2023 Tech & Fintech predictions

Here are some of my predictions for developing trends in Fintech and the wider tech landscape in 2023.

Non-invasive enhancement projects in-fashion: By this I mean technology that can either be stood up as a standalone, or with a relatively straightforward, non-risky implementation. If ‘risk’ is the lens through which business examine their options in 2023, then technology vendors that can deliver business impact without the risk associated with multi-year transformation programmes will be winners. Multi-year transformations will be scrutinised very hard.

Vendor-led implementation: In the land of milk-and-honey that was 2021, vendors supplying more mission-critical technology (CRM, ERP, Core, front-end etc) had largely been able to avoid getting their hands dirty to protect those pure SaaS valuations, leaving implementations to third-parties. However, with the challenging economic backdrop I think client-side senior execs will increasingly demand vendors self-implement technologies and agree to success-linked commercial terms as a way of reducing risk profiles of larger IT transformation programmes.

Efficiency-driven purchasing: ‘Saving money’ has always been one of the main drivers behind tech purchasing, but in a year where top-line revenue is likely to shrink, more focus will be on managing costs than before. There are some categories likely to do particularly well in the coming 12-18 months. A great example of strong categories includes SaaS cost-management tools (e.g Vendr and Vertice ).

I also expect businesses that offer BPaaS models, which combine technology-led efficiency with human outsourcing to do well - anything with end-to-end delivery will be received positively.

Retail banking Super-app features become table-stakes : ? Revolut has become the standard in this regard, going as far as to recently announce their interest in entering the Mortgage market. Properly monetising day-to-day transactional accounts with cross-selling to more profitable financial products is a no-brainer. The incumbent banks have been a bit ‘lumbering’ on getting in on the action here, but it’s inevitable that embedding investments, savings and other financial products intelligently within daily banking apps will very quickly become where the bar is set. There are a number of strong emerging businesses in this space. Upvest is doing interesting things in investment, and Qover in the embedded insurance space is also one-to-watch.

Embedded finance: 2023 will be the year when this really begins to gather momentum behind the scenes. The Fintech industry has been banging on about this for 2-3 years now but has been very inwardly focussed. Having said that, toward the end of 2022 I saw the use-cases starting to mature and we saw big-plays from Vodeno and Natwest anteing up. An indicator that embedded finance will be coming of age this year? Finance at the point-of-need is very exciting for this Fingeek.

Fincrime growth is recession-proof : I've spent some time with regtech and fincrime businesses recently. On one hand it's scary how advanced the 'Bad Guys' are getting with themes like money-muling, social engineering and mission-impossible-like ID fraud. However, it's been reassuring to see the industry rise up to meet this challenge. It's clear that although crime never sleeps, neither do Fintechs best-and-brightest. This should make this a resilient segment in the tought market.

Down-rounds, fire-sales and consolidation: Probably the most obvious of my predications. As gravity returned and EBIT resumed it’s place as the defacto governing metric, many many businesses are going to struggle. For the last 5 years the incumbent providers will have feared the young innovative upstarts. However, now any business with a strong balance sheet will be well-placed to scoop up some bargains as some inevitably fall by the wayside.

Some areas of the vendor landscape have grown waaay faster than the market opportunity. This has resulted in too many players, competing for too small a pie, and unit economics pushed down to everyones detriment as a result. These are scale business models, without the necessary scale. I think they'll be a thinning of the pack in areas like Open Banking, BaaS and cross-border payments. The space will be better for everyone once theres more balance.

What are your predictions for 2023?