In Q2 2023, fintech accounting-financing has greatly decreased, with the minimum in the previous six quarters and down 39% from the raise in Q4 2023.
But still, finance-related technology is the sector with the most investment rounds worldwide. It increased by $21.5 billion globally in Q2 2023.
About 90% of the population in the USA use fintech accounting and finance services now. Global quarantines and lockdowns have made digital accounting and finance processes more customer-related. It stimulates finance and technology-related companies to keep up with the times and properly adopt the recent technologies to cater to the expected level of things and keep a high satisfaction percentage.
The finance technology market was valued at $698.48 billion in 2030, while in 2021, it was $110.57 billion. This is because startups and established organizations are keeping up with the pace of change, updating their operations, and amassing enough technical skills and tools.
If you do not scale – you do not do well. But you also have to ensure the relevance of the scalable solution — this is why you might consider adopting new fintech finance and accounting industry trends in 2023 to gain an advantage over your competitors.
We researched the finance and accounting industry to find out how exactly fintech companies will approach increasing their efficiency. From BNPL to cryptocurrencies, how the payment world digitalizes and revolutionizes, and what place finance and technology innovation would have in the past few years – all these and other details of finance technology trends 2024 we have looked into in this blog post.
Without further saying, let’s get to the top trendy things in fintech!
Open banking
In 2024, 63.8 million people will be using open banking, predicts Statista. In comparison to 2020, this is almost five times more.
Open banking focuses on controlled financial information exchange. Account holders can accept procedures for safely sharing their financial data with nontraditional financial institutions. Accessible APIs enable third-party suppliers to access the clients’ financial data. Many fintech businesses that offer budgeting, expense tracking, financial planning, lending, and other services use open banking prospects.
According to McKinsey, just 10% of open banking’s promise is realized. Nevertheless, this financial technology seems to be promising. Users are slowly starting to understand the benefits of dealing with open data since information interchange enhances scholarly investigation, software advancement, and enhancement of financial services.
Open banking and using APIs to share information securely will simplify, accelerate and drive greater transparency and “pull through” in purchasing or financing products, the movement of money, and other dealings. As a result, most of us can look forward to seeing lower loan rates and more often hear “yes” when sending out applications as lenders try to woo customers and apply better data sets to their credit modules.
– Greg Mitchell, First Tech Federal Credit Union
For instance, a loyal customer may decide not to change financial institutions due to the fact that the customers are happy with the work and stability of their lender.
Customer Loyalty
The bank is mostly conservative, and many of the digital services given by rivals have not yet been adopted.
- The client wishes to link analytics tools to financial data to analyze customer expenditure and spending patterns.
- The bank likes to keep its dependable clients.
- As a result, it gives the holder’s data to a third party that handles the analytics with an API. It is accomplished via the API.
The account holder benefits from regular reports on the balance, expenses, and savings, thanks to open banking.
The bank can give insurance companies, retailers, and other businesses access to the client’s finance and accounting through open APIs. For example, they must confirm the client’s solvency before implementing insurance, providing a loan, or allowing payment in installments.
Neobanking
The pandemic has told us that we can do anything from home, and the finance and accounting industry has also taken it seriously. As a result, FinTech has caused the growth of neo-banks. Neo banks seem like traditional banks but do not have any branch locations.
- Thus, Neo banks are armed with all the features of a traditional bank branch. Instead of traditional bank branch models, many new FinTech businesses focus solely on Neo banking. It is a win-win thing for companies and clients due to the cost reduction and ease of doing things.
- Neobanks are a type of fintech business that exists to reduce the cost of banking dealings. Compared to bigger banks, they often provide fewer service categories but focus on these categories to raise the quality of the said services.
The number of people with a minimum of one account with a neobank is said to reach a peak of 39.1 million by the year 2025, up from 20 million in 2020, according to Socialpod. At a period when remote work was essential for many businesses, instant transfers, quick registration, and IBAN and ACH accounts enabled completely online banking access is a significant advantage.
Socialpod report shows 48 percent of respondents prefer Bing. Over 13 million people have personal banking with Bing, one of the biggest neo-banks in the US. With their cell phone banking app, Bing makes access to money for any direct deposits made up to your bank account two days before.
RegTech (Regulatory technology)
Financial institution work is governed by rules, standard processes, and regulations that one must be aware of and adhere to. Businesses must maintain accounting and finance records, tax records, income reports, and customer files.
According to the timeframe, they deliver the needed paperwork to regulatory bodies. They verify the quality of the data and the activity’s legal status. Regulatory technologies can help in any situation.
RegTech is a kind of technology used to look at regulatory compliance. Regulatory technology shows problems that do not follow the laws and make them work with the system. For example, specialized software automates monotonous procedures, monitors data security, and alerts users and bank workers to fraud.
RegTech makes it simpler for organizations to communicate with their regulatory authorities so that data may be sent without interruption, compliance is monitored (for example, by adhering to PCI compliance rules), and financial crimes are tracked.
Artificial Intelligence and Machine Learning
The worldwide fintech AI market is expected to hit an astounding $26.67 billion by 2028 while maintaining a CAGR of 23.6% from 2021 to 2026. More than 90% of international fintech businesses depend extensively on Artificial Intelligence and machine learning.
By collecting and processing data about customers’ cash accounts, credit accounts, and investments, AI enables financial institutions to monitor their client’s financial health and offer them more relevant and individualized services.
Companies can use cognitive automation, engagement, data analysis, and insights capacities to improve smart banking services.
AI can:
- manage client data,
- offer suggestions on management strategies,
- catch human errors,
- and control banking quality.
Artificial Intelligence can also interact with clients directly via chatbots and self-learning apps.
UBS Group, one of the world’s most significant financial holdings, partnered with a Singapore-based fintech company that uses AI for banking assistants. As a result, UBS Group developed a premium service that allows VIP clients to get intelligent insights and forecasts about their revenue and expenses.
Robo-advisors
After the rise of artificial Intelligence, a lot of us may now benefit from computerized financial guidance. Robo-consultants and personal finance accountants use Artificial intelligence ideas to show investors the best ways to spend money.
These sorts of things are a disruptive force in the finance and accounting industry and are tremendously profitable.
Based on AI data analysis algorithms, Robo-advisers can:
- analyze massive volumes of data,
- adjust to a changing environment quicker than human advisors,
- present investors with the best investment alternatives to achieve their objectives.
They are particularly well-liked among rookie investors who need access to traditional counseling since alternative investing instruments have considerably decreased the entrance load for investors and allowed nearly anybody to generate money, even with little cash.
Decentralized Finance and accounting (DeFi)
Though connected with the digital currency market and alternative financial instruments, decentralized finance and accounting will be a new growing fintech trend in 2023.
DeFi uses self-executing smart contracts for all management and is open source, giving users more confidence. In addition, it now makes it smoother for multiple blockchains to mingle with one another, elevating the cryptocurrency finance and accounting industry to a great level open to a broader public. On the market, you will find a ton of DeFi things that can compete with centralized financial solutions.
