Innovation is rampant in the fintech sector, to the extent that every year brings new tools and techniques to help businesses, individuals, governments, and more advance and improve their financial strategies. As 2022 is drawing to a close, many invested in the development of the fintech industry are eager to learn what the New Year will bring — and experts in the field have delivered the following predictions of rising trends.
BNPL: Buy Now Pay Later
Buy Now Pay Later, or BNPL is a fintech service that makes it easier for consumers to acquire items through online shopping. Simply put, BNPL is an installment loan that divides purchases into multiple equal payments. Fintech service providers will automatically bill a customer’s debit or credit card for remaining payments until the purchase is paid in full. Almost all BNPL plans come with interest and fees, like typical loans, though the amount will vary depending on the service provider.
Though BNPL has been available in limited capacities online for more than a decade, the service has received a significant amount of pushback from critics, who believed that offering loan options on any online purchase promotes consumerism to a dangerous degree and risks putting everyday people into financial strife.
However, more and more online retailers are beginning to offer BNPL options to customers, who are beginning to utilize the service with greater frequency. In the economic slowdown after the global pandemic, many consumers are coming to rely on BNPL as a means of retaining their purchasing power. Fintech organizations might consider how they can integrate BNPL into their POS offerings, and they may also consider promoting BNPL services through loyalty perks.
Compliance Through Regtech
The traditional finance industry is among the most heavily regulated industries as governments strive to keep consumers financially safe. Fintech companies have been required to comply with some existing regulations, and recently, regulatory bodies have worked to develop new regulations that apply specifically to fintech operations. The result is that fintech organizations need to be more diligent about maintaining compliance — so many have turned to regtech.
Regtech, or regulatory technology, is a sector within the fintech industry that focuses on building digital tools for managing compliance. Such tools function by monitoring key business practices, analyzing data, and creating reports, which business leaders can use to modify practices to ensure compliance. Regtech can make it easier for fintech professionals to avoid fines and other sanctions, so more fintech providers are likely to rely on regtech tools in the coming years.
Long a popular method of gathering financial resources, crowdfunding is often used by entrepreneurs in the initial stages of business development. Early adopters can support the products, services, and initiatives they believe in through small or large contributions to crowdfunding campaigns, which may reward donors with more information about the organization, exclusive merchandise, early releases, and more. However, a new type of crowdfunding called regulation crowdfunding allows companies to sell securities, which could be even more lucrative to entrepreneurs and early adopters alike.
Regulation Crowdfunding provides all the benefits of crowdfunding to businesses with additional benefits to investors. Fintech entrepreneurs can raise up to $1 million through increments as small as $100 from backers who are likely to be more invested in company success than traditional financiers, like venture capitalists. Though not every regulation crowdfunding campaign is destined to succeed, fintech business leaders might consider this a feasible option for raising funding in the future.
Embedded Digital Fingerprinting
Accurate identification has long plagued fintech, as the anonymous nature of the internet makes it difficult for online lenders and other digital financial service providers to verify an individual’s true identity. Efficiency and effectiveness in identification are essential for analyzing loan applications and preventing financial fraud and scams. Enter: digital fingerprinting.
The term “digital fingerprinting” applies to many different practices, but in the realm of fintech, it refers to technology that helps to identify individual users through unique device information and settings. Coupling digital fingerprinting technology with other identification tools could help fintech companies automate customer interactions and eliminate the possibility of online fraud.
By no means are these the only trends shaping the fintech industry in 2023. Business leaders eager to learn more about the present and future of fintech should enroll in online fintech courses from one of the world’s most prestigious universities. With the right education, leaders can make the best decisions to lead their organizations to success.
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