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Forecasting 2023 fintech trends
We asked Wise’s Chief Technology Officer, Harsh Sinha to forecast fintech trends for 2023 and beyond. Here’s what he had to say:
1. What trends can we expect to continue or evolve?
For years, the fintech scene has been focused on rapid growth; opening new markets, onboarding new employees and investing heavily in customer adoption using venture capital (VC) funding. But with the economy taking a turn for the worse globally, the number of resources at fintechs’ fingertips have depleted, making it hard to focus on hyper-growth. Instead, we’re going to see fintechs push for profitability – focusing on activities that will secure the organisation for the long term. While a company might not achieve profitability within the first year, the focus will definitely be on getting there sooner rather than later.
2. Why is the sector experiencing high growth?
High growth in the fintech sector is ultimately underpinned by better online experiences. These experiences are driven by technology and lower operational costs, which in many cases means a streamlined experience and lower cost of delivery services. A commitment to continually bettering the user online experience is always going to ensure growth in the long road.
3. Why fintech?
Consumers have now started realising that their banks and other financial service providers, who have bundled too many offerings and cross subsidised products, are no longer serving their needs to the desired effect. A lot of the free services you get from your bank (like the teller depositing cash into your account) are being subsidised by the higher fees you’re paying elsewhere, such as on your mortgage repayments or foreign currency transactions. Consumers have realised that moving to a model where you can use a different specialist, or an app for specific problems, helps them get the best experience in that specific space. With the continued advancement of tech, consumers are now also able to get these services from the convenience of their phones – where they download an app and get a rich, easy to use focused experience; usually developed by a fintech company wholly focused on that specific problem.
4. What are the challenges and opportunities?
Many fintechs are still yet to figure out their unit economics and have relied on scaling by using VC funding. The challenge in this environment is around how to become profitable quickly, now that the economic tide has turned. Plenty of smaller fintechs who haven’t yet figured out how to build a self sustaining business will not survive the next two years. Those who will, are those who can double down and grow fast, picking up a large portion of the market.