The fintech industry is being affected by the deteriorating macroeconomic situation in Europe and even globally. We now see asset values decreasing and access to financing becoming increasingly challenging. This is due to the excessive post-COVID consumer demand and the ongoing battle against inflation that is weighing down on the economic growth in 2023.

But in the long run, European fintech companies should continue to grow in influence and importance to consumers and the economy. Keep reading to know more about the current state of the financial technology industry and what fintech trends we are looking out for in 2023.

The Current State of Fintech in Europe 

Financial technology is starting to have a direct and noticeable effect in the financial industry in Europe. Strong fintech companies are giving customers more options and ease when it comes to digital banking. In numerous European nations, the financial sector is already modernized. This is because of the competition they bring to non-digital banking systems. There is currently at least one fintech company among the top five major banks in each of the seven largest European nations by GDP. 

One of the things that consumers like most about fintech is that it adds value by giving better service at lower prices. For example, digital banking companies can charge just 10% of what traditional banks do. This computation is for foreign transfers and the final cost to the customer when trading stocks.

Fintech is acting as a catalyst for growth and innovative industry disruptor in the financial sector.

Fintech companies are well-positioned to adapt to a variety of emerging innovations. Examples of this are distributed ledger technology and embedded finance, thanks to their agility and speed. Fintech companies frequently introduce new offerings and services significantly relatively fast. They are also leaders in better client experience and lean banking procedures. Today, many of Europe's top banks rely on fintech partnerships in a variety of areas, including operations and payments.

3 Major European Fintech Trends

 No one could have expected how difficult 2022 would be for the world economy. Despite the difficulty we faced, the financial technology sector is still developing and expanding. To fulfill a consumer base that is getting more intelligent and demanding, there is still a ton of possibility and opportunity. And hence, it is crucial to consider the fintech trends that will act as motivating factors. Below are just some of the fintech trends our experts at Brightvision are looking out for in 2023.

1. AI Technology

 Banks are among the most profitable organizations embracing artificial intelligence. It is anticipated that the financial industry will continue implementing AI solution techniques in 2023. Automation of difficult processes is made possible by artificial intelligence (AI). Today, many of Europe's top banks rely on fintech partnerships in a variety of areas, including operations and payments.

Who has access to different financial services and how will also be more influenced by AI algorithms. In 2023, it is predicted that more AI technology will be widely used in the fintech sector. This technology can be used in making judgments about loan issuance, negotiation, and fraud detection.

2. Cross-Border and Contactless Payments Growth

Cross-border and contactless payments are becoming increasingly popular as global businesses expand. International transactions are becoming faster, safer, and more secure as technology advances. Companies can speed up payment processing while reducing fraud. Contactless payment systems have grown in popularity in recent years. They have allowed clients to make seamless purchases worldwide using just their phones.

This payment method is user-friendly and secure because of multifactor authentication. Cross-border and contactless payments will increase as governments accept a global digital economy. Cross-border and contactless transactions will remain popular in 2023 and beyond. This due to their security and global commerce capabilities.

3. Embedded Finance

Embedded finance is basically the incorporation of financial products or services into non-financial institutions' product lines. The embedded finance ecosystem is indeed very large. Its scope has been expanded to include related industries like payment processing and insurance. It encompasses financial services including banking, credit, and investment.

Buy now pay later (BNPL) is an area of embedded finance that is rapidly expanding across the board. With this payment method, customers can order goods now and pay for them later. Typically, this is done by breaking the total cost of the purchase into a number of installments that will be paid back over time.

Taking a Look at the Future of Fintech

To say 2022 has been a difficult year would be a stretch at best. Banks are currently preparing for even harsher economic conditions in 2023. This is due to the oil crisis that drove high levels of inflation and caused greater costs of living. Banks are finding ways to assist customers in coping with the increasing challenges of inflation. One way for banks to help is by digitalizing their services further which satisfies their customers' changing demands

Compared to their B2C equivalents, B2B company models are better protected from market volatility and less susceptible to mounting inflation and interest rates. As a result, there is possibly a dramatic rise in the number of banks working with third-party suppliers. This will result in unprecedented growth and investment in the B2B fintech market.

This year, forward-thinking banks will set themselves apart from their competitors. These companies will be able to predict changing consumer need and build better user experiences.