Financial Technology

3 Fintech Predictions For 2023

COO of Adyen.

As concerns increase regarding an economic slowdown, emphasis on brand stickiness becomes more pronounced. What are brands doing to make themselves a must-have over a nice-to-have when buyers start reviewing spending?

Downturns, inexorable by their very nature, can be unpredictable. When customers—be they individuals or businesses—are considering where their money is going, what makes a business stand out compared to the rest? An incomparable customer experience.

Financial technology and payments contribute to CX for individuals by becoming as invisible and smooth as possible, and add value behind the scenes to businesses when used correctly. Here are several key trends as technology continues to be an experiential needle mover when times prove challenging.

Emerging technology creates platform potential.

The year will be another big one for platforms, many of which have taken a major step toward converting small and medium-sized businesses into banking customers by introducing embedded financial services.

SMBs, long underserved by traditional banking, have been partnering with platforms for years now. Now, platforms are set to become even stickier in nature by embedding financial products.

As entrenched as they already are in users’ daily operations, how much of a stretch of the imagination is it to host bank accounts on the same interface or, when the time is right, offer a loan? According to research on the opportunity for embedded financial products, conducted by our company and Boston Consulting Group, SMBs are showing an increasing openness to sourcing financial services from nontraditional bank entities.

While embedded financial products for SMBs are still in the early stages of adoption, an economic slowdown has the potential to encourage this transition away from traditional banking dependence. Given that the addressable revenue opportunity for cash advances, business accounts and card issuing is $110 billion across the U.S., Europe and the U.K., 2023 will be the year that the platforms that get it right will more likely come out on top.

The devil’s in the details for in-person experiences.

As with any innovation, once the bar has been set, everyone else scrambles to follow. In-person retail and restaurant experiences are no different. Fatigued as people were by online ordering post-pandemic, the store has made a meaningful comeback into people’s lives.

Shoppers are still craving that personal experience, whether that’s before an online purchase or after having seen something online and wanting to see it in person. Research we conducted for our annual Retail Report found that 64% of consumers “say physical stores are an important touchpoint, even if they shop with the same retailer online.”

The in-person payments landscape has transformed in recent years. Influenced by the rise of platforms, hardware innovations and general customer impatience, on-premise payments for food and beverage and retail have irrevocably changed and continue to do so as customers demand elevated, seamless experiences.

Whether in large or small environments, indoor or outdoor, once a customer has decided they want to pay, the experience should be as speedy as possible. Smaller, more portable devices are the answer here, and I expect we’ll only be seeing more in the coming years.

And when there’s no need for roaming devices (or indeed people to hold them), I foresee more and more self-checkouts outside of grocery and quick-service restaurants, such as at fashion retailers. Customers in a rush will welcome the appearance of more self-checkouts, with floor staff then freed to ensure their shopping experience is optimal.

Newer payment methods are paving the way for the future of money movement.

A few years ago, I predicted payment methods would become super apps, as the public continues to take more control over their money movement. We are seeing just that. And the driving force behind their adoption? Gen Zers, many of whom are contradicting banking norms by going from unbanked status straight onto these apps or digital wallets.

In fact, I foresee fewer personal cards in use at checkout. This practice is no more prevalent than in Brazil, where adoption of payment method Pix is such that it has overtaken credit and debit card volume in the country.

And in Europe, the Middle East and Africa, where alternatives to traditional banking have been prevalent for years, their growth remains steady, with the latest entry for freer money movement—open banking—beginning to pick up traction also, particularly in the U.K.

Human trends that continue to propel these changes to how consumers pay and move money are notable in that they’re not merely generational, but circumstantial. With COP27 having just wrapped in Egypt and the emphasis on businesses to act toward the world’s goals for 2030, there will be louder calls from this generation and others for technologies to support and consolidate their future.

Watch for more impact-, sustainability- and purpose-driven products making appearances on super apps and more, as they respond to growing calls from customers to actively participate in the conversation, and help when help is needed most.

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