If there is one sector that is constantly changing it is finance and it certainly seems like the pace of change has increased over the last few years.
This means that if you are wanting finance for your business it is important to understand what the trends are, what is new in the market and what will be helpful for you.
So as we kick onto 2023 we thought we’d have a scout around and see if we could work out what the trends will be in the coming year.
The TL;DR;
● AI decisioning
● More alternatives
● Embedded finance
● SaaS
● More troubles for Crypto
● New uses for blockchain
● Resurgence of the personal touch
More alternatives
If there is one buzz phrase that has caught on over the last 12 months it has to be alt-finance, the snappy moniker for the alternative finance sector.
Alt-finance has been a real growth area over the last few years and it is a growth rate that we don’t see slowing down any time soon.
Alt-finance has appeared for good reason and it is the same reason we set up Rocking Horse; Traditional banks just weren’t looking after their customers.
We don’t see any signs of that changing and we think that this will simply embolden alt-finance companies and widen the scope of services available.
AI decisioning
Whether it is Chatgpt writing webpages (not this one though!), AI-bots taking support queries or the latest AI-driven chess grandmaster, Artificial Intelligence is, it seems, here to stay.
To a large extent, automated decisioning and underwriting has been with us for quite a while but that has largely been within the realms of human-written algorithms.
What we’ll start to see more and more are decisions made by AI which will learn from the results of its previous actions.
There are some serious points that will have to be overcome though with GDPR and FCA regulation being among the first hurdles.
However we predict that 2023 will start to see much more reliable bots in place in the financial sector and with their flexibility and open mindset, alt-finance companies will lead the way.
Embedded finance
Embedded finance has been a real winner over the last year or two and as the technology evolves we’ll start to see this roll out to ever-wider applications.
Embedded finance turns up when you get to the checkout of your favourite online auction or clothes store. It pops up and asks if you’d like to spread your payments over a number of months.
At the moment it is largely confined to the B2C retail sector but we think we will see this toll out to ever-larger transactions and make real inroads into the B2B arena too.
SaaS
Software as a Service platforms have been a massive growth area for software businesses and it is unusual nowadays to buy a system that is not SaaS.
We think that alternative lenders may well start to use a similar approach with an all-in-one platform with a variety of different alt-finance offerings that the business owner can pick and choose and use as and when they need it.
Think Compare the Market but with instant, pre-approved decisions and one platform to choose, apply and manage your finance product
More troubles for Crypto
People have been telling us that crypto would take over the world for a long time and, whilst it has certainly made inroads, crypto still has a long way to go before the shining star of the alt-finance scene becomes mainstream.
The May crash certainly didn’t help and with Hodlnet being investigated for fraud and disappearing companies like Phoenix Community Capital we can see that there are choppy waters ahead.
New uses for blockchain
Despite what we have said above about crypto, Blockchain will go from strength to strength.
But don’t confuse the technology with what it is ultimately used for. Crypto is simply one high-profile use for Blockchain but there are many others.
Distributed Ledgers or blockchains have a myriad of uses and can help with the development of alt-finance products, loan management and security.
The next 12 months will see a lot of embryonic companies hit the market with innovative and creative uses of blockchain that will provide yet more impetus for change.
Resurgence of the personal touch
We’ve spoken a lot about technology and AI but we think that there is still a place for the personal touch and that place will grow rather than shrink.
It’s a sales trope to say that “people buy from people” but it is true and never more so than in the finance sector.
Where the alt-finance sector will always be able to compete with behemoth high street banks is in its customer focus and service-based approach.
You only need to look at the rise of platforms like Etsy to see that consumers like to buy from people and think that they are getting something that is unique and special for them.
Businesses are no different and if the alt-finance sector has one advantage over bigger finance houses it is that they are flexible in their approach.
Being able to move right away from the “computer says no” attitude and to really understand and serve their customers will win alt finance companies a lot of friends this year.
There will be surprises
Who could have predicted in January last year that Russia would invade Ukraine or that within twelve months we wouldn’t be able to get tomatoes in UK shops?
The alt-finance market is vibrant, creative and unpredictable so we ‘confidently’ predict that there will be surprises!
Without a doubt there will be winners and losers that we don’t expect so watch this space – it is going to be a very interesting year.
Want your own slice of alt finance?
Here at Rocking Horse, we have developed our own speedy, flexible and innovative financial product that helps businesses access their R&D tax credit cash super-quick.
If you have ongoing research or are developing new products then give us a call and let us show you how we can boost your cashflow.
