Best Financial Services Predictions will be discussed in this article. The financial services industry is getting ready for a challenging 2023 as recession fears and geopolitical conflicts cast a shadow over the world economy. To weather the storm, how will business leaders use their data and advanced analytics? Leading industry specialists from SAS make predictions about what consumers, financial institutions, and those responsible for their protection can look forward to in the upcoming year.
Top 10 Best Financial Services Predictions for 2023
In this article, you can know about Financial Services Predictions here are the details below;
“2023 won’t be a chaotic year. In reality, some level of predictability will return in 2023. Pent-up demand, competitive labor markets, and supply chain issues were to be anticipated as the economic effects of this once-in-a-lifetime pandemic. Combining these elements was destined to fuel inflation, necessitating rate increases as an obvious course of action. As the world works through the aftermath, expect higher delinquencies in retail and commercial portfolios as well as high market volatility. Anthony Mancuso, Director of Risk Solutions Consulting, stated that effective scenario analysis, close to real-time tracking, and overall organizational agility will rule the day.
Customer-centric decision-making launches a new era of differentiated customer engagement
“In the fight to win and keep customers, the capacity to make decisions across the full customer lifecycle will become a major differentiator. Thinking holistically about risk, fraud, and marketing choices on a single architecture can help one stand out from the competition by offering a unique customer experience.
I expect that increasing fraud losses and a drive towards automation will motivate centralized authority over disparate solutions and consolidation of decisioning capabilities at onboarding and throughout the customer journey,” said Stu Bradley, Senior Vice President of Fraud & Security Intelligence. Also check Prepare for a Recession
Zombie firms, flash crashes force an economic reckoning
“In the face of persistent geopolitical instability and unusually high sovereign debt, rising interest rates and a strengthening dollar indicate trouble. A series of national defaults could occur in 2023, and the already fragile market condition could be made worse by liquidity issues in the treasury markets. As borrowing becomes more expensive and scarcer, these variables will cause an economic reckoning, especially among so-called “zombie firms”—companies that don’t generate enough profit to pay their debts. As noted by Stas Melnikov, Head of Risk Portfolio, “Companies that lack strong balance sheets and the capacity to produce cashflows will be at high risk of default, while those that endure are likely to prioritize the quality of earnings and cashflow sustainability over their growth rates.
Banks double down on ESG progress for greater resiliency
One might anticipate financial institutions to scale back on environmental, social, and governance (ESG) initiatives amid ongoing economic turbulence, but there are indications that most banks are either continuing on their current course or doubling down. According to a recent poll of 500 banking executives, 76% of respondents believe that financial services have a responsibility to address societal issues, but 64% of respondents believe that banking falls behind other industries in advancing ESG goals.
Leaders in the financial services industry are clearly aware of the chance to strengthen long-term resilience even as they withstand the impending storm. With ESG as their guiding principle, banks may come out of this recession more financially stable; those who take the lead in the ESG revolution will undoubtedly benefit from increased customer loyalty and confidence as well, according to Alex Kwiatkowski, director of global financial services.
Cryptocurrency drives the search for criminals
“While recent events will undoubtedly result in more regulatory monitoring, cryptocurrencies are still alive and well. Criminals will continue to use cryptocurrency to conceal their illicit activities and transfer their stolen funds.
In turn, law enforcement & regulators will better hone their ability to comprehend the movement and exchange of illicit funds, improving the industry’s capacity to triangulate human trafficking, drug dealing, money laundering, & other criminal activities with swiftness and precision,” expressed Dan Barta, Principal Enterprise Fraud & Financial Crimes Consultant. Also check Idea Validation
The rise of APIs and cloud computing
Financial organizations will use APIs and other tools to patch or return weak links as they are discovered as shifting relationships between risk factors reveal the limitations and flaws of legacy risk management systems. According to Martin Zorn, Managing Director of Risk Research and Quantitative Solutions, “Institutions will first attempt to ‘plug the leaks in the barrier before attacking large scale relief of legacy systems, so cloud computing and speed-to-market of focused solutions will become considerably more important.
Climate change risk comes from consumers
Banks will start factoring climate change financial risks into residential mortgages and business loans as these risks become more well-understood. If you reside in a busy hurricane, flood, or fire zone, be prepared to pay more, said Naeem Siddiqi and Senior Advisor for Risk Research & Quantitative Solutions.
Government regulators spark an anti-money laundering modernization wave
“The year ahead for financial intelligence units (FIUs) will be interesting. One of the biggest “innovators” of the cryptocurrency boom has been the rise of criminals and tax evaders, leaving a significant gap in the efficacy of suspicious activity reports. FIUs will reevaluate how they function, from their lawful authority to the IT systems that support their missions, as global conflicts continue to drive significantly increased penalties against bad actors. According to Shaun Barry, Global Director, Fraud and Security Intelligence, “My eyes are on Singapore, Germany, and Canada as likely forerunners to start the first wave of modernizations that stimulates broader anti-money laundering innovation centered on AI and real-time capabilities.
Retreat from globalization spells opportunity for finteh upstarts
We’ll witness a significant retreat from the globalization that has dominated the world for the past 30 years as a result of ongoing supply chain contraction and increasing political and societal pressures. Global financial services companies will quickly and pragmatically modify their strategies and operations as business networks begin to operate more locally.
By integrating with established industry players, regionally aligned fintech and insurtech companies may find new opportunities to grow their agility and innovation. Such alliances would serve as a crucial lifeline for tech startups as the business environment becomes less supportive. Those who go it alone will have a difficult time surviving, according to Norman Black, director of EMEA Insurance Solutions.
Financial services see a scenario analysis renaissance
“Scenario management and analysis will experience a renaissance as a result of the whirling uncertainty caused by variables such as climate change, geopolitical instability, energy crises, and other issues. The scenario will develop into a dynamic outcome of specific risk models, so it won’t be a static output. According to Christian Macaro, Principal Risk Solutions Advisor, topics like scenario creation, scenario concern, risk analysis related to a specific scenario, and reverse-engineering of a scenario will be able to answer issues not addressed by conventional methods.