The financial sector is facing several unprecedented challenges as we head into 2023. The future is uncertain; from political instability and economic uncertainty to technological disruption and changing consumer behaviour, financial organisations are looking
for new ways to support customers.
While the financial sector has long relied on traditional business methods and only relatively recently engaged in digital transformation, there are several ways that new technologies could help the sector tackle the challenges it’s facing.
In 2023, we could see these trends start to reshape the financial and banking landscape:
1. Increased decentralisation
Over the past few years, cryptocurrencies like Bitcoin and Ethereum have gained attention, and more people have invested in them. While they remain controversial and volatile, we could see them become more mainstream.
Before the collapse of FTX, some experts believed that cryptocurrencies could become a widely accepted form of payment, with many major retailers and financial institutions accepting them as a legitimate currency by 2023.
While the outlook is more uncertain now – especially with the U.S. Securities and Exchange Commission vowing to pursue crypto companies for violating securities laws – cryptocurrencies still have their advocates —people who believe in the decentralised vision
behind the creation of cryptocurrencies.
In 2023, we could start to see a greater level of decentralisation of the banking and finance sector, which could eventually make traditional financial institutions less relevant.
2. An increased role for virtual reality and the metaverse
Virtual reality has come a long way in recent years and will likely continue to advance. The metaverse has had a bumpy start, but as it becomes more sophisticated, we could start seeing more people visiting it.
We’re probably still some way off from people using the metaverse as part of their everyday lives, but we shouldn’t be surprised to see adoption take off in 2023. As more people use VR and metaverse, we’ll see more financial institutions explore how they
can get involved.
We could be building a world where people use VR and the metaverse to complete financial transactions from home and use it as the primary way to interact with financial services companies.
3. An increase in quantum computing
Quantum computing is a relatively new technology that could potentially solve complicated problems that traditional computers cannot. For example, financial service companies could use this form of computing to provide much more accurate financial analysis
In 2023, we’ll see more financial service companies invest in quantum computing to stay ahead of the competition and offer better services to customers. The more the industry invests in quantum computing, the more it will revolutionise its approach to financial
analysis and risk management.
4. The end of physical bank branches?
In recent years, digital-only banks have gained popularity, offering many of the same services as traditional banks without the overhead costs of physical branches. While many people were reluctant to try digital banking, the pandemic (and lockdowns) gave
some the nudge they needed to try these services out.
In 2023, we’ll see the switch to digital continue as more consumers turn to digital-only banks (and digital banking services offered by traditional banks) for their banking needs.
We could see a significant shift in the banking landscape, with traditional banks facing increased competition from these digital-only players, forcing them to invest more in their digital offerings.
As demand falls, we’re already seeing banks close down more of their branches. A survey of European banks (conducted by
The Economist Intelligence Unit and Temenos) found that 70% of respondents expected physical branches to no longer exist by 2025.
There are things that banks would need to address to get to this point – like the accessibility of their services for people who aren’t online or who just want a physical banking experience. But it’s certainly a trend we expect to develop in 2023.
5. Will banks be replaced by AI-powered financial advisors?
Artificial intelligence (AI) is a transformative technology, and we’ll likely see it used much more extensively in 2023. Its ability to help organisations increase efficiency, reduce costs, and automate tasks could give financial service companies a significant
advantage in the coming year.
Eventually, we could see AI-powered financial advisors providing personalised financial advice to customers.
As financial service organisations look for ways to navigate 2023 (and beyond), more will be exploring the potential of emerging technologies. What’s more, they’ll be willing to take risks with these new technologies in ways they haven’t imagined before.