Financial Technology Trends to Look Out for in India This 2023
Financial technology (fintech) has made significant strides in recent years and emerged as a game-changer in India, significantly impacting how its banking and financial industry has operated.
This 2023 is expected to be a good year for fintech in India, with several emerging industry trends expected to present worthwhile investment opportunities.
The Trajectory of Fintech Development in India
The development of India’s fintech sector thus far can be characterized by challenges in integrating innovative technologies with traditional banking systems. However, due mainly to the ongoing efforts of the public and private sectors, the industry’s overall outlook has gradually improved year-on-year.
Sustained interest from public and private entities alike has driven nationwide fintech innovation. Thus, the fintech trends emerging in 2023 will carry beneficial applications encompassing several areas of society relevant to the Indian government, businesses, and citizens. The benefits provided by fintech will affect the short-and long-term future of India’s banking landscape.
Potential Fintech Trends in 2023
One of the foremost fintech trends for 2023 is the continued adoption of digital banking. Although the adoption of digital banking, like mobile wallets, e-money, and online payments, increased over the pandemic, further migration of other banking processes onto online channels is expected. This includes but is not limited to digital lending, personal finance management, insurance, etc.
Another trend likely to gain popularity in India is the application of blockchain technology, a concept that many became familiar with due to the emergence of cryptocurrency. Blockchain technology enables the digital storage of data, like e-money or currency, onto a series of blocks or categories via cryptography– a method of protecting information using codes.
Through blockchain, traditional banks can transform their systems and decentralize finance in India, which benefits users as blockchain transactions are more secure, faster, and efficient overall. The implications of blockchain will also affect how other industries operate, specifically in the retail sector and payments. In the coming years, blockchain should be an area of interest for the private sector.
These innovations suggest that fintech will be a driving force in facilitating long-term changes in banking. Specifically, neo-banking, commonly understood as online banks without physical branches, is expected to become commonplace in India’s financial landscape. Although neobanks can exist independently outside of any physical branch, they can also collaborate with existing traditional banks. Such setups benefit micro, small, and medium enterprises (MSMEs), as neo-banking will allow for increased accessibility and quicker turnover. Neo-banking could help sustain private sector growth, especially in India’s promising start-up economy.
Meanwhile, traditional banks will also seek to integrate fintech tools that help boost their productivity. For instance, artificial intelligence and machine learning can be utilized for financial functions, such as financial forecasting, automated investment, and advanced analytics that provide actionable insight into financial business decisions. However, it is essential to note that such fintech tools and systems must be used in addition to human expertise.
Introducing these fintech innovations will also call into question the safety of digital finance. As fintech continues transforming banking in India, the government and banking institutions will invest more in relevant areas, like cybersecurity and infrastructure, to ensure the utmost security of financial services. Overall, these measures will help bring regulation to fintech, which will inevitably contribute to its long-term viability in India.