the need for accessible transactional banking.

Founded in 2019 with the vision to create an all-in-one solution for digital businesses in need of borderless, scalable and omnichannel payment and banking services, Klarpay is the first Swiss-licensed fintech company to work exclusively with e-commerce and digital entrepreneurs. From its top-tier licensing to its high security and technology standards, Klarpay has leveraged innovation to offer digital businesses fully embedded payment solutions with simple integration, all-in-one transactional banking through virtual debit cards and IBAN accounts in more than 17 currencies, as well as seamless transfers and payouts.

As crypto payments, open banking, and payments become more mainstream, fintech companies such as Klarpay are leveraging these trends to offer products for digital businesses that are currently underserved by established banking institutions.

Discover how Klarpay helps some of the world’s leading companies transact globally.

Originally published on Business Reporter