Australian businesses are embracing the next generation of financial services technology to fuel new growth in digital channels despite current economic uncertainty, according to FIS.
FIS's inaugural 2023 Global Innovation Report surveyed business leaders in the financial services (insurers, banks, capital market firms, and fintech) and non-financial businesses (retail, restaurants, travel, gaming, digital content, and enterprise technology providers) in Australia about their business strategies and experience with embedded finance and Web3 – including decentralised finance (DeFi), cryptocurrencies, and the metaverse – and environmental, social, and governance (ESG) frameworks.
According to the report, most of the business leaders surveyed expect a major or moderate impact from each of the following trends in the next 12 months:
As the uncertainty of the current economic landscape looms, FIS's report emphasised the significance of investing in innovation focused on short-term strength and resilience and longer-term growth.
“Our research shows that key fintech areas such as ESG, embedded finance, DeFi, and, to a lesser extent, crypto remain a top priority for Australian businesses across finance and commerce as they look to position themselves for a fast-approaching digital future,” Nick Aronson, VP capital markets, APAC country management at FIS, said.
“Australian businesses and consumers have always been early adopters when it comes to advanced technologies, but prioritisation is fundamental.”
FIS's report expects embedded finance – when consumers have unique, tailored financial services delivered when needed – to become a competitive advantage for Australian businesses in 2023.
Specifically, 39% of the financial services firms said they will significantly invest in developing embedded financial products within the next 12 months. Meanwhile, 31% said investing in this space will increase their competitive advantage, help them expand into new sectors, and attract investment capital.
Despite 2022 being a challenging year for cryptocurrencies, the report expects growth and investment in digital assets and the underlying technologies to continue at a strong pace.
Half of the financial services firms recognised DeFi, according to the report. However, 59% cited poor user experience as a barrier to DeFi adoption, and 57% said they needed to better understand the risks involved before participating. Moreover, 57% of financial services firms actively research potential opportunities in the metaverse.
As Australian businesses look into capitalising on opportunities in ESG, the report expects innovative technology helping to report ESG metrics to play an essential role.
Fifty three percent of Australian financial services firms said ESG enables them to improve their competitiveness in the market. However, the respondents said the biggest challenge around ESG is insufficient internal data or tools (46%). Therefore, 59% of the respondents said they will invest in technology to improve their ESG reporting and disclosures to address data-related gaps.
