Seven key trends expected to influence financial services in 2023

The prediction by the world's leading financial services firms is included in Mambu's annual "Partner Predictions" report, which highlights the top financial trends expected to influence the industry in 2023 as businesses try to survive and thrive in a volatile macroeconomic environment.

The report features insightful commentary from industry leaders from the fintech and financial services sectors, including executives from AWS, Backbase, Deloitte, Google Cloud, and others.

The participants share their perspectives on key issues that will shape the financial services sector in the coming year.

Mambu pointed out that banks' focus on the payments theme will shift next year, with a greater emphasis on developing their own interface.

Rather than integrating their products into external platforms, this type of payment makes users more engaging, relevant, and interesting in order to increase brand loyalty.

Four other trends and issues expected to have a significant impact on the Asia Pacific financial services industry include the low code/no code approach, big tech in banking, environment, social, governance (ESG) and ethical impact finance, and the growth of data unlocking.

According to Mambu's report, the low code/no code approach will empower digital banking teams to quickly protoype and launch without the need for complex development processes and specialised coding skill sets.

Many major Asian technology companies, such as Grab, Aeon, and the SEA Group, are now part of conglomerates with digital banking licences. This move by big tech will put pressure on banks to accelerate digital transformation.

"Customers now have higher expectations for their digital experiences," according to the report, so traditional banks must collaborate with technology providers to provide more competitive banking services.

Meanwhile, a shift towards ESG across Asia Pacific will push traditional banks to offer more inclusive and customisable financial products and services, while also keeping sustainability in mind for the benefit of their customers, the report said.

In terms of data unlocking growth, Google Cloud predicts that by the end of 2025, more than 90% of all data generated by banks will be actionable in real time using machine learning.

"Financial institutions will reimagine themselves as "data companies with a banking licence in order to access previously locked innovation opportunities, such as one-hour home loans, green lending products, frictionless onboarding, and ultra-flexible, customer-centric products," according to Google Cloud.

Pham Quang Minh, general manager of Mambu Thailand, said at the report's release on Tuesday that some of these trends will gain traction, while others will be legally permitted to operate fully.

“2023 will certainly be a promising year for Thailand’s financial landscape. The spotlight will be on digital banks, which are expected to be fully licensed and start operating throughout 2023. We are looking forward to seeing how innovation can make financial services simpler, more inclusive and accessible for everyone,” he said.

According to Dan Jones, partner at Oliver Wyman Digital, digital banking in Southeast Asia is already more common than physical card payments and is on track to dominate point of sale (POS) overall.

"Some 72% of countries now have their own real-time payments (RTP) schemes, which I expect to extend across borders by 2023," he said.

He explained that real-time cross-border payments are now uncommon, with only a few bilateral links between Singapore's PayNow and Thailand, Malaysia, India, and the Philippines. However, multilateral agreements are on the way.

The governors of Asean central banks have signed an agreement for a true cross-border system based on QR codes.

Super-app ecosystems often include their own e-wallet offerings, such as WeChat and AliPay in China or Grab and GoTo in Southeast Asia, he pointed out.

Fernando Zandona, chief technology and product officer of Mambu, said that banks have to reinvent themselves and the end customers will decide which players will win.

Embracing technology will be one of the top approaches that financial services will need to survive and thrive, he said.