# 2023 Finance Predictions 
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-12-12
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: 2023 Banking Trends: Switching, Globalisation, BNPL
Meta Description: Stay informed on banking trends like increased switching, global fraud risks, and the ongoing battle between big banks and fintechs in the BNPL space.
URL: https://financedigest.com/2023-finance-predictionshtml

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_![](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/681-1736814730794-compressed.jpg)_

_By **Venkatesh Varadarajan,** Partner, Financial Services, Infosys Consulting_

**Banking on a switch**

The switching [trend will continue into 2023 as consumers search around for better deals](https://www.financedigest.com/volkswagen-strikes-below-inflation-wage-deal-continues-german-trend.html "Volkswagen strikes below-inflation wage deal, continues German trend") amidst a difficult economic situation. Banks are in wait-and-watch mode right now. They are passing additional costs on to consumers, effectively bumping up [interest rates](https://www.financedigest.com/ecbs-centeno-says-interest-rate-close-to-peaking-if-no-new-shocks.html "ECB’s Centeno says interest rate close to peaking if no new shocks") in the sentiment that these will increase even further next year. It’s unlikely they will go head-to-head with each other and [offer aggressive rates](https://www.financedigest.com/credit-suisse-offers-higher-deposit-rates-in-asia-to-woo-the-wealthy-sources.html "Credit Suisse offers higher deposit rates in Asia to woo the wealthy – sources"), due to ongoing market uncertainties. We’ve already seen them take stock, withdraw offers and [hike up mortgage rates](https://www.financedigest.com/bank-of-england-set-to-hike-to-4-as-rate-peak-looms.html "Bank of England set to hike to 4% as rate peak looms"). High rates will remain well into next year, and at least until the market situation stabilises further.

**Globalisation of [banking will increase fraud](https://www.financedigest.com/why-financial-services-firms-are-banking-on-behavioural-biometrics-to-beat-fraud.html "Why financial services firms are banking on behavioural biometrics to beat fraud") risk**

The globalisation of [banking is opening finance](https://www.financedigest.com/why-finance-professionals-must-bank-on-a-journey-to-the-cloud.html "Why finance professionals must bank on a journey to the cloud") up to a whole variety of new fraud situations. Increasingly, consumers can move [finances online between standalone bank](https://www.financedigest.com/the-transformative-power-of-technology-in-banking-and-finance.html "The Transformative Power of Technology in Banking and Finance") accounts in different countries, but this heightens the risk of money laundering and financial crime. In 2023, we’ll see more [banks attempt to combat this by adopting tools that enable the earlier detection of suspicious activity in transactions](https://www.financedigest.com/igtb-launch-digital-transaction-banking-available-as-saas.html "iGTB launch Digital Transaction Banking available as SaaS"). AI and machine learning tools have already seen a lot of traction post-Covid and during the economic [bounce back](https://www.financedigest.com/biotech-stocks-pin-bounce-back-hopes-on-ma-boost.html "Biotech stocks pin bounce back hopes on M&A boost"). However, adoption will become more widespread as banks look to conduct data-backed sense checks which can identify causes and ensure the [detection of fraud](https://www.financedigest.com/harnessing-ai-and-machine-learning-for-fraud-detection-in-trade-finance.html "Harnessing AI and machine learning for fraud detection in trade finance") much earlier in the lifecycle.

Both [banks and insurance](https://www.financedigest.com/swiss-regulator-monitoring-banks-and-insurers-after-svb-collapse.html "Swiss regulator monitoring banks and insurers after SVB collapse") firms will continue to beef up operational, security and technology remediation activities to better identify potential risks. This means more audits of various processes, including legacy [technology and disaster recovery](https://www.financedigest.com/the-role-of-technology-in-post-pandemic-recovery.html "The role of technology in post-pandemic recovery"). As threats increasingly target these business-critical areas post-Covid, we’ll see more programmes being driven under direct guidance from leadership, and teams bolstered by SMEs and external support.

**A tussle over Buy Now Pay Later**

[Buy Now Pay Later](https://www.financedigest.com/the-pros-and-cons-of-buy-now-pay-later.html "The Pros and Cons of Buy Now Pay Later") (BNPL) is here to stay. It’s cemented itself as a new [payment method](https://www.financedigest.com/freelancer-payments-methods-what-you-should-know.html "Freelancer Payments Methods: What You Should Know"), offering a flexible, faster way for consumers to purchase items. In the past year, we’ve seen UK banks like NatWest, HSBC, Monzo and Virgin Money [all launch BNPL products](https://www.ft.com/content/69917e3e-311e-48c4-b806-01e8e537ef27), to increase appeal amongst younger customers where demand for the service is high. In 2023, we’ll see the bigger players move from strength to strength in this area, buoyed by consumers typically gravitating towards more established banks during economic uncertainty.

This isn’t to say smaller players like Klarna will suffer. In 2023, we can [expect the tussle between the two sides to continue](https://www.financedigest.com/synechron-continues-to-shine-with-expected-record-revenue-growth-of-28-amounting-to-405m-in-the-financial-year-2016-17.html "Synechron continues to shine with expected record revenue growth of 28% amounting to 5m in the financial year 2016-17"). As the [cost-of-living crisis](https://www.financedigest.com/british-shoppers-defy-cost-of-living-crisis-at-christmas.html "British shoppers defy cost-of-living crisis at Christmas") continues, a key challenge is ensuring consumers don’t overspend and fall into debt. Bigger [banks have an upper hand as they can access rich customer](https://www.financedigest.com/christmas-debt-hangovers-how-banks-can-help-customers.html "CHRISTMAS DEBT HANGOVERS: HOW BANKS CAN HELP CUSTOMERS") data based on multiple transactions, credit cards and mortgages. On the other hand, fintechs like Klarna and Clearpay are far nimbler and quicker at mining this information. Both sides will need to better utilise these capabilities, as it’s likely more regulation will be introduced in 2023 requiring firms to check customers can afford to use their products.

**All eyes will be on the Metaverse**

The Metaverse is still a relatively small market, but it’ll grow substantially over the next decade—forecasts suggest by [almost 40% yearly between 2022 and 2030](https://www.globaldata.com/store/report/metaverse-market-analysis/#:~:text=According%20to%20GlobalData%20estimates%2C%20the,39.8%25%20from%202022%20to%202030.). A lot of [banks are already using the metaverse](https://www.financedigest.com/what-is-the-future-of-banking-in-the-metaverse.html "What is the future of banking in the metaverse?") for training purposes, but it has huge potential to enhance the customer experience and excite customers to bank and shop for new products. Virtual banking is a growing space and can help keep banking costs down, reducing the need for physical space and enabling branch optimisation.

Big tech is already placing large stakes in this, and the intersection of tech and [financial services](https://www.financedigest.com/boom-or-bust-how-the-financial-services-sector-is-coping.html " Boom or Bust: how the financial services sector is coping") will accelerate over the next few years. Major players like Meta, Apple, and Amazon all have a deep [understanding of customer behaviour](https://www.financedigest.com/changing-face-b2b-business-practices-understanding-timeless-behaviour-important-ever.html "The changing face of B2B business practices – why understanding timeless behaviour is more important than ever."). They will use this data to wire up [consumers in various ways and financial](https://www.financedigest.com/credit-agricole-beats-estimates-on-insurance-consumer-finance.html "Credit Agricole beats estimates on insurance, consumer finance") services are a critical component of this.

In terms of regulation, it’ll be smaller rules coming in that impact other channels, rather than big-ticket ones that we see in [capital markets or investment banking](https://www.financedigest.com/austrian-regulator-orders-system-relevant-banks-to-up-capital-buffers.html "Austrian regulator orders system-relevant banks to up capital buffers"). Like we’ve seen with certain sets of regulations introduced off the back of branch openings, then contact centres, then the internet and most recently mobile banking, the metaverse will be the next stage in this process as we look to virtual banks.

**Younger generations gain momentum in capital markets**

Capital markets [activity will continue to grow despite](https://www.financedigest.com/asias-factory-activity-contracts-despite-chinas-covid-reopening.html "Asia’s factory activity contracts despite China’s COVID reopening") market volatility as more consumers invest in stocks and Isas. Previously, the [customer base in capital markets](https://www.financedigest.com/the-cervical-total-disc-replacement-market-to-grow-based-on-customized-digitization.html "The Cervical Total Disc Replacement Market to grow based on customized digitization") was very institutional in nature. However, the pendulum has swung, especially [towards younger generations](https://www.financedigest.com/gen-z-significantly-prefers-user-generated-content-older-millennials-lean-toward-streaming-inmobi-insights-survey-shows.html "Gen Z Significantly Prefers User-Generated Content, Older Millennials Lean Toward Streaming, InMobi Insights Survey Shows"), thanks to the accessibility and ease of stocks and shares platforms online and consumers sitting on more savings from lockdown which they are willing to invest.

These platforms have not only increased awareness and knowledge around investing, but low or zero fees charged have made it far easier to [invest smaller sums of money](https://www.financedigest.com/six-tips-for-saving-money-and-investing-wisely.html "Six Tips For Saving Money And Investing Wisely"). We’ll see momentum with capital markets activity continuing into 2023 and beyond as younger consumers look to grow their investments in the long term.


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