What trends will we see for fintech and payments in 2023?
It is predicted that by 2024, the number of people who own a smartphone will surpass 7 billion. Unsurprisingly, the payments industry continues to flourish, with an estimated £5.3bn sent to low and middle income countries this year.
The world is sending more money digitally than ever before, but how will this impact remittance and payments services in 2023?
And how will the global cost of living crisis, rising energy and food prices and political uncertainty play into daily sending and spending?
Karen Jordaan, head of UK at global remittance company WorldRemit, shares her predictions for the year ahead.
Customers will become even more sensitive to exchange rates.
Money senders are becoming more and more financially-savvy and conscious of foreign exchange rates out of necessity.
Due to political and economic turbulence, the UK witnessed the pound exchange rate fluctuate drastically. As a result, more of us are brushing up on the world of FX, and paying extra attention to markets, which influences when money is sent abroad to get the best deal possible. In other words, we’re all looking for the most bang for our buck.
Quicker, easier, safer: the rise in demand for open banking
Hundreds of payment apps are waiting at our fingertips. From ordering food, to booking a taxi or sending money to a friend, the ones we use most all have the same things in common: speed, security and convenience.
Customers want to jump through as few hoops as possible before making a transaction. Here’s where open banking comes into play, which will continue to grow in 2023. This simply means speeding up the payments process by sharing financial information via your bank with the app instead of filling out numerous forms. Payments providers can connect directly to their customers’ bank to let them approve payments via online or mobile banking.
The result is a seamless, speedy user experience, which payments companies are rolling out in order to keep up with increasingly time-poor customers.
Global payments providers will play a greater role for good
During times of crisis, people send money to help family, friends and those who need it urgently. We may start to see more companies show support by reducing or waiving their fees for payments sent to countries affected by disasters relating to climate change and other global events.
For example, last summer’s Pakistan floods left around 33 million people displaced. In response, WorldRemit removed its fees and donated £5 for every transaction over £100 to the country. For those who find themselves needing to send money to people impacted by these disasters, it will become commonplace to find and opt for money transfer providers who offer convenience, value and will play a bigger role in helping the people impacted to recover.
Remittance payments will take priority over savings and investments
Many are waiting with baited breath to learn the outcome of January’s energy bills. And with Christmas 2022’s overall cost reaching an average of 65% more than 2021, this is a time of significant spending and sending.
This year, the cost of living crisis resulted in a change of behaviour for Brits who regularly use money transfer services. For instance, almost a third (30%) started declining social gatherings or occasions, and over half (55%) went out to eat less to save money.
When the first bills come through in 2023, we could be seeing even more people declining invitations, cooking at home, and finding more ways to save in order to keep up with their remittance obligations, as well as daily costs of living.
