Embedded Finance, Web3 and ESG Lead 2023 Fintech Investment Amid Recessionary Pressures, according to FIS® Global Innovation Report
January 24 2023 - 8:00AM
Business Wire
Key facts
- A global study of 2,000 executives at firms across markets
revealed plans to increase investment in embedded finance,
environmental, social, and governance (ESG) frameworks, and
decentralized finance in 2023, including cautious optimism towards
cryptocurrency.
- 44% of financial services firms’ executives across the globe
say they will invest significantly in developing embedded finance
products in 2023 as consumers demand more convenient ways to pay,
bank and invest.
- Nearly two-thirds (61%) of all non-financial services
executives told FIS it will be strategically important to have a
presence in the metaverse in the next three years.
- ESG is top of mind for financial services firms globally, with
60% of executives saying they are developing new ESG products and
services.
New research released today from FIS® (NYSE: FIS), a global
leader in financial services technology, reveals global c-suite
executives plan to invest significantly in Web3, environmental,
social, and governance (ESG) frameworks and embedded finance in
2023, as companies look to fintech innovation to fuel growth
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 and digital content, and technology
providers) globally about their key areas of financial investment
in 2023.
According to the study, most executives across the globe say
they expect a major or moderate impact from the following areas of
fintech in the coming year: ESG (84%), embedded finance (84%),
decentralized finance (DeFi) (82%), the metaverse (80%) and
cryptocurrencies (77%).
These projections are largely mirrored by U.S. executives, who
expect innovation in these spaces to impact their business in 2023:
ESG (83%), DeFi (82%), embedded finance (81%), the metaverse (78%)
and cryptocurrencies (78%).
“As the threat of a global economic slowdown looms and
businesses look for ways to thrive through the downturn, it is
evident that unleashing growth requires focus, top-down executive
support, a culture of innovation, and collaboration to anticipate
and shape to consumer demand,” said Himal Makwana, Global Head of
Product Strategy & Web3 at FIS. “Our findings show that many
executives see decentralized finance, web3 infrastructure, digital
assets and currencies as critical components of their long term
strategy, both from a defensive and offensive perspective, to help
lead the way into this next phase of the digital revolution.”
U.S. Firms are Planning for Digital Assets and Next
Generation Internet
The next generation of the Internet, referred to as Web3,
centers around decentralized infrastructure like blockchain
technology and includes innovations such as cryptocurrency, DeFi,
and the metaverse. According to new FIS research, the U.S. is
keeping pace with other countries’ investment in Web3 as
organizations around the world look for the next growth
opportunity.
- While nearly one-third (29%) of U.S. respondents expressed no
interest today in developing cryptocurrency services, only 5% of
financial services firms told FIS they do not anticipate offering
such capabilities in three years’ time.
- Financial services firms cited a lack of ecosystem services to
support crypto (29%), lack of interoperability between platforms
(28%), and lack of clarity around regulations (26%) as key barriers
to greater adoption within their organizations.
- Non-financial services firms shared similar concerns, however,
24% noted lack of crypto services from banks and other financial
services providers as a barrier.
- Almost half of U.S. financial services firms (47%) recognized
DeFi to be a major growth opportunity for their organization.
- There are concerns about DeFi, with 50% of financial services
firms citing poor user experience as a barrier to adoption and 47%
saying they need to better understand the risks involved before
they will participate.
- 59% of financial services firms are actively researching
potential opportunities in the metaverse, while 45% of
non-financial businesses say it will be strategically important to
have a presence in the metaverse in the next three years.
Embedded Finance to Empower U.S. 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. 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 U.S.
- 36% of financial services firms will invest significantly in
developing embedded finance products within 12 months, according to
the study.
- Meanwhile, 59% 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.
ESG is Widely Seen as a Competitive Must-Have in the
U.S.
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 U.S.
market.
- 56% financial services firms in the U.S. say ESG offers an
opportunity to improve their competitiveness in the market.
- 60% of financial services firms told FIS they are developing
new products and services.
- To address difficulties in accessing and analyzing their own
ESG data, 56% 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.
Methodology
All data is based on a survey of 2,000 executives from financial
services firms (banks, insurers, capital markets firms and
fintechs) and non-financial services businesses (merchants,
corporates and technology providers) in nine countries (Australia,
Brazil, Canada Germany, Hong Kong, India Singapore, the U.K. and
the U.S.). The survey was conducted by Longitude Partners on FIS’
behalf between July and September 2022.
About FIS
FIS is a leading provider of technology solutions for financial
institutions and businesses of all sizes and across any industry
globally. We enable the movement of commerce by unlocking the
financial technology that powers the world’s economy. Our employees
are dedicated to advancing the way the world pays, banks and
invests through our trusted innovation, system performance and
flexible architecture. We help our clients use technology in
innovative ways to solve business-critical challenges and deliver
superior experiences for their customers. Headquartered in
Jacksonville, Florida, FIS is a member of the Fortune 500® and the
Standard & Poor’s 500® Index. To learn more, visit
www.FISglobal.com. Follow FIS on Facebook, LinkedIn and Twitter
(@FISglobal).
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version on businesswire.com: https://www.businesswire.com/news/home/20230124005112/en/
For More Information Kim Snider, 904.438.6278 Senior Vice
President FIS Global Marketing and Communications
kim.snider@fisglobal.com
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