Goodbye 2022, Hello 2023

What does as a payment/fintech/embedded finance geek do on the last days before Christmas? They reflect on the past year and look forward to the upcoming opportunities. I think we all can agree that 2022 was an interesting period for our industry (to say the least). While it begin with a pink cloud above our heads, it become clear that there were some thunderstorms on the horizon.?

Now…what to do? To reference one of the greatest business philosophers of all times, Jim Rohn, “It is the set of the sails, not the direction of the wind that determines which way we will go”. Currently, the wind is not blowing in favor of the industry but only the smart, creative, and persistent will be able to tether the proverbial sails. It is not by accepting the current situation, but by adapting together that winners are created.

Instead of joining the movement of fear and uncertainty, I want to draw the focus on the opportunities that are lying ahead of us in 2023. I may be in the minority, the but the greatest growth is that in times of crisis. If you’ve seen the movie “Our Brand is Crisis” with Sandra Bullock and Billy Bob Thornton you’ll understand how an entrepreneurial spirit coupled with persistence and creativity leads to results. This is the sign of the times.

But what exactly are the opportunities that lay ahead of us? I don’t have a crystal ball, but my conversations with industry peers brought the following ideas to light:

-???????The?global ISO20022 migration?creates new opportunities in data monetization and cross border payments. It will provide richer data to enable improved fraud detection and better cash positioning. Also, aligning key payment infrastructure in banks including Target2, EBA Clearing and SWIFT will drastically decrease the total cost of ownership. It will create major benefits for corporates with standardized formats and processes for payment reporting and exception handling messages that facilitate end-to-end automation across the corporate banking ecosystem – from invoicing and liquidity management to exception handling and reconciliation. The global implementation of ISO20022 is only a start; the real business cases will follow the initial implementation.

-???????Non-financial services organizations will continue searching for new income sources and see?the opportunity of embedded finance. The question is: will these corporates offer embedded products with fintechs or traditional banks? Banks have now a huge opportunity to take their share of the embedded finance industry as they have the relationship with corporates and they have the base products available. Their only challenge is offering these services in a fintech way. The advantage for the traditional banks is that the talent from fintechs from recent downsizing efforts will become available and banks can offer them a stable and long-term engagement.?

-???????Automation of back-office processes?will become key in cost optimization. A significant amount of profit can be made by turning to intelligent operations across areas specific to banking, including payments, lending, credit, capital markets, compliance, and core banking. The use of Artificial Intelligence, automated orchestration, business intelligence and big data will be key factors for banks to achieve this cost optimization and automation for these processes.

What surprised me is the absence of crypto in 2023 activity, which can be connected to the current market situation. I can happily disclose that my crypto wallet as of this week is less than 50% valued compared with the initial figure but cannot make any other professional statements on the future of its market relevance. Now, I think we need to make distinction between the crypto (coins) market and CBDC’s. For example, the Digital Euro initiative is gaining momentum and early next year the next phase in the introduction of this Digital Euro will be initiated. We are far from a launch, but the activities show the willingness to expedite this effort in the coming years. Activity in other regions also underpins this initiative.?

I had a very interesting discussion with Leda Glyptis on Endava’s #PaymentTalks about the same subject. The result you can see on?https://okt.to/WDrPjM.

In summary, I am not the visionary who predicts how our industry will look like in 12 to 18 months. I see myself as a geek with 25 years of experience in an industry that was very different to what it is now. Payments was boring at the start of my career, became sexy in the last 5 years and now must find its middle ground. I am curious to see how the next 12 months will evolve and who will become the rising stars of this exciting world.

On personal level, I am also very excited to start a new chapter in my career as global head of sales in a payments solution company in January 2023. As they have and the experience of innovation, they are positioned to become one of the leaders in our industry. I’ll disclose more at the start of of the new year???

In the meantime, I wish you all a Happy Christmas, a good end of 2022 and a great start of 2023!

Peter Theunis