While the evolution of blockchain in the sector began with building the blockchains, protocols, privacy technology and scaling solutions needed for growth, more recently it has extended to decentralized use cases in the region’s capital markets. For example, traditional FSIs are now offering hedge funds and deposit accounts on blockchain with no intermediaries.
In 2023, we also expect institutions to use blockchain to capture, consolidate and process data relating to the carbon emissions of asset portfolios. Blockchain is particularly well-suited to this because it ensures high levels of data trust and integrity.
Embedded finance has become part of the fabric of everyday life and one of the region’s key drivers in creating accessible digital ecosystems. Populations in Southeast Asia are gaining access to a growing range of virtual financial services, and at a faster rate than in most of the world’s other markets.
The focus is shifting to using ecosystem models to own the full aspects of a customer relationship. In 2023, FSIs will rapidly monetize their customer base with additional revenue streams and vertically scaled products that increase customer lifetime value. Equally, in the region’s massive SME market, we will see small merchants increasingly adopting digital financial ecosystem solutions that allow them to access financial services, like credit or commercial insurance.
An FSI’s digital transformation efforts depend on hiring and retaining skilled talent in a competitive landscape. The growing need to upskill and reskill existing employees to address the skills gap, coupled with employees’ interest in advancing their own knowledge, highlights the importance of continuous learning across the organization.
When it comes to attraction and retention, EY Asia-Pacific Belonging Barometer 2022 found that employees who feel like they strongly belong are three times as likely to stay with their current employer. Trust, respect and a connection to others through similar or shared interests, skills and challenges define the feeling of belonging. The Belonging Barometer highlights that workplace diversity and the opportunity for hybrid working both increase employee retention.
2023 will be a year of innovation
Our region is already home to some of the world’s most advanced FinTech markets. As we look towards 2023, we can expect the financial services sector to continue to benefit from a powerful FinTech feedback loop, with increased adoption driving increased innovation – and vice versa especially as the region continues to attract investment.