For our money, here are the Financial Services trends we’re watching for 2023

Critical Mass

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Calgary, Canada

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Charlotte Diaz

SVP Strategy — Critical Mass

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Joe Cook

Strategy Director — Critical Mass

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Banks Will Recalibrate the Crypto Hype

If 2022 was the year of banks trying to prove they were ahead of the crypto game, 2023 will be the opposite. Having spent much of the last few years breathlessly trying to keep up with the pace of change in the cryptocurrency and digital assets space, large financial institutions will seek to reposition the opportunity from untethered hype to a regulated opportunity within blockchain. They’ll need to show up in market as trusted brands who can provide stability in an industry suffering from multiple high-profile collapses of confidence (the FTX meltdown, most notoriously).

It Will Be Time To Get a Little More Real About ESGs

We’ll see banks and financial institutions dial back the rhetoric with their more nebulous stances around environmental, social, and corporate governance (ESG). For ESG, the height of recent expectations (and a glut of ESG funds and services in market) has led to claims of greenwashing, prompting greater scrutiny from regulators and customers alike. This raised bar (and greater transparency) will require brands to figure out how they can build products that are additive to the ESG space—all while communicating to their brand audience authentically. Empty virtue signaling won’t fly.

Embedded Finance Will Take Off

When you stick a financial tool, service, or product “in a nonfinancial customer experience, journey, or platform,” you’ve got embedded finance (to borrow from McKinsey’s handy definition). It’s a back door to experiences that were once the sole preserve of finance brands. More than ever, “nonfinancial” brands are walking through in greater numbers, eager to accept payments, lend money, provide traditional banking, or offer insurance services.

While obvious examples include Google Pay, Apple Pay, and Venmo, almost any company can incorporate fintech for any number of reasons (e.g., to increase loyalty, to keep users inside their ecosystem, to stretch into adjacent product offerings). We’re going to see successes and failures, and the successes will happen because the brand will understand how to make an embedded finance experience fit within the broader ecosystem (and a really great example of success is Shopify—from Shopify Balance, which essentially acts as a current account, to Shopify Capital, which provides financing and loans directly to merchants). 

Banks Will Pay More Attention to Gen Z

New customer segments mean new growth potential for the financial service industry, but new customers will have needs that differ from traditional customer segments.

Gen Z, for example, is now aging into the industry, and their expectations, such as immediacy and ease of access, are coming with them. They also find information and advice in different ways. According to a Vericast report, 34% of Gen Z consumers get financial advice from TikTok. That’s a tip-of-the-iceberg example of the ways financial institutions will need to consider how they want show up in new places.

Banks Will Also Continue To Fix Inequitable Practices

Financial institutions are going to have to explore new ways to open up access to banking, loans, and insurance products while simultaneously finding the right way to market these shifts.

This will involve changing their own rules and practices in an effort to open their doors, products, and services to those who have been historically excluded due to inequitable practices and structural racism.

While financial institutions are investing in financial inclusion initiatives to ensure more equitable access to financial products and services, continuing to remove barriers (such as net worth) can empower more people to enter the industry.

As More Tech Talent Seeks Out Safety, Banks Will Try To Snap Them Up

In a challenging macroeconomic environment, with inflationary pressures and economic turbulence on the horizon, banks and financial services will dial up their focus on tech— product development, improved customer experiences, and driving transformation and innovation agendas. Silicon Valley’s layoffs are creating giant talent pools for banks to absorb.

But first, financial institutions will have to up their communication and recruitment game. They’ll need strategies that help them attract tech talent in an authentic, on-brand way while combining the high-minded promises of Silicon Valley (e.g., impact and innovation) with the safety and security of a large financial institution.

Digital Finance Will Get De-Risked

With the pandemic spurring accelerated adoption of digital financial services, banks and financial institutions have doubled down on technology and digital design. Now that the responsive wave has calmed, corporations will shift their focus to risk mitigation and security. Risk strategies will include increased investment in data management, technological infrastructure, reporting, and compliance.