One of the new financial services trends 2023 ushered in with a bang is the idea of striving towards a “higher bottom line.”
The concept behind the higher bottom line is simple: To make business decisions that benefit both earnings and society, while recognizing that the two are positively linked. And it’s an idea that’s directing the future of finance industry players in a few particularly interesting ways.
What is a “higher bottom line,” and how are financial services trends changing how we do business?
Revenue and profit are unarguably important, but many companies, particularly those that offer financial services, have the opportunity to enact positive social change, too. By aspiring to this higher bottom line, they can achieve the ultimate goal — strong profits and a better world. Or at least better service, access, and tools for those who need them most.
It won’t always come naturally, but if these companies seize their opportunity to do both, the whole country stands to benefit. And that’s what makes this, and similarly positive financial services industry trends, 2023’s most exciting sector developments.
How are accounting and finance companies embracing these new financial services trends? Read on to learn how technology is shifting how these companies approach revenue, access, and innovation.
4 higher bottom line technology trends in financial services worth watching this year
Financial Services Trend #1: Expanding access to the services we need most
One of the biggest recent trends in financial services takes access far beyond mobile banking. As financial companies make services like investment management, financial planning, insurance, capital raising, and accounting more accessible to individuals and small business owners, both parties will benefit.
According to a report by McKinsey & Company, expanding access to financial services can increase the GDP in the United States by as much as 6% before 2028. Much of that growth would come from greater investments and consumption of these services.
By leaning into the financial services trends that make these products simpler and more user-friendly, the industry can access a vast audience of low- to middle-income individuals who don’t currently utilize these services — increasing industry revenue and improving financial health in these underserved communities. And this is one of several digital transformation trends in financial services aimed at increasing inclusivity and accessibility for all.
Financial Services Trend #2: Decreasing costs and friction
Financial technology trends that aim to decentralize financial services and increase affordability are already gaining momentum, as evidenced by the recent boom in fintech (financial technology companies). Services like contactless payments, person-to-person payments, credit access, and thousands of other niche financial services gained widespread popularity during the pandemic. One report from Vantage Market Research states that the fintech market is already valued at $112.5 billion and is expected to nearly triple to $332.5 billion by 2028—underscoring just how important affordability is to the future of finance industry companies.
Remittance payments are one significant example of how technology trends in financial services are increasing affordability. When remittances (money sent from workers in the U.S. to their family members overseas) are sent using the traditional banking channels, individuals pay 10%-20% in fees. Now, using fintech services, the cost to send money overseas has decreased significantly and is even free in some regions. Of the current trends in finance industry technology, this may be one of the most widely impactful.
Financial Services Trend #3: Greater access to credit and capital
Another of the financial services trends benefitting bottom lines and society as a whole is improving access to funding.
For entrepreneurs, small businesses, homebuyers, and students, accessing funding has always been challenging. Previous financial technology trends and industry developments have largely catered to major corporations, big businesses, brokerages, and wealthy investors. But as the financial services industry evolves, funding for smaller projects is becoming more accessible — enabling a greater number of individuals to build their own wealth along the way.
Digital transformation trends in financial services now allow these companies to offer customized funding opportunities to a wider audience, while helping them closely monitor their risk. The underwriting and funding approvals process, formerly a time-consuming manual one, can now be done in seconds using data and algorithms. As a result, these companies can offer more assistance to more consumers without taking on too much risk. Unlike the destabilizing credit issued in the financial crisis of 2008, today’s companies can maintain their stability, manage their risk, and still provide much-needed funding to a wide range of individuals and small businesses. Of all the current trends in finance industry development, this trend may offer the greatest long-term benefits, by empowering people across the country to buy a home, start a business, go to college, and more.
Financial Services Trend #4: Rebuilding trust
While not directly related to technology, another of the recent trends in financial services involves rebuilding the trust lost during the financial crisis of 2008. That national recession eroded society’s trust in the finance and accounting sectors. But by practicing transparency, better managing their risk, and using a more stable business model, these sectors can rebuild that trust.
A sound financial system is crucial for healthy, growing economies. And a strong economy is essential to the success of financial services companies. It only makes sense that these companies can improve society and strengthen their bottom line by engaging in responsible innovation. If financial services companies are willing to include multiple stakeholders in their planning and decision-making, including consumer advocates, they can ensure their products and services strengthen communities and generate profit, while earning significant trust in the process.
Recent trends in financial services spotlight the dual role of companies in fostering social betterment without compromising profitability. As we navigate through these trends in financial services, 2023 has shown us that by balancing bottom lines with societal benefit, we can achieve meaningful change without sacrificing profit or growth.