I am the CEO at Happy Money and have spent my career connecting ‘fin’ and ‘tech’ by uniting the benefits of Silicon Valley and Wall Street.
For the fintech space, 2022 was an eventful year, and many companies will need to enter a new phase in 2023 while facing challenging economic conditions. Conversations I’ve had with employees, industry leaders and investors, coupled with the changing macroeconomic environment, have given me a lot to think about regarding the new year. One question that routinely comes up is “When are we going to return to normal?”
Whether the sentiment is in regard to consumer trends, adoption of technology or returning to in-person work, my response is the same: “We’re not going back.” In fact, we’ll continue to see a rapid pace of change where intelligence-driven and agile companies win.
But what does this mean in practice? I’m sharing some of my predictions for how tech leaders can embrace this rapidly changing environment to hit the ground running and succeed in 2023.
1. Embedded Financial Services Will Be An Expectation
We’re already seeing what it looks like for every company to be a fintech company. In 2023, I expect we’ll see more solutions for consumer lending with widespread adoption of embedded finance and advancements in the digitization of banking. This is already happening with buy now, pay later (BNPL) as it widens into other categories. As Bain notes, consumers are less interested in traditional stand-alone financial services and are in favor of embedded experiences.
Companies looking to expand into financial services or increase their offerings should consider what would fit naturally into their customer flow. For instance, BNPL is a viable consideration for companies that sell products customers would prefer to pay for over time, such as big-ticket items or discretionary expenses. Ultimately, it starts with the customer and understanding how they interact with your business from a financial transaction standpoint.
2. Network Effects Will Be A Competitive Edge
I recently wrote about leveraging network effects, and an NFX report found network effects were responsible for 70% of the value in tech in 2022. While economic conditions continue to shift, there’s still an opportunity to innovate and aggregate smaller players that are too small to have strong engineering, data science and machine learning teams. Smaller players can be left behind as the world become more digital, so tech platforms can bring added value through new technology, distribution channels, customer segments and business opportunities. Shopify is one example of a tech platform offering this support.
Who is key to this innovation and enabling of network effects? As I’ve pointed out in the past, your organization’s technologists are likely aware of the advancements in your industry. Thus, they’re often eager and ready to use these tools to solve complex problems and build groundbreaking solutions. That’s why it’s important to both educate and encourage your tech workers. You want to provide a solid foundation for understanding your strategic goals within the context of the larger environment around your business. Then, coach your technologists in the process of developing cost-benefit analyses that support data-informed, intelligence-driven business cases. I typically encourage teams to seek feedback from peers and operate with an iterative approach that will elevate and improve their ideas.
3. Companies Will Need To Embrace Distributed Work
If you spend even five minutes on LinkedIn, you know the debate between in-person, hybrid and distributed work is still a hot one. But what does the data tell us? Owl Lab’s State of Remote Work Report found the number of workers choosing to work remotely in 2022 increased 24%, those choosing hybrid went up 16% and interest for in-office work dropped by 24%. The data keeps rolling in with this McKinsey study that found, when offered, almost everyone takes the opportunity to work flexibly.
Companies looking to embrace this flexible work mindset should focus on improving and optimizing synchronous activities like all-hands meetings, lunch and learns, and coffee chats. Supporting asynchronous work is also important. Personally, I’m a champion of written and narrative documentation of projects, which allows people to review and process on their own time and at their own pace. In my experience, this makes meetings even more productive and impactful so people can focus on the outcomes of time spent together.
Looking Ahead To The New Year
No one has a crystal ball for what the next year holds. But I’m confident that 2023 will be a year that forces tech companies to be more agile. I encourage tech leaders to focus on the ways your organization can be more intelligence-driven as the pace of change will only accelerate. The faster tech leaders adapt, the more likely they are to thrive.