3 predictions for Fintech companies’ development in 2023

I am the CEO of Happy money and have spent my career connecting ‘fin’ and ‘tech’ by combining the advantages of Silicon Valley and Wall Street.

For the fintech space, 2022 was an eventful year, and many companies will enter a new phase in 2023 while facing challenging economic conditions. Conversations I’ve had with employees, industry leaders and investors, combined with the changing macroeconomic environment, have given me a lot to think about for the new year. A question that regularly comes up is “When will we go back to normal?”

Whether the sentiment is in relation to consumer trends, the use of technology, or the return to in-person work, my answer is the same: “We’re not going back.” In fact, we will continue to see a rapid pace of change where intelligence-driven and agile companies win.

But what does this mean in practice? I share some of my predictions for how technology leaders can embrace this rapidly changing environment to hit the ground running and succeed in 2023.

1. Built-in financial services will be an expectation

We are already seeing what it looks like for every company to be a fintech company. In 2023, I expect that we will see more solutions for consumer loans with widespread use of embedded finance and advances in the digitization of banking. This is already happening with buy now pay later (BNPL) as it expands to other categories. As Bain notes, consumers are less interested in traditional stand-alone financial services and favor embedded experiences.

Businesses looking to expand into financial services or increase their offerings should consider what fits naturally into their customer flow. For example, BNPL is a viable rating for companies that sell products customers prefer to pay for over time, such as big-ticket items or discretionary spending. Ultimately, it starts with the customer understanding how they interact with your business from a financial transaction standpoint.

2. Network effects will be a competitive advantage

I recently wrote about harnessing network effects, and an NFX report found that network effects were responsible for 70% of value in technology by 2022. Even as economic conditions continue to change, there is still an opportunity to innovate and bring together smaller players who are too small to have strong engineering, data science and machine learning teams. Smaller players may be left behind as the world becomes more digital, allowing technology platforms to add value through new technology, distribution channels, customer segments and business opportunities. Shopify is one example of a tech platform that offers this support.

Who is the key to this innovation and the enabling of network effects? As I’ve pointed out before, your organization’s technologists are likely aware of advances in your industry. Therefore, they are often eager and ready to use these tools to solve complex problems and build breakthrough solutions. That’s why it’s important to both educate and encourage your technical workers. You want to provide a solid foundation for understanding your strategic goals within the context of the larger environment surrounding your business. Then coach your technologists in the process of developing cost-benefit analyzes that support data-informed, intelligence-driven business cases. I typically encourage teams to seek peer feedback and operate with an iterative approach that will elevate and improve their ideas.

3. Businesses will need to embrace distributed work

If you spend even five minutes on LinkedIn, you know that the debate between in-person, hybrid and distributed work is still hot. But what does the data tell us? Owl Lab’s State of Remote Work Report found that in 2022, the number of workers choosing to work remotely increased by 24%, those choosing hybrid increased by 16% and interest in working in the office fell by 24%. The data continues to roll in with this McKinsey study that found, when offered, almost everyone takes the opportunity to work flexibly.

Companies that want to embrace this flexible working mindset should focus on improving and optimizing synchronous activities such as all-hands meetings, lunch and learning and coffee chats. Supporting asynchronous work is also important. Personally, I am a champion of written and narrative documentation of projects, which allows people to review and process in their own time and at their own pace. In my experience, this makes meetings even more productive and impactful, allowing people to focus on the results of their time together.

Looking forward to the new year

No one has a crystal ball for what next year will bring. But I’m sure 2023 will be a year that forces tech companies to be more agile. I encourage technology leaders to focus on the ways your organization can be more intelligence-driven, as the pace of change will only increase. The faster technology leaders adapt, the more likely they are to thrive.

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