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3 trends defining the digital transformation sector in 2023

iStock 1440530133 - Global Banking | Finance

572 - Global Banking | FinanceBy Anastasios Papadopoulos, Co-founder & CEO, IMS Digital Ventures

2022 has been a defining year for many, forcing organisations to audit their business operations and to face difficult decisions as to how they can navigate an uncertain market. Leaders have had to reconsider business priorities such as cutting costs and inefficiencies, determining most profitable revenue streams, and positioning themselves for future fundraising opportunities.

2023 will provide further challenges – and some defining opportunities.

Many of these opportunities are characterised by digital trends. Companies who are able to create efficiencies thanks to technological innovation, will be in a favourable position to outmanoeuvre their competitors and win future market share. Digital transformation unlocks opportunities for creating more comfortable margins in existing business streams as well as opportunities for new business-building.

Among the digital trends shaping future interactions between businesses and consumers, the rise of SaaS software, use cases for software, and advances in the cybersecurity and proptech space will prove defining for companies in 2023.

  1. SaaS market will continue its upward trajectory:

We predict that, despite the squeeze on company budgets, the SaaS market will continue to grow as smaller and medium sized companies increasingly recognise the power of investing in technology.

According to Statista, the SaaS market is expected to reach USD 208bn in 2023. With the recession unfolding, businesses will want to find ways to streamline their operations, automate processes and adapt to remote work, so we can anticipate seeing all in one and end to end solutions become increasingly popular.

Moreover, SaaS companies will look to maximise the productivity of their workforce. This means that they will help deliver better experiences to clients in an effort to retain customers and grow market share.

Companies who have previously been making do with juggling several systems will now look for ways to reduce tech costs while at the same time creating efficiencies. This will push them to revise how well they are allocating business spending and turn to all-in-one SaaS solutions. Interestingly, a recent survey of technology buyers across industries showed that while overall tech budgets weren’t expected to change, their tech-buying habits were, with a focus on consolidating vendors.

Ultimately, SaaS companies can help businesses win market share. They can do this by focusing on solution-driven marketing, case studies, securing industry leaders as clients, and launching ‘lighter’ versions of their subscriptions to attract smaller clients where appropriate.

  1. Blockchain goes beyond the hype:

The first half of this year saw a phenomenal interest in blockchain deals with even Google jumping on the bandwagon and investing USD 1.5 billion in blockchain companies. However, blockchain is more than a fad, it’s the future. Consumers and businesses are demanding more security and transparency.

We think that the Web3 landscape will begin to mature as entrepreneurs think beyond the hype and create sustainable business models that answer real industry needs such as transparency and security.

Blockchain addresses these explicit trust issues, and there are so many opportunities to change how business is done by addressing gaps in information, identity, security, and relationships through blockchain technology.

As Web3 technology becomes more mainstream, companies will need to protect against emerging cybersecurity threats. Additionally, as use cases of blockchain continue to rise, start-ups that can effectively integrate blockchain into their business model will be able to differentiate themselves from the crowd and win market share.

  1. More focus on real estate and cybersecurity sectors:

Technology in the real estate industry is catching up. According to industry figures, investment in proptech reached record levels during the first half of this year while a recent report revealed how real estate was the sector fastest to embrace new tech solutions over the next three years.

COVID and strained economic conditions, such as the recession and the cost-of-living crisis, have shone a light on the need for more efficiency across the property landscape.

Savvy real estate firms know that investing in technology might be the only way they can attract or retain top sales talent (after all, this is what their business model relies upon). Better tech = better chance of closing deals = happier agents = better for businesses’ bottom line.

In fact, according to  Kizen “the combination of increasing wages and labor shortages, coupled with the current downturn, has pushed firms to get more efficient, and firms want to get 15% to 30% more efficient when it comes to customer acquisition costs”.

Equally, Web3 is expected to become more influential in the year ahead in terms of how businesses protect personal data within the cybersecurity sector. Any industry that leverages web3 technologies will be increasingly concerned with cybersecurity risk. The evolution of web3 technologies makes security matters even more urgent. This trend does not apply to Fintech alone but can also be seen across all industries where emerging technologies are being integrated into day-to-day information sharing, relationships, and business models.

This year has also seen some high-profile security breaches including Samsung and Microsoft so businesses will have to show stronger commitment against cyber-attacks. On top of this, consumers will become more protective of their data and wary of how they are being tracked online.

These data breaches can cost on average USD 4.35 million globally and near USD10 million for US businesses according to an IBM report, with more companies now recognising the unquantifiable reputational risk these can bring.

This explains why cybersecurity will be one of the bigger line items in 2023 IT budgets. Additionally as the need for security rises, Web3 will become a valuable tool in the cyber landscape.

The Bottom Line:

Competing priorities between cutting costs and preserving opportunities for growth will mean difficult decisions for leaders. Companies should not just think about cost-cutting as a means of survival but about how to create additional revenue streams through new business-building to win market share and withstand the uncertainty 2023 brings.

Global Banking & Finance Review


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