By Prince Osuagwu, Hi-Tech Editor

In recent years, the financial business ecosystem has experienced a significant transformation, particularly with regard to payment solutions. Between 2021 and 2022, the payments industry fuelled a greater level of industry consolidation and attracted more tech-savvy ecosystem players.

Merchants learnt to incorporate newer and easier ways to reach and engage customers through digitally-powered storefronts; people traded with various types of crypto currencies as an alternative way to enjoy financial freedom and hedge their funds against economic instability.

However, in 2022 there was a sharp economic downturn, including hyperinflation, and a spike in the cost of living, making the payment ecosystem face challenges.

But in an encounter with Abimbola Odedeyi, Country Manager Unlimint,  a payment processing services provider, the sector appears to have opportunities to look up this 2023. She gave reasons why it has to be so.

Digital assets’ll drive impacts

As is already common knowledge, the payment solutions market will continue to see significant growth in 2023 thanks to the relevance of crypto currencies and other digital assets. Most significantly, there will be more regulation and more trust in digital currencies as a legitimate payment alternative. This is because crypto currency has established a huge significance in user applications and adoptions. In light of this, more countries will adopt or test the use of Central Bank Digital Currencies.

To ensure user safety, more private exchanges will take extra precautions to protect their clients and seek to operate in a regulated environment, thereby increasing trust in Crypto as a long-term payment solution. As crypto currency becomes more regulated, the likelihood of the trust factor improving is high and we envisage more traditional retail channels offering it as an alternative payment method in addition to the existing traditional payment methods.

Decentralised Finance‘ll gain ground

The growing popularity of fiat-to-crypto and crypto-to-fiat services such as GateFi makes it much easier for new customers to enter the DeFi world. Central banks’plans to issue a tokenized non-cash currency based on blockchain technology may serve as another incentive to popularize DeFi. Stablecoins issued by regulated organizations can partially replace private decentralized stablecoins and cryptocurrencies in DeFi, which should increase trust in DeFi among new users and institutional investors alike.

AI ‘ll become more of anti-fraud tool

Solving risk management and fraud in finance has been a significant concern for many payment solution organizations around the world, and we predict that this will become even more apparent in the coming year. Competitive pressures and the benefits of AI optimization are driving business processes, and in some cases entire industries, to rely more heavily on AI. Companies are devoting more resources to developing, procuring, or acquiring AI tools and strategies to meet this demand. This is further underpinned by other external risk management factors that influence the Fintech ecosystem such as the diverse geopolitical realities across the globe, the heterogeneity of regulatory requirements across different markets, the emergence of new barriers to the flow of funds, as well as the innovation of new fraudulent measures by cybercriminals. As a result of all of these, it is reasonable to anticipate an emerging trend of the use of artificial intelligence technologies as financial protection and risk management tools in the coming year.

The Superapp Boom

Africa is seeing continued growth in digital services and super apps and we anticipate that this sector will continue to expand in the upcoming year. Financial institutions want to centralize their applications around their customers’ digital needs.

These days, the banking applications of conventional financial institutions and other neo-banks are characterized by a plethora of supplemental features made to cater to the demands of customers, whether those needs are directly or indirectly related to the management or usage of their cash.

There are other businesses that provide these Superapp services, and Revolut, a financial application that enables you to manage investments, buy insurance, and book hotels, is just one shining example. Numerous Nigerian banks have also been successful in incorporating a lifestyle arch into their standard mobile banking applications.

Banking as a Service, BaaS

This typically implies that payment institutions offer brands, businesses and companies access to their regulated products, often, through Application Programming Interface (API) models. The institutions will continue to embed financial products into their end-user offerings. The Use-Cases for this can be as small as the issuance of a virtual card solution to as big as building the next FinTech giant. APIs offer flexibility to businesses looking to embed financial products and they reduce unnecessary friction as any digital company can offer this service without the rigmarole that regulations bring.

It’s interesting to note that during the past year, searches on Google for terms like “digital banking,” and “FinTech” have surged tenfold, along with the number of companies providing BaaS. As a result, it can be concluded that Banking as a Service is undoubtedly here to stay and will significantly influence payment solutions.

Overall, we are optimistic about the potential of the payment solutions market; we envision a time when using digital payments is quick, easy, and frictionless for everyone. The payment industry has remained at the forefront of innovation and will continue to do so as long as user protection and transparency remain top priorities.