After a decade aptly described as the 'golden age of FinTech', last year saw a substantial dip in global FinTech investment (from $238.9bn in 2021 to $164.1bn in 2022). The industry, as one easily can imagine, was rattled. Media called it 'FinTech's first test' and 'the great FinTech reckoning'. They all agreed that the so-called 'easy money' had dried up. 

Despite the catchy headlines and the gloomy predictions, we will see many investment opportunities in FinTech companies in 2023 - especially among those embracing new technologies and AI. But there'll be new factors for the companies and investors to consider. 

First, let's address a key factor: the market volatility around rising interest rates, which undoubtedly played a part in last year's investment decrease. This unpredictability seems set to continue due to market uncertainties, and investors will likely be more careful with their investment strategy this year rather than looking to make up for lost time. However, the addressable market opportunity remains huge as customers continue seeking alternative, nimble, digital-enabled financial services solutions - so there'll be no let-up in the number of new FinTechs emerging and seeking capital. 

While capital is still available, discerning investors - some of whom have been stung by previous FinTech investments at (what now appears to be) inflated valuations - will be more circumspect in writing cheques, which in turn means not all startups will get the financial backing they seek.

Yes, there will undoubtedly be consolidation - there are too many FinTechs in specific market segments, so there will be scope for the more successful players to acquire competitors and accelerate their growth/build capability/etc. The key to success will be what differentiates one from the other - and who does it best from the customer's viewpoint. 

Interestingly, I have noticed how clients are becoming a key focus for Fintechs when finding solutions and engaging with their needs. This year, the customer experience will be the primary beneficiary - it will no longer be "the Bank's way or the Highway". Fintechs must deliver the solutions their clients and prospects need and want. This will ultimately result in greater customer choice, further enabled by the growth of technologies such as AI.

Finally, and this one is always the sting in the tail, there will be more regulation. We are seeing it already in the less regulated markets such as crypto and Buy-Now-Pay-Later (BNPL). This development will only increase as the regulators look to clamp down on financial crime once and for all. Regulation, however painful for customers, is in itself a market disruptor. It creates new customer pain points for nimble FinTechs to raise capital and address.

While there is no reason to doubt that FinTech remains in a good place, it is good to remember that the wider sector still faces record-high inflation. Investors being smarter with their investments should not be a cause for concern; merely an opportunity for Fintech companies to embrace where they can best move forward and find ways to differentiate themselves from their competition through CX and secure investment. If the 'easy money' has dried up for the time being, good companies with viable products will still get the backing they need to succeed, which makes 2023 look less like a year of reckoning and more like an age of reason.