Banking and Payments Predictions in 2023 - Thematic Intelligence
Description
Banking and Payments Predictions in 2023 - Thematic Intelligence
Summary
This report identifies the key themes that will impact the banking and payments space in 2023. For each theme, we offer a series of predictions, identify winners and losers, and suggest further reading.
2023 will test the economic and technological underpinnings of all direct-to-consumer and B2B propositions in banking, payments, and wealth management. With far less venture capital (VC) money sloshing around the sector, investors will expect far shorter, more direct paths to profitability. Incumbent banks will be under pressure to limit non-performing loans, while re-defining, to some extent, what ESG care-abouts-from investors and consumers-mean amid a cost-of-living crisis. A distressed fintech sector will present highly favorable M&A opportunities for incumbents looking for a step change in capabilities and a blueprint for a new operating model. Those new entrants that are highly focused on consumer pain, whether in money management, lending, or financial exclusion, will rapidly grow market share given difficult ongoing economic conditions.
Scope
Summary
This report identifies the key themes that will impact the banking and payments space in 2023. For each theme, we offer a series of predictions, identify winners and losers, and suggest further reading.
2023 will test the economic and technological underpinnings of all direct-to-consumer and B2B propositions in banking, payments, and wealth management. With far less venture capital (VC) money sloshing around the sector, investors will expect far shorter, more direct paths to profitability. Incumbent banks will be under pressure to limit non-performing loans, while re-defining, to some extent, what ESG care-abouts-from investors and consumers-mean amid a cost-of-living crisis. A distressed fintech sector will present highly favorable M&A opportunities for incumbents looking for a step change in capabilities and a blueprint for a new operating model. Those new entrants that are highly focused on consumer pain, whether in money management, lending, or financial exclusion, will rapidly grow market share given difficult ongoing economic conditions.
Scope
- Success in AI will require judicious investments in related areas, such as cloud and robotic process automation, to harvest the transformational potential of AI across all dimensions of the customer experience.
- Millennials and Generation Z are the key demographic for mobile-first investing and robo-advice, which is seen by many new entrants as a launching pad for a lifelong wealth relationship. However, this will continue to be a very difficult market for new entrants.
- The most successful mobile payment systems in 2023 and beyond will be those that utilize the versatility of a mobile P2P or mobile commerce system to achieve omnichannel reach, as services in Asia-Pacific have already done.
- Understand the most disruptive themes in banking for 2023.
- Access key predictions per theme to help guide strategy and tech decisions at your institution.
- Understand which individual firms are best placed to “win” or “lose” amid predicted thematic impacts.
Table of Contents
53 Pages
- Executive Summary
- Artificial Intelligence
- AI has wide-ranging applications in banking, payments, and wealth management
- Biometrics and cybersecurity
- Social media style interfaces
- More dynamic risk assessment
- AI-enabled automation
- Winners and losers
- Further reading
- Conversational Platforms
- Customer-facing bots for triage and queue management
- Reliance on chatbots will bring added risk for distressed consumers
- Chatbots will support multi-channel and super-app engagement
- New digital banks will be divided by who bets on bots
- Winners and losers
- Further reading
- Cloud
- A continued increase in cloud spending across 2023
- Large tier-one banks will continue with their case-by-case legacy renewal
- Explosion in software as a service (SaaS)
- Winners and losers
- Further reading
- Cybersecurity
- Incumbent banks are losing the argument on online security
- Cybersecurity tech spend will grow
- The diversity and severity of cyber attacks will increase
- Winners and losers
- Further reading
- Financial Wellbeing
- The economic environment will heighten the focus on financial wellbeing
- Wellbeing will form part of the antidote to disintermediation
- Wellbeing for SMEs
- Winners and losers
- Further reading
- Robo-Advice
- Digital investing will increase but robots will not be the primary beneficiaries
- Robo growth will be harder
- Robo M&A activity will heat up
- Winners and losers
- Further reading
- Social Media
- New entrants will exploit the networking power of social media
- The direct entry of social media giants will continue
- Winners and losers
- Further reading
- Generation Hashtag
- Openness to non-traditional providers will increase further
- Generation Hashtag will drive mobile-first investing
- Generation Hashtag will drive alternative payments
- Winners and losers
- Further reading
- Digital Banking
- Challengers will look at physical presence to expand market potential
- It will get (economically) challenging for the challengers
- Value-based digital banks will continue but struggle
- Winners and losers
- Further reading
- Environmental, Social, and Governance (ESG)
- Voluntary initiatives will be challenged by economic austerities
- ESG will prove incompatible with ‘customer centricity’
- Social considerations will displace environmental imperatives
- Winners and losers
- Further reading
- SME Banking
- SMEs will face existential challenges
- SME digital banks will outperform consumer-only focused peers
- SMEs will increase in number and need support
- Winners and losers
- Further reading
- Mobile Payments
- M-commerce and P2P exist in mobile payments
- Mobile payments will explode in 2023
- Winners and losers
- Further reading
- Instant Payments
- Instant or real-time payments are due for rapid growth in 2023
- Instant payments growth will be fueled by multiple benefits
- Instant payments will support financial inclusion
- Winners and losers
- Further reading
- Online Payments
- Ecommerce will keep growing in 2023
- Mobile commerce will become the biggest part of ecommerce
- Online payments will see rapid M&A to keep pace
- Winners
- Further reading
- Data Privacy
- Social media super-apps will be on a collision course with data privacy
- Privacy-enhancing technologies will mitigate privacy trade-offs
- Winners and losers
- Further reading
- Open Banking
- Open banking is on the brink of next-level adoption
- Open banking drives most disruption through second-round effects
- Winners and losers
- Further reading
- User Experience
- New entrants will continue to offer superior UX
- UX will not create a moat—just a paragon to copy
- UX will not translate into revenue
- Winners and losers
- Further reading
- Digital Lending
- New entrants will focus more on lending
- Incumbents will embrace SaaS delivery to expedite capability
- Embedded lending will explode
- Winners and losers
- Further reading
- Strategic Partnerships
- Strategic partnerships will be about embedded delivery
- Partnership with disaggregate value chains
- Partnerships will increase agility and broader functionality
- Winners and losers
- Further reading
- Blockchain
- Central bank investment in digital currencies
- Continued investment from leading incumbent banks
- Inflation and cost of living will reduce crypto speculation
- Winners and losers
- Further reading
- Glossary
- Further Reading
- GlobalData reports
- Our thematic research methodology
- About GlobalData
- Contact Us
- List of Tables
- Table 1: Glossary
- Table 2: GlobalData reports
- List of Figures
- Figure 1: Worldwide consumers are broadly satisfied with chatbots in banking
- Figure 2: The majority of banks globally have increased cloud spend, nearly a quarter increasing significantly
- Figure 3: Incumbent banks are failing to convince on cybersecurity vis-à-vis new entrants
- Figure 4: Wellbeing is a multidimensional concept
- Figure 5: Digital investing has risen across the world since 2019 by 7%
- Figure 6: The networking power of social media has increased exponentially
- Figure 7: Generation Hashtag exhibits a variety of different provider and behavior preferences
- Figure 8: Physical presence is becoming more, not less, important to consumers
- Figure 9: ESG has already fallen down the agenda for 2023 strategic priorities
- Figure 10: New SME-focused digital banks already have a 20% of primary SME account relationships
- Figure 11: Mobile commerce transaction value to grow at a CACR of 19.9% between 2021 and 2025
- Figure 12: Global instant payments are focused on continued growth
- Figure 13: Global ecommerce will keep growing across 2023
- Figure 14: The social media business model relies on harvesting customer data to target ads
- Figure 15: The UK will continue to lead in open banking across 2023
- Figure 16: Incumbent banks are managing to close the ‘experience’ gap vis-à-vis new entrants
- Figure 17: Consumers in multiple markets are open to digital lending through branches remains critical
- Figure 18: Strategic partnerships will flourish around the intersection of BaaS and Embedded finance
- Figure 19: Developing nations and Asian countries are leading the adoption of digital currencies
- Figure 20: Our five-step approach for generating a sector scorecard
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