Well, 2022 has been an interesting year, to put it mildly. Contactless lifestyle, remote working, and decline after a glorious rise (funding and valuation have dramatically dropped) are just top-of-the-mind descriptors of the past year for the FinTech industry.

Nonetheless, the future looks promising for the FinTech players. Yes, funding did become relatively lower – but that’s natural after its sky-rocketing growth. Yes, some big FinTechs had to cut their expenses and let go of part of their employees – show us an industry where this doesn’t happen.

After all, the future IS digital. And FinTech is all about making that digital future as comfortable and risk-free as possible. Let’s check what trends will be shaping up the industry in 2023 and then meet at the end of the year and see how right our “crystal ball” was.

1. The Rise of Banking-As-A-Service and Embedded Finance

One thing you can say about today’s consumers is that they know exactly what they want. They will no longer stick with providers just out of loyalty or because their grandparents used this bank, for example. “If you don’t have a good offer for me, I’ll find it elsewhere.”

In this continuous marathon for the client’s attention and satisfaction, BaaS comes as a lighthouse in the open sea, enabling the integration of non-banking businesses with the regulated financial structure. The result? Tailored, out-of-the-box dynamic solutions. The scenarios are different but always efficient.

And while all this magic is happening in the background, the end customer is enjoying the countless possibilities of Embedded Finance. The connection between these two – BaaS and Embedded Finance will only strengthen throughout 2023, especially with Open Finance taking over the MENA region and PSD3 knocking at the EU’s door. From Card-as-a-Service, Data-as-a-Service, and Onboarding-as-a-Service to Embedded Banking, Embedded Insurance, and Embedded Payments – the future is now, and APIs are the DJs playing the soundtrack to all that’s happening on the stage.

2. Enhanced Financial Inclusion

Financial Inclusion – now, where did we hear that before?... Oh yes, everywhere! It is one of the favourite buzzwords worldwide and, the good thing about it is that it’s more than just a trend. It’s something people and businesses all over the world believe in more and more. Just look at the last decade: over 1.2 billion unbanked people have gained access to financial services. This wouldn’t have been possible without innovations and FinTechs wisely using them to scale up their offering to worldwide levels.

According to the World Bank, almost 2 billion unbanked people are still waiting for financial services to become available. Therefore, 2023 seems just the right year to intensify investments in boosting financial inclusion.

3. The reinvention of Buy Now Pay Later

BNPL came out storming the market some time ago and consumers felt so happy to get an alternative solution to buying (almost) everything they want and paying for it later. There are currently over 360 million BNPL users worldwide, with Gen Z being its biggest fans. Moreover, it is predicted that the BNPL adoption rate among Zoomers will increase to almost 50% by 2025.

However, 2022 has proven that it’s not all that “pink and fluffy” when it comes to BNPL. After all, the popular acronym is just a different word for a loan but comes with less regulation and standards.

2023 is set to change that and bring more protection for BNPL consumers, whilst also focusing on educating people on what it means and involves. Moreover, while some businesses have already moved away from BNPL, other big names are only beginning to tackle the concept and give it a special twist. Take Apple for example, with its Apple Pay Later option, bolstered by Goldman Sachs.

In other words, small companies will keep on enriching their BNPL business model with new features in 2023, aiming to maintain their profitability, while the heavy-weighted brands will play around with it to support their broader business offer.

BNPL will not die, as many have previously assumed. It has just become mature enough to deserve the regulator’s attention. And that is a good thing.

Long story short: FinTech will keep blooming, mostly revolving around user experience and adaptability to new regulations. Of course, making predictions at this point, in a turbulent reality, is somewhat difficult. But based on what’s been going on for the past 12-24 months, this is the direction that FinTech will be moving towards in 2023. Let’s wait and see!

Meanwhile, if you need any help embracing Open Finance, drop us a line here.