With the rapid development of financial technology, several new trends are emerging that will likely have a significant impact on the future of this sector in the year 2023.
The financial services industry and its ecosystem have evolved, diversified, and grown more competitive over the last two years as a result of digital technologies that are upending traditional business models and specialized use cases.
Consumers and businesses have adopted digital banking and FinTech platforms as a result of the pandemic-driven push for digital adoption, 4G-capable handheld devices, faster and more pervasive internet access, and the push for a digital economy.
The rise of InsurTech (technology-driven insurance), digital lending (also known as “neo-banks”), and alternative investment platforms are all part of this expanding market.
With tech companies collaborating with insurance companies to bring innovations in products and the way they are distributed to customers, the pandemic has revolutionized the insurance industry. The insurance sector has changed from detecting and fixing problems to predicting and preventing them by utilizing AI, machine learning, deep learning, artificial neural networks, Blockchain technology, and IoT.
The companies are adjusting the premiums to make them more competitive by using data from all sources, including geo-location and activity tracker wearables. Through solutions like video and mobile options, intelligent bots, Robot Process Automation, and Natural Language Processing, InsurTech start up platforms also digitize claim processes.
Platforms for alternative investments
New-age customers and HNIs are using alternative investment platforms for wealth creation due to easier digital customer onboarding and affordable access to investment platforms. Customers are assisted in making informed decisions by the alternative investment solution ecosystem, which consists of data analytics providers, insights providers, B2B software solution providers, and online platforms, particularly in non-traditional areas like tokenized real estate, digital gold, startups, and non-fungible tokens (NFTs). Currently, banks and other financial institutions are looking into possible joint ventures with alternative platforms.
The digital lending ecosystem, which is filling the credit gap for low-income groups and small businesses in India by using tools like robotics, machine learning, and automated data analysis, is now at a turning point. Modernized with unified dashboards and analytics, digital lenders are now using a variety of ML-based models to optimize their products. Applications processing, applicant evaluation, screening, servicing, data collection, and analysis are all being automated end-to-end in the customer acquisition and onboarding processes
The “year of the chatbot” in banking
Bank executives will finally take action in 2023 after hearing about how disruptive AI will be in banking for a number of years from pundits and futurists. To speed up their digital transformation efforts, financial institutions must also invest in conversational AI, and many—credit unions in particular—seem prepared to do so. One in four credit unions stated in Cornerstone Advisors’ What’s Going on in Banking study that they intend to implement a chatbot in 2023. Banks will need more than just “chatbot” deployment in the years after 2023.
Financial institutions must use intelligent digital assistants to meet the demand for better digital service and engagement (IDAs). What distinguishes an IDA from a chatbot: Chatbots are rule-based systems that can answer common questions while carrying out routine tasks. With complete natural language understanding capabilities, easier deployment and onboarding, and a higher level, more sophisticated conversation capability, IDAs can support a wider range of use cases.
With digitalization and FinTech paving the way for underserved people to get access to financial services, financial education will be the next step in the FinTech revolution. This will help customers select the best financial services, which will improve the population’s overall financial health. It will also result in the development of hyper-personalized products.