2023 may be a very exciting year for the banking and financial sector. They are at the
crossroads of transitioning into bigger digital entities with better presence virtually. The
need for digital transformation may be several, like lowering costs, improving compliance,
etc., but 2023 will also be a year when banks and financial institutions will witness the
massive growth of strategic compliance for processes, people, and if possible, the banking
It is important for retail banks to have a clear idea of what they can expect in the coming
year and make plans accordingly. On this note, let us explore five top retail banking trends
and predictions for 2023 and how banks can keep up their competitive spirit in the holiday
Neobanks will continue their dominance
In 2023, we will see neobanks continue their dominant growth when compared to
traditional banking players.
Studies estimate that neobanks will exhibit nearly 53.4% CAGR every year presently.
However, established banks are now slowly realizing the need to perceive neobanks as
their allies and not competitors. This will result in more neobanks being developed and
deployed on top of the existing digital banking infrastructure of leading banks. It will lead
to consumers getting more accessible banking services via just their smartphones.
Countries like India will lead the world as more consumers are digitally savvy and there are
plenty of online financial and credit finances.
More internal processes and workflows that banks leverage for their daily functioning will
be automated in 2023. Automating areas like trade finance, bill settlements, orchestrated
payment options, etc. will ensure that there is uninterrupted service for end customers,
irrespective of whether they interact directly with the provider’s application. By starting
small initiatives and growing them progressively, we can ensure that there is minimal
The explosive growth of embedded finance
In the past, big-ticket purchases at appliance stores or auto dealers were financed through
banking points present within those stores or showrooms. This was the beginning of
embedded finance wherein financial services or products were sold as part of the customer
journey in a non-banking business. As we move into the new year, embedded financial
services will take a significant leap forward in not just high-spending avenues, but across
several digital and physical consumer services. Banks and financial institutions will
empower a range of businesses to transition into localized distribution points for their
credit services. From a local food delivery app allowing in-app payments to a clinic
specializing in hair transplantations offering attractive EMI options for patients, consumers
will be able to leverage credit facilities across several businesses that will be backed by
As more millennials and digitally savvy consumers begin to flock to markets, banks will
certainly need to upscale their services to meet new and dynamic needs. In 2023, a key
focus area in this regard will be the large-scale adoption of experience-driven banking
services. In simple terms, experience-driven banking refers to engaging customers by
providing not just a specific banking function but an experience that they will love to
return. This would require banks to have a very flexible technology stack and architecture
that empowers easy adaptability with 3rd party digital services.
Rise of BaaS
In addition to the concept of embedded finance we covered earlier, the widespread
adoption of Banking as a Service or BaaS will be witnessed in 2023. In the BaaS route,
banks only need to deal with delivering their banking infrastructure via a web access point
and 3rd party businesses can build innovative digital services around the banking
infrastructure. It can help in taking better and more attractive products to the market. BaaS
will be pivotal to the growth ambitions of several banks as they can leverage the rich
depository of customer data from 3rd party services and evaluate the creditworthiness of
potential customers to help win deals faster.
We already know that personalized experiences are key to success for any business,
including those in the banking and finance sector. But simple personalization hacks and
technology implementation is old school as there is a rapid adoption of AI and machine
learning-powered contextual personalization opportunities. In simple terms, contextual
personalization refers to a personalization initiative that aligns with the functional
perspective of the business.
In 2023, we will witness a deeper integration of banking and financial services with the
digital economy. However, banks and financial institutions need expert guidance in
selecting the right partners for extending services. In addition, they also need to have their
digital backbone built resiliently and reliably which would mandate the implementation of
advanced and emerging technologies like cloud, AI, etc. This is exactly what Verinite does
for your business. Get in touch with us to learn more.