Fintech trends in turbulent 2023.

No one likes turbulent times in business. And with the downturn market, the fintech ecosystem has become uncertain.

I’ve been asked to talk about the trends in Fintech. I know this industry well. I’ve been active in it for the last 15 years.

Here are 6 observations.

1. Gone are the days with cheap financing. Fintech firms are switching strategies.

Fintech firms are going to rethink their strategies. From expansion to profitability. Reason? For long, fintech startups have received billions in funding and have prioritized expansion over profitability. But gone are the days with cheap financing. All smart investors know they must focus on sustainable business models that generate profits.

2. Competition in the fintech ecosystem is intensifying.

Competition is going to intensify. Especially in consumer banking and payments. Why? The fintech ecosystem is crowded and competitive. Fintech firms with weaker business models are disappearing. Market consolidation is also going to increase, as shown with Visa and Tink.

3. Fintech firms are moving from being disruptive to cooperation.

Cooperation (and interest in Open Banking) is going to grow. Why? Most fintech firms are largely operating on specific niches, as payments or credit. They are only a small part of the overall financial ecosystem. But they can bring innovative ideas and cutting-edge technology to banks and insurers to create new and improved financial products and services. A win-win situation?

4. The convergence on e-Commerce is continuing.

The on-going convergence on e-commerce is going to continue. With financial institutions likely to play a central role. Why? There is a strong demand for payment solutions. And Financial services are positioning themselves at the center of the consumer activity, by providing payment mechanisms to e-commerce platforms, mobile apps, and other digital platforms. This is Klarna‘s strategy.

5. Financial authorities’ attention to Fintech firms is going to increase.

Regulation will not disappear. Fintech firms are likely to face increased scrutiny from financial authorities. Reason? Fintech companies have operated in regulatory gray areas. As the fintech industry continues to grow and evolve, financial authorities have begun to pay closer attention to them in recent years. This is likely going to increase and might cause a shakeout.

6. Innovation will continue.

Innovation is going to continue. Driven by Artificial Intelligence and Blockchain. why? Artificial Intelligence and Blockchain are already playing a significant role and are expected to continue to drive innovation and transformation in the years to come. Example: Decentralized finance (DeFi), based on blockchain technology, a new and rapidly growing area of the fintech market.

Any other trends you see missing?

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About the Author

Didier Dessens

CRM and Digital Experience Advisory