Embedded Finance, Web3 and ESG Lead 2023 Fintech Investment Amid recessionary pressure, according to FIS® Global Innovation Report

Keywords

• A global study of 2,000 executives at firms across markets revealed plans to increase investment in embedded finance, environmental, social and governance (ESG) frameworks and decentralized finance in 2023, including cautious optimism towards cryptocurrency.

• 44% of financial services firm executives worldwide say they will invest significantly in the development of embedded financial products by 2023 as consumers demand more convenient ways to pay, bank and invest.

• Almost two-thirds (61%) of all non-financial services leaders told FIS that it will be strategically important to have a presence in the metaverse over the next three years.

• ESG is top of mind for financial services firms globally, with 60% of executives saying they are developing new ESG products and services.

JACKSONVILLE, Florida, January 24, 2023–(BUSINESS WIRE)–New research released today from FIS^® (NYSE: FIS), a global leader in financial services technology, reveals global c-suite leaders plan to invest significantly in Web3, environmental, social and governance (ESG) frameworks and embedded finance in 2023, as companies look to fintech innovation to fuel growth despite economic uncertainty.

The first 2023 Global Innovation Report polled the c-suite and top executives in financial services (banks, insurance companies, capital market companies and fintechs) and non-financial businesses (retail, restaurants, travel, games and digital content, and technology providers) globally on their key areas of financial investment in 2023.

According to the study, most executives worldwide say they expect a large or moderate impact from the following areas of fintech in the coming year: ESG (84%), embedded finance (84%), decentralized finance (DeFi) (82%). ), the metaverse (80%) and cryptocurrencies (77%).

These projections are largely mirrored by US executives, who expect innovation in these areas to impact their business by 2023: ESG (83%), DeFi (82%), embedded finance (81%), metaverse (78%) and cryptocurrencies (78%).

The story continues

“As the threat of a global economic downturn looms and businesses look for ways to thrive through the downturn, it’s clear that unleashing growth requires focus, top-down leadership support, a culture of innovation and collaboration to anticipate and shape consumer demand demand,” said Himal Makwana, Global Head of Product Strategy & Web3 at FIS. “Our findings show that many leaders see decentralized finance, web3 infrastructure, digital assets and currencies as critical components of their long-term strategy, both from a defensive and offensive standpoint perspective, to help lead the way into this next phase of the digital revolution.”

American firms are planning for digital assets and the next generation Internet

The next generation of the Internet, referred to as Web3, centers around decentralized infrastructure such as blockchain technology and includes innovations such as cryptocurrency, DeFi and the metaverse. According to new FIS research, the US is keeping pace with other countries’ investment in Web3 as organizations around the world look for the next growth opportunity.

• While almost a third (29%) of US respondents today expressed no interest in developing cryptocurrency services, only 5% of financial services firms told FIS they do not expect to offer such opportunities in three years.

• Financial services firms cited lack of ecosystem services to support crypto (29%), lack of interoperability between platforms (28%) and lack of regulatory clarity (26%) as key barriers to greater adoption in their organizations.

• Non-financial services firms shared similar concerns, but 24% noted a lack of crypto services from banks and other financial service providers as a barrier.

• Nearly half of US financial firms (47%) recognized that DeFi was a major growth opportunity for their organization.

• There are concerns surrounding DeFi, with 50% of financial services firms citing poor user experience as a barrier to adoption and 47% saying they need to better understand the risks involved before participating.

• 59% of financial services companies are actively investigating potential opportunities in the metaverse, while 45% of non-financial businesses say it will be strategically important to have a presence in the metaverse in the next three years.

Embedded Finance to Empower American Businesses in 2023

Embedded finance is when consumers have unique, tailored financial services delivered to them when they need it by non-financial companies. Embedded payments are most familiar to consumers, enabling the speed and convenience of paying for goods and services within an app with just a single click. New cross-bank, lending and investment use cases are emerging, and the drive to deliver embedded financial services is growing in the US

• 36% of financial companies will invest significantly in developing embedded financial products within 12 months, according to the study.

• Meanwhile, 59% of non-financial firms that see an impact from embedded finance on their business told FIS they will respond by increasing their technology or research and development budget this year.

ESG is widely seen as a competitive must-have in the US

ESG is the systematic assessment of environmental, social and governance factors together with economic factors when making decisions about investments, business practices and commercial relationships. If supported by the right technology, ESG can open up new growth opportunities and competitiveness in the US market.

• 56% of financial services firms in the US say that ESG provides an opportunity to improve their competitiveness in the market.

• 60% of financial companies told FIS that they are developing new products and services.

• To address issues with accessing and analyzing their own ESG data, 56% of financial services firms say they are investing in technology to improve reporting and disclosures, providing clients with greater transparency about ESG scores and/or providing more detailed ESG assessments of assets and securities.

Methodology

All data is based on a survey of 2,000 executives from financial services firms (banks, insurance companies, capital markets firms and fintechs) and non-financial services firms (merchants, enterprises and technology providers) in nine countries (Australia, Brazil, Canada, Germany, Hong Kong, India Singapore, UK and USA). The survey was carried out by Longitude Partners on behalf of FIS between July and September 2022.

About FIS

FIS is a leading supplier of technology solutions for financial institutions and businesses of all sizes and across all industries globally. We enable the movement of commerce by unlocking the financial technology that powers the world economy. Our people are dedicated to advancing the way the world pays, banks and invests through our trusted innovation, system performance and flexible architecture. We help our customers use technology in innovative ways to solve business-critical challenges and deliver superior experiences for their customers. FIS is headquartered in Jacksonville, Florida and is a member of the Fortune 500^® and Standard & Poor’s 500^® Index. To learn more, visit www.FISglobal.com. Follow FIS on Facebook, LinkedIn and Twitter (@FISglobal).

See the source version at businesswire.com: https://www.businesswire.com/news/home/20230124005112/en/

Contacts

For more information
Kim Snider, 904.438.6278
Senior Vice President
FIS Global marketing and communication
[email protected]