What we can expect from fintech in 2023

By Eduardo Martinez Garcia, CEO and Co-Founder, Toqio


Following the trend of the past few years, 2022 proved itself to be another major year for fintech. Whilst embedded finance continues to be a hot topic, I believe B2B embedded finance will dominate in 2023.

The B2B embedded finance market is already worth billions and is expected to quintuple by the early 2030s. The number of startups offering embedded or in-house finance will increase substantially in the coming years. This will be next years big trend, with regtech and diversity also playing a big part in changing the landscape of the sector. Here are just some of my thoughts on what we can expect in fintech in 2023.

  1. Embedded finance will expand even further

The fintech space is becoming more mature. I see that there is going to be a broader adoption of fintech technology and products by large corporations. Bigger companies are seeing more clear use cases they can profit from. Similarly, we will also continue to see the expansion of embedded finance.

Traditionally, B2B has fallen behind B2C in terms of embedded transactions, but the space is set to explode and reach $2.6 trillion in transactions by 2026, and about $183 billion in revenue by 2027. Many of the reasons behind the massive acquisitions of neobanks are going to be the same driving forces behind the proliferation of B2B embedded finance. Companies are going to look for solutions that provide business users with an excellent, efficient experience within the scope of a corporate offering, and they’ll be looking for experts who leverage the right technology and partnerships.

It’s estimated that 96 percent of businesses will launch an embedded finance offering by 2026, and many of these will be FMCG companies, retailers, etc. This is all going to lead to market consolidation, where there will be more focus among fintech companies. These more specialised fintech companies will begin to serve clients outside the finance sector.

  1. Regtech will become a focal point in fintech

If a company is not legally compliant it cannot move forward with a fintech offering, making regtech the natural basis for all other fintech development. Although regtech is as developed as fintech, regulators simply haven’t been very rigorous in terms of enforcing compliance.

Eduardo Martinez Garcia

That’s one of the reasons compliance has been a trending topic over the last couple of years. Furthermore, even though incumbents are increasingly collaborating with fintech providers on new products, compliance efforts are still lacking in terms of digital capabilities. The 2023 Future Focus Report from TrustQuay found that just one in three fund service firms have digitised.

The acceleration in digital migration since 2020 is set to reach regtech in 2023, with record 2021 investment in new regtech ventures. And it’s not just a question of digitisation. Regtech will become more relevant than ever as regulatory bodies such as the UK’s FCA crackdown on financial crime and urge organisations to take on digital technologies to enable stronger, more efficient compliance.

We’re going to see major changes in the BaaS model as regulators begin to examine and control the agency model. That means we’re going to see an increase of BaaS providers begin to incorporate digital compliance solutions into their standard offerings.

  1. The return of the incumbents

Incumbent banks and financial institutions are going to become even more significant than they already are in the fintech space. They’re investing heavily in fintech companies and technologies and they’re not going anywhere.

Goldman Sachs, HSBC, BBVA, Natwest, and others are making moves in the open banking and BaaS space and will continue to in the future. Large, stable companies with diversified interests and a willingness to adapt to the new landscape are going to be sexy again. In fact, the bigger the downturn, the more attractive they’ll become. They probably won’t try to take over the space, they know they’re not agile enough, so look for mega-deals between market leaders.

  1. The fintech market will thin out

In the financial sector, institutions need to keep transforming their offerings digitally and expanding their services to remain competitive. Fintechs not only challenge traditional financial institutions with regard to products and processes, but they also tend to be more progressive in terms of human capital. Companies that are creative and diverse will take the lead to eke out a larger market share in 2023 and beyond.

Finding investment is becoming more difficult for startups and we have already begun to see some companies fold, with more to follow. The market will thin out and only those with a solid business plan, a secure client base, and bulletproof technology will be left standing.

Some companies might get bought out or merge with strategic partners, but one thing is for sure: the fintech space will be very different in a year, 2023 will be decisive for many companies and the fintech market as a whole.

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