In the ever-changing financial technology sector, companies are bracing themselves for a bumper year

Financial technology, or fintech, exploded last year with a record level of investment.

In 2021, around $130 billion was invested into the fintech sector.

Nigel Green is the chief executive officer and founder at the deVere Group, which is one of the world’s largest independent financial advisory firms.

“Against a backdrop of slowing economic growth around the world, supply chain issues, red-hot inflation and the subsequent interest rate hikes, the environment has been more challenging,” he said.

Fintech companies have redefined how financial services are delivered.

Mr Green has several key tips for investors to keep an eye on in 2023.

Traditional banks will shift across

Traditional banks are set to play catch up this year as regulatory requirements and technology pushes them into a new era.

“Two reasons: first, millennials as they are the fastest-growing cohort of clients; and second, because they are becoming the beneficiaries of the Greatest Transfer of Wealth in history,” Mr Green said.

Around $68 trillion in wealth is expected be passed down from baby boomer generation, who are among the wealthiest ever.

Millennials have grown up on technology and are typically influenced by the surge new developments.

“Against this backdrop, they seemingly became comfortable using fintech to help them access, manage and use their money rather than using a traditional bank,” Mr Green said.

In addition, 92 per cent of millennials distrust banks and view them as an unreliable source of information.

Brace for greater regulatory scrutiny

Global watchdogs are preparing to push for increased consumer protection.

“This will come about as fintech services are increasingly embedded within non-regulated entities,” Mr Green said.

He said there will be a specific focus on accountability and transparency.

Data become even more important

2023 will be the year of data, with a key focus on modern methods to collect, analyse and use the data in real-time.

These opportunities will seek to differentiate client-based propositions.

Asia is where it’s at

It is hardly a surprise, but Mr Green believes Asia will continue to be at the forefront of innovation in the fintech sector.

“We attribute this to several key factors. These include a proactive approach to innovation by regulators; the plethora of virtual banks; the development of the wider tech ecosystem, especially application programming interfaces (API); and the influx of Chinese financial and tech giants into the sector,” he said.

2023 welcomes a world of opportunity, and fintech companies are on the forefront of revolutionising consumer experience and demands.

Even as the world nears the brink of recession, Green said “we expect fintech investment will continue to build momentum in 2023.”