Businesses worldwide have become accustomed to constantly adapting to changes due to pandemic outbreaks, war-induced energy crises, and crypto market crashes.
FREMONT, CA: This year has been difficult on multiple fronts. From a persistent pandemic breakout to a war-induced energy crisis and the crypto market crash, businesses worldwide must now continually adjust to changing circumstances.
How people live and interact with one another will continue to evolve in the future. Regarding the financial technology industry in 2023, the following are four fintech trends to watch.
Alternative Financing
After a three-year rampage, the Covid-19 virus has left its imprint on nearly every corner of the globe, wreaking havoc on local companies and economies with each unwelcome visit. Although most bank CEOs (79 percent) stated in a 2021 study that they did not lower the amount of capital committed to supporting trade, the global trade finance gap is constantly widening, and alternative financing is becoming increasingly important.
Alternative financing (or alternative finance) refers to nonbank institutions' provision of company funding. Some of them are not even loans.
For example, revenue-based financing (RBF) is an alternative to loans. RBF funding is repaid as a proportion of the company's monthly sales instead of in set installments on a predetermined timetable. Invoice factoring is a sort of alternative financing in which outstanding invoices are sold at a discount in exchange for quick cash.
The concept and practice of alternative financing have existed for some time, but they have only recently gained prominence because of the e-commerce and startup boom. This is because young or internet enterprises are frequently judged "high risk" by conventional bank lenders and denied funding.
Alternative financing is currently valued at $6.62 billion and is projected to increase at a CAGR of 6.3 percent between 2022 and 2028. This sector has a bright future. It is anticipated that alternative finance will play an ever-increasing role in supporting the business environment in the future as fintech companies try to increase financial inclusion across the board.
Environmental, Social, And Governance Initiatives
Environmental, social, and corporate governance, generally known as ESG, is a field that has attracted significant interest and large inflows of investment capital over the past few years. As the host of COP27 pledges to revitalize global efforts to tackle climate change this year, it is anticipated that investments in the ESG field will expand further. Global ESG assets will reach $53 trillion by 2025, representing over one-third of the total assets under management.
There have also been incubators developing ESG-focused fintech solutions for enterprises and organizations. For instance, the Monetary Authority of Singapore (MAS) has partnered with Google Cloud to develop the Point Carbon Zero Programme to promote climate-related fintech innovation throughout Asia.
Fintech companies with ESG mandates can enjoy the benefits of both worlds and be ideally positioned for quick and exponential growth by riding the waves of the most recent fintech trends while being socially responsible.
