Technological innovations in fintech are continuing to evolve, as we reach the halfway point of 2023. Gen Z is leading the way for fintech service adoption as physical cash continues to diminish, whilst digital wallets, robust blockchain offerings and super apps grow in popularity.
With the ever-evolving fintech space in mind, Lanistar CEO, Jeremy Baber, discusses the current trends leading the fintech revolution.
Commenting on this, Baber said: “European nations continue to drive towards a cashless society, for example in Norway, 95% of the population use mobile payment apps and fewer than 5% of point-of-sale transactions are now paid for by cash. The UK is expected to hit this mark by 2026, with just 17% relying on cash at present.
“Gen Z is bridging the gap between the digital and traditional economies, with older generations slowly recognising the convenience and flexibility digital technology payments can offer.”
All-in-one platforms for payments, messaging and shopping, better known as super apps, are on the rise, with a market value of $61B in 2022 and is expected to expand to $426B by 2030.
Baber continues: “The Asian financial market has benefitted from the introduction of ground-breaking platforms such as Alipay and WeChat. Elon Musk recently announced his plans to turn Twitter into a super app or, in his words, an everything app on the back of a recent rebrand, a first for the United States. Yet, super app creation and integration in Europe, North America, LATAM and Australasia has failed to materialise, meaning the potential for super apps, especially in the West, remains untapped.
“Super apps will aid enterprise fintech, enhance customer experience, generate diversified revenue streams, offer valuable data insights, streamline operations and reduce costs, with many drawn to super apps due to their proposed simplicity offering a convenient, seamless experience across various services.”
According to recent reports, the global fintech blockchain market is set to reach $43.1 billion by 2030, from $1.4 billion in 2022.
Baber said: “Fintech blockchain has been vital to business growth, providing a cost-effective solution for businesses by offering firms a new level of security and freedom, while optimising operations and improving their workflows and productivity.
“Many have been quick to adopt blockchain technology as transactions are stored publicly and do not require third parties to verify. Transactions are processed and validated immediately across all the nodes in the blockchain networks, improving efficiency and security as the blockchain ledger cannot be tampered with.”
As the appetite for frictionless payment services continues, the excitement surrounding embedded finance is thriving and pushing aside the conventional wisdom surrounding banks, with the market forecast to grow from US$54.3bn in 2022 to US$248.4bn by 2032. This continued growth will further accelerate a shift away from incumbent banks in the payments space.
Baber continued: “In 2023, embedded finance has given opportunities for big tech players with extensive reach and financial liquidity to make daring integration plays, as the number of fintech’s with banking licences playing in embedded finance continues to increase.”
AI is taking fintech by storm, with 90% of fintech companies already using solutions transforming the way fintech start-ups operate, from algorithmic trading and fraud detection to data analysis, and is expected to be valued at $49.43 billion by 2028.
Baber added: “AI solutions have been beneficial for the analysis of consumer behaviours on transaction histories and product purchases to draw a more precise client risk profile, and are anticipated to reduce the operational expenses of banks by 22%, by 2030.”
Baber concludes: “Traditional processes are diminishing year after year as fintech enhancement continues to shine, reducing unwanted friction across finance and banking. Consumers are becoming more aware of the benefits of financial technology, with the majority digitising with digital wallets and opting to pay on their devices.
“Physical cash use will disappear in the coming years as leading countries continue their drive towards cashless societies and older generations shy away from traditional payment methods. Organisations are enhancing their processes as they integrate fintech tools with early adopters continuing to reap the benefits. The trends outlined are improving fintech offerings removing unnecessary barriers by streamlining processes allowing for frictionless and streamlined services for users.”