Here are some forecasts for the coming year, including topics as diverse as tribal banking, virtual cards, and cryptocurrency payments.
Improvements in blockchain technology and other forms of digital currency have ushered in novel forms of interaction between merchants and customers.
As customers become more tech-savvy, they are more likely to adopt and experiment with novel payment methods like crypto, virtual cards, and “buy now, pay later,” and the underlying technology that enable these methods.
Financial Forecasts To Know In 2023
These are some forecasts for the financial technology and cryptocurrency industries for the coming year:
Cryptocurrency: A Regular Payment Method
Many crypto investors likely lost millions in 2022 as the value of most cryptocurrencies plummeted. Experts, however, anticipate that this won’t dampen consumers’ enthusiasm for using the tech as a payment method beyond the year 2023.
In fact, contrary predictions are made by specialists. As more and more businesses recognise the benefits of accepting cryptocurrency payments, they anticipate the widespread adoption of this method of payment.
This movement has the support of major corporations like Mastercard and Google. For example, Mastercard is working on a strategy to enable cryptocurrency payments “daily” by connecting the Paxos cryptocurrency trading platform (which PayPal uses) with major financial institutions.
Mastercard will take care of any major hurdles, including financials and regulatory compliance.
Coinbase and Google have formed a partnership so that, starting in 2023, consumers can pay for some Google Cloud Services with cryptocurrency.
Searches for the phrase “pay with crypto” have increased by 136% since 2017, and now that major corporations like Google are getting on board, we expect many more financial institutions to follow suit by the year 2023.
Revolution Of Virtual Cards
In recent years, online banking has become increasingly popular, marking a huge shift in the financial technology industry. Especially among millennials and Gen Zers, who are more comfortable doing all of their financial transactions online and taking note of their budgets with a mobile app, neo-banks like Revolut, Monzo, and N26 have been gaining traction.
Virtual cards, which are being heralded as the era of financial spending, are gaining in popularity in tandem with the rise of online banking.
Virtual cards are leading a change in the way businesses handle their spending. Virtual cards are becoming more widespread because of the increased protection they provide against unauthorised usage by parties like hackers and fraudsters.
Google Trends shows that interest in Revolut has grown by 143% since 2017, while interest in the term “virtual card” has grown by a staggering 2160% in the same time frame.
Experts attribute some of this to the ease with which virtual cards allow corporations to track the money their employees spend on company business.
Having a separate card for each employee makes it easy to track who is spending how much. Everyone on the team will be able to keep their spending within their allotted budget if the funds are divided up beforehand.
Buy Now Pay Later 2.0
The term ‘buy now, pay later’ (BNPL) has emerged as a hot topic for 2022, although it has also been criticised for encouraging impulsive spending.
A number of services now provide the ability to divide payments, but Klarna was one of the first European names in the BNPL market.
Deliveroo, a meal delivery app, partnered with Klarna in October 2022 to offer a “eat now, pay later” option, prompting some to question whether or not BNPL had pushed too far.
Many BNPL services allow for interest-free installments, which has kept the feature in the spotlight, especially among the younger generations of consumers (Gen Z and Millennials).
Experts predict that as the BNPL industry grows, so too will the regulatory focus on it; this is especially true in the United Kingdom, where new legislation is expected to mandate lenders perform affordability checks before making loans.
Regulation of “buy now, pay later” advertising will also start to ensure that consumers are not misled.
Similarly, the financial marketing guidelines for BNPL are changing to make sure advertisements are not confusing to consumers, whose searches have increased by 130% since 2017.
Contactless Wearables To Lead The Queue
Contactless wearables, such as watches, bracelets, and rings, are becoming increasingly popular, and this trend is expected to continue growing in 2023.
Wearable technology will provide a quick and convenient alternative to paying with cards, cellphones, and, of course, cash as the web of things becomes more pervasive in our daily lives.
The Apple Watch, with its revolutionary ability to process payments simply tapping the device into a reader, kicked off this movement. Experts also report an increase in interest in smart rings, with searches for this technology increasing by 180% around the world.
We anticipate this tendency will accelerate in 2023, and as a result, fintech businesses will utilise these interconnected gadgets more frequently to learn about their customers and make better selections.
The Emergence Of Consumer “Digital Tribes”
Last but not least, the idea of a “digital tribe” is seen as another key trend that is expected to grow in popularity in the year 2023. The phrase is used to refer to groups of people that interact online and share a common interest, such as a sports team or television series.
Companies will start interacting with these online communities to build stronger bonds with their customers and ultimately increase sales. As a result, businesses will begin offering their own banking services targeted towards the communities with which they have established ties.
The Bottom Line
Key motivators include the widespread use of global payment platforms and the development of open banking.
The growth of digital payment systems and financial transfers is being encouraged by the quickly shifting worldwide consumer and retailer trends.
Because individuals have not been included, because they do not feel understood, and because they are not open to dialogue, members of various communities have historically felt unwelcome in legacy banks.
Sooner or later, members of these communities will start looking for a bank that makes them feel welcome and included.
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