As the global economic climate continues to be affected by recessions and cost-of-living crises, with the ongoing war in Ukraine causing supply chain issues, mass resignations and redundancies being seen globally, and increasing Covid outbreaks, the fintech landscape for 2023 is looking to be a picture of complexity.
However, despite the challenging times, there are still huge opportunities within the finance industry for those companies taking a sustainable growth approach. As we enter 2023, it’s time to consider some of the trends that fintech firms and finance professionals from the wider industry must be aware of to ensure meaningful success is achieved in the year ahead.
Redefining value during a recession
The importance of recognising and understanding ‘value’ from a financial perspective will still be key going forward. This year, more than ever as the recession takes a firmer grip, finance teams are going to sharpen and refine their knowledge around the principles of cash management and help colleagues in the wider business by democratising this knowledge.
Included in the knowledge sharing is the understanding that fat is always distributed unequally in businesses, and a surgical approach to spending cuts is required. Some areas of the business will need investment, and some spending cuts — it’s about focusing on the things that work well and losing the things that don’t.
As digital transformation and the AI revolution continues to spread through companies and across different industries, the shift in the mindset of finance teams to identify value, not just in a company’s finances but also in its people, its network, and its technology, has already begun.
The trend will continue to evolve as the definition of value itself is adapted to current times. As cultural aspects of the workplace become a high focus in the minds of both employer and employee, we will start to see an overlap between HR departments and Diversity, Equity and Inclusion initiatives.
This is something that should excite fintech companies. Digital transformation is creating greater data maturity and technological know-how, and the redefining of value can help shape the way workplaces embrace new ways of working. Think maximising opportunities for cross-departmental collaboration and supporting the new roles that will emerge with increased accessibility and education around data.
Automation and embedded finance
Historically, banks and card schemes (traditional banking) have dominated the finance industry thanks to an abundance of customers, ownership of payment networks, and access to clearing houses. Since the digital disruption of the landscape, however, new technology has reinvented the payment stack; creating a modernised infrastructure and offering customers a more streamlined service.
In the year ahead, financial functionality and features will become further embedded in other software services to provide an end-to-end experience for customers. But what does this look like? Take a digital pharmacy for example. The software used for the online health service can integrate financial services such as accounting, payments, invoicing and expense management into the pharmacy’s internal systems. This relieves the pharmacy’s employees of repetitive and time-consuming manual finance tasks, and also avoids the need to bring in other parties or services to carry out these tasks on their behalf.
Businesses will increasingly optimise their systems and internal processes towards agility, to empower their employees and offer a greater level of freedom and responsibility. Invoice automation and end-to-end supplier payments that relieve businesses from long, burdensome processes by streamlining invoicing — while providing full control and visibility — is a prime example of this kind of agility.
From digital transformation to workplace culture transformation
There are other ways in which the workplace is evolving. The emergence of remote and flexible working — on a larger scale at least — is a by-product of the COVID-19 pandemic. When considering their career path, potential employees are rating remote or hybrid working arrangements as an essential part of the decision-making process. No longer are these arrangements deemed a perk of a job — it’s now a necessity. And so begins the onset of workplace culture transformation.
This transformation has never been more evident (or evidenced) than in the current research conducted by not-for-profit community 4 Day Week Global, around the adoption of a four-day working week. The pilot programme has already revealed interesting data regarding the effect of reduced working hours/days on employees.
Initial reports from the programme suggest that 63% of businesses found it easier to attract and retain talent when adopting a four-day working week. Unsurprisingly, this meant 78% of those employees said they felt happier and less stressed.
In addition to recent fintech redundancies, there is also a struggle to attract the right talent. An exercise that has become expensive both in time and money, finding and recruiting the right people has inevitably led to fintech businesses focusing on flexible working arrangements, especially if long-term staff retention is a key objective.
Admittedly, automation and embedded finance might be more commonplace than a global roll out of a four-day working week, but if there is one industry that is well placed to embrace such new ideas and innovations, it’s fintech.