My Annual Predictions for the New Year

As we prepare for the arrival of a new year, I am delighted that we have returned to a more normal operating environment after managing through extraordinary circumstances. Our physical and virtual worlds have converged, digital payments became mainstream, and innovative technology helped businesses deliver frictionless, omnichannel experiences their customers demand. The new normal looks a lot like the old normal –?but more digitized. So what’s next??

In 2023, I’m anticipating a return to practicality in which businesses focus on technologies that add clear and immediate bottom line benefits: accelerated digitization of B2B payments, the need for value added real time payment solutions in the US, further blending of our physical and digital lives, and a broader realism that values technology for its ability to solve real pain points.?

B2B payments accelerate

The timing couldn’t be more perfect for digital solutions to revolutionize the world of? B2B payments. Businesses are struggling to hire and retain workers who typically perform manual payment tasks; work-from-home trends make it inconvenient to keep up with snail mail invoicing, mail-out AR and AP functions; companies are actively looking for technologies that have direct bottom line benefits; and there are new technology solutions that address these concerns.

Yet few technology providers enable end-to-end B2B solutions for both AP and AR challenges. Those that bring these solutions together seamlessly, offering a one-stop-shop for B2B browsing will be far ahead of their competitors.

Real time payments are finally upon us (almost)

Increased attention and investment around real-time payment technologies, such as the FedNow Service that will launch in 2023, points to a growing realization that how businesses move money today is slow, costly and susceptible to fraud.?

Open banking regulations in Europe – and the innovation that has followed – also suggests room for further development in the US, the largest payments market globally.??

As open-banking and other real-time payment options develop, there will be exciting opportunities in 2023 for further digitization including at points of sale and in B2B. All that presupposes, however, an infrastructure that has yet to be developed that protects consumers and counterparties with the level of care that they have come to expect from the branded networks.

To put it simply, there’s currently too much friction in payments – and too many exciting new solutions – for businesses not to invest in this area in 2023.?

Physical and digital complete their merger into omnichannel

There is no longer a distinction in consumers’ minds between the virtual and physical worlds. This would likely have happened over time in any event, but the pandemic catalyzed the shift. The rise of mobile shopping and ordering is perhaps the best and most recent example of this trend.

Another archetype: Stadiums, where the post-pandemic consumer is primed to adopt more digital ways of doing things – beyond virtual tickets. No one wants to stand in line to order a beverage, food or merchandise. Some stadiums may even experiment with ticketless entry where your face is your ticket.

Another hybrid area that I’ll be watching closely in 2023 is social commerce, where consumers engage with influencers and brands on social media as part of a shopping/entertainment experience. This is hardly nascent – it’s already a proven sales channel – but more companies will want to capitalize on this opportunity.

Gravity still functioning

Moonshot efforts to create dramatic advances in technology will always capture the public imagination, but higher interest rates and the crypto crash – among other factors – are forcing a more disciplined posture toward new technologies that is likely to prevail throughout the new year.

Take the metaverse, for example. The commerce opportunities in virtual worlds are substantial, but they depend on whether people flock to the metaverse like they adopted social media back in the early 2000s – or if uptake will be a longer runway. I expect the latter will play out because much of the promise of the metaverse depends on technology that’s still new and needs major improvements. In the meantime, companies will largely view the metaverse as an extension of their e-commerce strategy.

Buy Now Pay Later (BNPL) was another trend over the past year, although installment payments have existed in various forms for decades. In 2023, we will likely see more regulation of BNPL that will help stabilize these types of installment payments and protect consumers. New, competitive offerings from established financial institutions will emerge and pose a competitive challenge to the current players.

And finally, crypto. Successes in crypto will occur via effective use cases. And there is no legitimate use case currently for everyday point of sale transactions. Rather, stablecoins, blockchain technology and central bank digital currencies (CBDC) are the likely winners in all of this in the near term because there are real use cases where they can be put to work on a regulated, reputable and compliant basis.

A year ago, we wondered where things would settle. Now, we have a clearer picture. This is the new, digitized normal.??