Looking Ahead: 2023 FinTech Predictions

With 2022 coming to a close, we’ve gathered the thoughts of a number of FinTech experts to share their predictions for the year ahead. Read on to find out what 2023 has in store for the FinTech sector.

Stephen Richardson, SVP, Financial Markets, Fireblocks

“Despite the current crypto market conditions, mainstream exploration of tokenized traditional assets and blockchain technologies will continue to accelerate. In 2022, we have already seen major banks and asset managers around the world launching or preparing to launch tokenized assets such as bonds, carbon credits, and private equity funds. Traditional finance views tokenization for its potential to increase transactional transparency, security, speed, traceability, and reduce costs. One major hurdle that financial institutions will face is the integration of wallet and blockchain technology into their existing infrastructures.

“Traditional finance will also continue to explore blockchain innovations such as decentralized finance to create greater efficiencies in the infrastructure. In fact, decentralized finance (DeFi) is seen by major financial institutions as a major growth area. One such example is the Bank of International Settlements (BIS) leveraging DeFi to test liquidity between banks through an automated market maker (AMM).”

Anita Szarek, CFO, Pleo

“Prior to the recession, the fintech market was one of the boom sectors in the European startup and tech ecosystem. But 2023 is shaping up to look slightly different. When it comes to technology, there will be greater consolidation of software – driving towards all-in-one solutions that can replace multiple tools and unify disparate data to provide a single consolidated view of business spend.

Automation and AI will also have a greater role to play – such as in minimising fraudulent expense reports by monitoring, tracking and approving expenses. Machine learning can also help maximise business efficiency via more accurate business forecasting. Beyond technology, trust will be a common theme over the next 12 months. People are feeling more vulnerable with their money than ever before – as illustrated by our recent report which exposed that 74% of employees are concerned they won’t get the money they spend for business purposes back. In 2023, trust, safety and security will be critical factors for the financial products that businesses deploy.

We are undoubtedly facing a difficult economic climate, but this kind of environment often produces innovation, bold ideas and solutions to new problems. Over the coming year, fintechs may have to adapt their business model from growing at all costs to growing efficiently in order to stay profitable in 2023.”

Silvia Mensdorff-Pouilly, SVP Banking & Payments Europe, FIS

“As digital native younger generations come of age and their spending power increases, their expectations for how they want to pay, bank, and invest are driving many businesses’ financial technology strategies for 2023. Our research shows the scale of demand for innovative financial experiences. In the next 12 months, over 70% of younger consumers say they plan to shop via social media, 67% plan to explore checkout free supermarkets, and despite its mixed reception in 2022, 64% of Gen Z shoppers plan to access the metaverse in 2023.

With this demand comes great opportunity. Advanced technology means that a range of financial services can be embedded into the places consumers choose to spend their time and money. Embedded finance is the invisible back-end technology that makes these modern payment experiences possible, and we expect embedded finance to explode in 2023.

However, it’s also important not to get complacent about embedded finance because its success depend on the ways in which it is applied. A potential pain point for consumers is having to wade through reams of offers when buying a plane ticket or renting a car online, for example.

To achieve a true embedded finance utopia, firms need to leverage the wealth of data they have, bearing in mind data privacy regulations, and apply artificial intelligence to ensure customers are presented with the most appropriate products and services for them, precisely at their point of need. But if embedded finance spirals into presenting more and more untailored offers to the consumer, then it will simply turn them off.

The industry is heading in the right direction, and we have the technology that is required to provide consumers with a much faster, smoother, and more intuitive user experience. From enabling the creation of ‘everything apps’ or VIP loyalty experiences based on NFTs, we will increasingly see embedded finance opening the door to brand new revenue streams in 2023, providing opportunities for banks, insurers, fintechs, and other financial service providers to meet consumers where they are now and in the future.”