Fintech Review 2023: A Year of Disruptive Innovation and Regulatory Shifts
As 2023 draws to a close, the fintech and banking sectors reflect on a transformative year marked by highs, lows, and groundbreaking moments. FinTech Futures, in collaboration with industry giants such as JP Morgan Chase, Citi, IBM, Nova Credit, and Arteria AI, takes a retrospective look at the evolution of fintech in the past year.
All in for AI:
Artificial intelligence (AI) emerged as the driving force behind transformative changes in financial services. With the ascent of generative AI (GenAI), applications expanded into credit decisioning, operational efficiency, risk management, and anti-fraud efforts. Arteria AI, a standout startup automating manual documentation processes, secured $30 million in a Series B round, heralding 2023 as a pivotal year for fintech.
Despite AI’s meteoric rise, challenges persisted, including macroeconomic factors impacting start-up growth. Shelby Austin, CEO of Arteria AI, emphasized the premium on strong fundamentals and tangible value. Noteworthy contributions came from IBM, which launched its AI and data platform Watsonx, accompanied by a $500 million venture fund for AI start-ups.
Regulatory support for AI, particularly GenAI, gained momentum, with IBM introducing the compliance toolkit, Watsonx.governance, aligning with the EU AI Act’s goal of ensuring safe, transparent, and non-discriminatory AI systems.
Instant Payments Revolution:
European efforts in 2023 focused on the seamless integration of payment systems, driving the realization of the SEPA Instant Payments system. Regulatory mandates requiring banks and payment service providers to offer instant payments gained approval in November, enhancing consumer and business access to instant payment benefits.
Parallel initiatives in the US, such as the Clearing House’s collaboration with the Federal Reserve for FedNow, marked a significant step towards instant payments. JP Morgan Payments led the way with a Tap to Pay on iPhone offering, reflecting the broader trend of modernizing payment rails to operate 24/7/365.
Globally, the appetite for instant payment capabilities persisted, with the South African Reserve Bank introducing PayShap, a real-time rapid payment platform. Partnerships, like MultiChoice’s collaboration with UK fintech Rapyd, expedited the system’s reach.
As we transition into 2024, the fintech landscape remains dynamic, with AI at its core, driving innovation and reshaping the future of financial services.