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FIS Reveals Top Investment Priorities for Financial and Non-financial Services in 2023

New research from FIS, a global fintech, revealed global c-suite executives plan to make significant investments in 2023. Namely in web3, environmental, social, and governance (ESG) frameworks and embedded finance. This is a result of companies looking to fuel fintech innovation despite economic uncertainty.

The inaugural 2023 Global Innovation Report asked c-suite and senior executives in financial services (banks, insurers, capital markets firms, and fintechs) and non-financial businesses (retail, restaurants, travel, gaming, digital and technology providers) globally about their key areas of financial investment in 2023.

According to the study, most international executives said they expected a major or moderate impact from certain areas of fintech in the coming year. These included ESG (84 per cent), embedded finance (84 per cent), decentralised finance (DeFi) (82 per cent), the metaverse (80 per cent) and cryptocurrencies (77 per cent).

These projections are largely mirrored by UK executives. They expected innovation in these spaces to impact their business in 2023: ESG (84 per cent), embedded finance (84 per cent), DeFi (81 per cent), the metaverse (81 per cent), and cryptocurrencies (73 per cent).

UK firms are planning for digital assets and next generation internet

The next generation of the Internet, referred to as Web3, centers around decentralised infrastructure like blockchain technology. It also includes innovations such as cryptocurrency, DeFi and the metaverse. According to new FIS research, the UK is keeping pace with other countries’ investments in Web3 as organisations around the world look for the next growth opportunity.

  • More than half (59 per cent) of respondents expressed no current interest in developing cryptocurrency services. However, 17 per cent of non-financial firms and four per cent of financial services firms told FIS they do not anticipate offering such capabilities in three years’ time.
  • Financial services firms cite a lack of clarity around regulations (25 per cent), lack of interoperability between platforms (22 per cent) and a lack of ecosystem services to support crypto (21 per cent) as barriers to wider adoption of crypto in their organisation.
  • Non-financial services firms shared similar concerns. However, 24 per cent noted a lack of crypto services from banks and other financial services providers as a barrier.
  • Fifty-five per cent of financial services firms are actively researching potential opportunities in the metaverse. Meanwhile, 58 per cent of non-financial businesses say it will be strategically important to have a presence in the metaverse in the next three years.
  • More than half of UK financial services firms (51 per cent) recognise DeFi to be a major growth opportunity for their organisation, according to the recent study.
  • Meanwhile, 51 per cent of firms in this study say their risk management frameworks are incompatible with most digital assets. This could be a roadblock for wider adoption of DeFi in the UK.
Embedded finance to empower UK businesses in 2023

Embedded finance is when consumers have unique, tailored financial services delivered to them at their point of need by non-financial companies. Furthermore, embedded payments are most familiar to consumers, enabling the speed and convenience of paying for goods and services in an app, with just a single click. New use cases across banking, lending and investing are emerging and the drive to deliver embedded financial services is on the rise in the UK.

  • Over eight in 10 (84 per cent) UK companies say embedded finance will impact their organisation as consumers demand more convenient ways to pay, bank and invest, in the next 12 months
  • Thirty eight per cent of financial services and fintech firms will invest significantly in developing embedded finance products within 12 months, according to the study.
  • Meanwhile, 55 per cent of non-financial firms that see an impact from embedded finance on their business told FIS they will respond by increasing their tech or research and development budget this year.
Silvia Mensdorff-Pouilly, SVP banking and payments, FIS
Silvia Mensdorff-Pouilly, SVP banking and payments, FIS

“While the macroeconomic environment in the UK and around the world poses a real challenge to businesses of all kinds, those that invest in evolving their technology capability to serve tomorrow’s consumer will find ways to thrive. What’s clear from our research is that a wide range of business leaders see embedded finance, Web3 and ESG as drivers of growth despite recessionary headwinds,” said Silvia Mensdorff-Pouilly, SVP banking and payments, Europe, at FIS.

“At FIS we view early adoption in these innovative spaces as critical to success over the next few years—the businesses investing now will be the ones succeeding in years to come.”

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

ESG is the systematic consideration of environmental, social and governance factors alongside financial factors when making decisions about investments, business practices and commercial relationships. If supported by the right technology, ESG can open new growth opportunities and competitiveness in the UK market.

  • Sixty per cent financial services firms in the UK say ESG offers an opportunity to improve their competitiveness in the market.
  • Forty-one per cent of financial services firms told FIS they are developing new ESG products and services.
  • To address difficulties in accessing and analysing ESG data, 56 per cent of financial services firms say they are investing in technology to improve reporting and disclosures, giving clients more transparency into ESG scores and/or providing more granular ESG ratings of assets and securities.

Author

  • Francis is a journalist and our lead LatAm correspondent, with a BA in Classical Civilization, he has a specialist interest in North and South America.

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