Fintech Leaders 2023

FEBRUARY 2023

TABLE OF FIGURES

FIGURE A. WHERE ARE YOU LOCATED

FIGURE B. WHAT SECTOR DO YOU WORK IN

FIGURE C. MOST IMPORTANT FINTECH OPPORTUNITIES FOR FINANCIAL SERVICES FIRMS IN 2023

FIGURE D. MOST IMPORTANT FINTECH OPPORTUNITIES FOR FINANCIAL SERVICES FIRMS IN 2028

FIGURE E. CENTRAL BANK DIGITAL/CRYPTOCURRENCIES IN YOUR OPINION, AND IN YOUR JURISDICTION, DO YOU FORESEE A NATIONAL BACKED DIGITAL CURRENCY AS INEVITABLE

FIGURE F. AI HAS CONSISTENTLY BEEN RANKED AS A KEY FINTECH OPPORTUNITY, WHAT ARE THE TOP 3 PRACTICAL AND APPLICABLE AREAS FOR AI IN FINANCIAL SERVICES, OR WITHIN YOUR BUSINESS UNIT, IN THE FORESEEABLE FUTURE

FIGURE G. MOST IMPORTANT FINTECH THEMES WITHIN INCUMBENT/ ESTABLISHED BANKS FOR THE NEXT 5 YEARS

FIGURE H. MOST IMPORTANT FINTECH INVESTMENT AREAS FOR 2023

FIGURE I. MOST IMPORTANT OBSTACLES TO SUCCESSFUL ADOPTION OF FINTECH

FIGURE J. MOST IMPORTANT BENEFITS OF FINTECH FOR YOUR ORGANIZATION

FIGURE K. GENERAL STATUS

ABOUT CEFPRO

The Center for Financial Professionals, CeFPro®, is an international research, events, and media company. CeFPro® is the focal point for risk, technology, and regulatory professionals, advancing the profession through renowned thought leadership, knowledge sharing, unparalleled networking, industry solutions, and lead generation. CeFPro® is driven by, and dedicated to, high quality and reliable primary market research. It is this market research that allows us to provide an excellent portfolio of peer-to-peer conferences, live interactive webinars, industry-led content, international surveys, and a membership area for the industry to connect.

Through the Fintech Leaders Report, CeFPro® strives to provide insights, support, and benchmarks for organizations as the revolution of financial technology in financial services increases and gathers pace. Supported by more than 60 industry professionals from various sectors, positions, and backgrounds, the Fintech Leaders Advisory Board provides guidance, direction, support, industry insight, and knowledge to the industry. The objective is to provide a comprehensive report examining the opportunities, investment priorities, key obstacles, and main benefits of the fintech industry. Findings are based predominantly on the views of the extensive international survey and the Fintech Leaders Advisory Board, with CeFPro’s analysts and senior management reviewing the results and ensuring the integrity of the methodology and data contained in the final report.

The final Fintech Leaders Report can therefore be viewed as ‘the voice of the industry’, assisting all relevant parties with a comprehensive understanding of and insight into risk, technology advances, governance and regulatory compliance, and other aspects of the fintech industry. Moreover, Fintech Leaders will assist all readers interested in the advances in fintech to make informed decisions on technology and business-related matters, with in-depth analysis of and insight into all fintech solutions and providers.

CeFPro® is solely focused on risk, regulation, and technology, drawing on a decade of experience and expertise in the industry to provide a clear distinction from generic market research companies that cover multiple industries. Now in its fourth year, Fintech Leaders is increasingly recognized as the go-to resource, delivering unparalleled research and knowledge through the Advisory Board, CeFPro’s analysts, and other industry professionals.

Visit www.cefpro.com for more information.

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FINTECH LEADERS ADVISORY BOARD

Hugo Assagra, Group Head of Credit Risk Strategy, OSB Group

Cabinet Member: Tibor Bartels, Head of Transaction Services Americas, ING

Assad Bouayoun, XVA and Credit Hybrids Quantitative Analyst, Daiwa Capital Markets

Enrico Cacciatore, Senior Quantitative Trader, Head of Market Structure & Trading Analytics, Voya Investment Management

Stefano Canossa, Global Head of Operational risk and Head of Risk Luxembourg, GAM

Cabinet Member:

Albert Chin, Model Development and Risk Management, Freelance

Brooke Cooper, former Principal Solutions Manager Third Party Risk Management, Fusion Risk Management

Hakan Danis, Director, Macro Scenarios & OpRisk Models, MUFG

Dipanjan Das, VP, Business Head, Credit Cards, SoFi

Cabinet Member:

Brandon James Davies, Trustee and Lecturer, Institute of International Monetary Economics at Buckingham University

Chris Ekonomidis, Director, BNY Mellon

Cabinet Member: Alessia Falsarone, Adjunct Faculty, The University of Chicago

Sunil Gangwani, Cofounder, Plootus

Seth Giovanetti, Head of Operational Risk, Cross River Bank

Mariana Gomez de la Villa, Centre Expertise Lead –Distributed Ledger Technology, ING

Sergio Guirreri, Senior Manager Capital Market, Reply S.p.A.

Jason Hill, Partner, PA Consulting Group

Glenn Hursh, Partner, IBM

Angela Johnson De Wet, Cloud Enabled Business Transformation – Head of function, Lloyds Banking Group

Noah Kessler, Managing Director, Protiviti

Armel Kouassi, Senior Vice President - Global Head of Asset Liability Management, Northern Trust

Cabinet Member: Sabeena Ahmed Liconte, Chief Compliance Officer, ICBC Standard Bank

Cabinet Member:

Stevan Maglic, Head of Liquidity Risk, Capital Risk, and Risk Analytics, Celsius Network

Michael Middleton, Head of Content Strategy, Markov Processes International

Bradley Mirkin, Managing Director, Berkeley Research Group

Cabinet Member: Frank Morisano, Senior Managing Director, Treliant

Cabinet Member: Joe Posavec, Executive Vice President / Loan Portfolio Solutions, Newmark Valuation & Advisory

Allan Reid, Group Head of Anti-Financial Crime, Baillie Gifford

Gurraj Singh Sangha, Chief Strategist, G-20

Andreas Simou, Managing Director, CeFPro

Peter Smith, UK Fintech Ambassador, FintechReguLab / TISAtech

Cabinet Member: Craig Spielmann, Risk Intelligence Leader, CNM LLP

Vivek Tyagi, former Chief Risk Officer Transaction Banking (TxB), Goldman Sachs

Venkat Vedam, Director, Data Engineering, John Hancock Investments

Danielle Winandy, Risk ESG Transformation Manager, BNP Paribas

Cabinet Member: Stan Yakoff, Head of Americas Supervision; Law Professor, Citadel Securities

Xiaoling Yu, SVP, Director of Model Risk, KeyBank

FINTECH LEADERS EXECUTIVE SUMMARY

CYBERSECURITY, DATA, AND CUSTOMER EXPERIENCE: FINTECH’S ROUTES TO SUCCESS

Following an extensive three-month research campaign comprising 2,278 responses and over 50 one-to-one interviews, we are delighted to share with the industry CeFPro’s Fintech Leaders 2023 report.

Amid an already turbulent economic environment following the Covid-19 pandemic, the current geopolitical tensions and once-in-a-generation inflation levels are influencing investment decision making and affecting the prioritization of resources. This has led to one area emerging above all others as 2023’s number one fintech opportunity, investment priority, and barrier towards implementation: cybersecurity.

CYBERSECURITY SETS THE PACE

In total, more than 9 in 10 survey respondents viewed cybersecurity as a key consideration that requires investment. Moreover, when looking ahead to 2028, over 60% of respondents ranked it as the most significant fintech opportunity. In short, cybersecurity is here to stay as an opportunity, as an investment priority, and as an industry challenge – and according to our Fintech Leaders Advisory Board members, its importance is unlikely to diminish for the foreseeable future. As this area continues to advance, with threat actors constantly evolving their approaches and tactics, the fintech industry is in a prime position to drive innovation and help the industry stay ahead of criminal entities.

What is also apparent is that many of the other key opportunities cited by respondents to our survey are dependent upon effective cybersecurity measures. A primary example is customer experience, which is currently ranked in third position as a fintech opportunity – if cybersecurity is not treated with paramount importance, customer experience will be severely impacted. Other areas which have the potential to open cyber vulnerabilities include cloud computing and mobile and digital services, further demonstrating the role of cybersecurity in accelerating other fintech opportunities. This at least partly explains its position at the top of the table for the second year in a row.

OVERCOMING HURDLES TO GREATER AI ADOPTION

By contrast, artificial intelligence (AI) continues to fall in significance as a fintech opportunity, ranking in fifth place after topping the leader board in both 2020 and 2021. If this year’s respondents’ longer-term views are to be believed, then AI could see itself climbing back into the top three by 2028; over 40% expect it to be the most significant fintech opportunity in the next five years.

According to Fintech Leaders Advisory Board members, for AI to reach its potential, training, recruitment, and technical knowledge must be key considerations for the future. Current education offerings are seen to be lagging behind the industry’s requirements, with many academic institutions failing to offer up-to-date options and limited subject matter experts available to impart knowledge.

ENHANCING THE CUSTOMER EXPERIENCE

What is important to stress is not that AI is diminished in importance to cybersecurity, as they are equally important now, and in the future; the differentiation is that a cyber attack now can have a profound impact on any organization, not least headline risk which all respondents wish to avoid. AI, as a tool, as an area of growth and with significant potential, is yet to be fully realized. The pandemic showed that the ‘here and now’ are important, and that changes can happen suddenly.

But there remain plenty of uses and opportunities for financial institutions around the growth of AI, machine learning, and advanced analytics, including enhanced risk management oversight, revenue generation through new products and greater digitalization, increased use of chatbots, and anti-payments fraud. In general, the rise of digitalization and remote working has led to the key benefits of enhanced customer experience and greater interaction across retail banking, investment banking, and other financial services, and fintech is poised to help firms take this to the next level.

AI and machine learning also offer great cost-saving opportunities for front and middle office divisions – for example, leveraging algorithms to smooth the customer identification and authentication process, further deepening and personalizing customer-bank relationships.

THE CRYPTO EFFECT

Somewhat surprisingly, cryptocurrencies, both private and national backed, ranked extremely low with this year’s survey respondents as an area for fintech opportunity. Given the number of developed countries building foundations for their own central backed digital currencies (CBDCs), CBDCs look set to launch – yet only 12% of respondents rated them the most significant fintech opportunity by 2028 and 29% ranked them as not important.

For their part, CeFPro’s Fintech Leaders Advisory Board members and analysts believe there is an inevitable move to CBDCs and the question is when, rather than if, they will take off. At present, their implementation is piecemeal and still in an experimental phase, lacking real drive or determination. Should national governments and central banks throw their full force behind them, CBDCs could escalate rapidly, opening up significant opportunities across many areas in financial services. This would be a game changer and represent a fundamental shift.

THE ROAD TO 2028: ONES TO WATCH

Cybersecurity’s position at the top of the table is clear, but as the industry moves further away from postpandemic hesitancy towards a stronger appetite for growth, other areas are poised to climb their way up the leader board. Some of the areas aside from cybersecurity that are set to become key fintech opportunities by 2028 include:

• Quantum computing – Ranking low in 13th place for the second year running, quantum computing currently remains out of reach for many organizations as a result of the high implementation costs involved. However, there is an expectation of growth over the coming half-decade, with the percentage of respondents ranking this as the most significant area for future fintech opportunity tripling from 6% in 2023 to 18% in 2028

• Advanced data and analytics – Ranking second as an opportunity in 2023, 70% of respondents rated it as either very important or most significant, with this figure rising to nearly 80% for 2028. As the industry continues to advance, data requirements are only increasing, and analytical capabilities are becoming more deeply engrained in business processes. The need for increasing volumes of data makes this area ripe for continued growth and development. Interesting, advanced data and analytics has consistently ranked in the top three in all CeFPro’s Fintech Leaders reports.

• Artificial intelligence – AI climbed from fifth place as a fintech opportunity in 2023 to second place for 2028. CeFPro’s Fintech Leaders Advisory Board members

attributed this to the fact that AI has not yet lived up to its hype, potentially because resources and attention were diverted to more immediate Covid19-related challenges. Full potential is realized when quantum computing opens to more than the elite few organizations, industry knowledge and know-how (including college education programs) increases and more data and analytics can feed into systems.

REPORT CONCLUSIONS

The perception of fintech is evolving. Many now see it as an underutilized area with the potential to assist in a range of tasks, from automation and AI to operational risks (including cybersecurity, anti-fraud, and AML) and customer experience. Fintech is also increasingly being leveraged not only as a back-office tool to enhance systems, but increasingly as a front-office development aid to further advance product offerings.

The industry has proven itself to be dynamic and resilient in the face of multiple global crises, from the Covid-19 pandemic through to economic and geopolitical volatility. National and international disruption has arguably been more unsettled for more than a generation, yet fintech is showing resilience in the face of change. Encouragingly, 57% of this year’s respondents have confidence in fintech’s resilience and growth, with an additional 13% demonstrating extreme confidence. Disruption, such as Covid-19, war, and geopolitical risk, has reduced the pace of advancement, even direction of fintech development, but not the desire to move forward.

The changes in the last few years are evident through CeFPro’s Fintech Leaders reports, though this makes the industry an interesting one to be in, which will only grow and develop further. Whether the five year predictions prove correct are at times based on the current knowledge and circumstances, though what is certain is that the growth and advancement is here to stay.

An exciting time for the industry, and one that CeFPro hopes to track and promote for many years to come.

Andreas Simou Managing Director CeFPro

Alice Kelly Head of Content CeFPro

RESEARCH METHODOLOGY AND DEMOGRAPHICS

CeFPro’s Fintech Leaders 2023 survey ran October 11, 2022 through December 31, 2022, during which time 2,278 industry responses were submitted to our research team. We then undertook separate one-to-one interviews throughout January with the 50+ members of our Fintech Leaders Advisory Board, to garner diverse and expert feedback from industry influencers on the key findings from the survey. The consolidated views of the Fintech Leaders Advisory Board and the individual survey responses were subsequently reviewed by CeFPro analysts to produce this final comprehensive report.

The key geographies surveyed were North America and Europe (inclusive of the UK), representing over 90% of responses (Figure A).

The primary sectors surveyed were financial services, technology, and professional services, with over half of respondents working in financial services (Figure B).

Cybersecurity dominates Fintech Leaders 2023, highlighting how financial institutions are becoming as much ‘tech’ and as they are financial. The real potential is still be realized, though obstacles remain, such as geopolitical challenges, supply chains and attracting subject matter experts. Moreover, business models are changing, and the prospect of increased regulation looms large. Plus, the shadow of Covid-19 is, and remain, for some time.

What is clear from Fintech Leaders is the direction of travel and opportunities ahead, which all point to an exciting, maybe uncertain and at times volatile, road ahead.

Andreas Simou, Managing Director, CeFPro

OVERVIEW AND CONSIDERATIONS

GLOBAL ECONOMIC CONTEXT

Throughout 2022, a new wave of complexities emerged, layered on top of an already turbulent economic environment, as global economies continued to recover from the effects of the Covid-19 pandemic. As evidenced in both the 2021 and 2022 Fintech Leaders reports, a seismic shift in investment priorities and key opportunities within fintech was already taking shape as a result of the distinct move to online and digital offerings, in part prompted by a rise in remote working. As much of the world began emerging from lockdowns, new challenges were also being faced within supply chains and logistics, as well as inflation levels not seen for a generation.

This challenging macroeconomic environment, alongside escalating geopolitical tensions, resulted in global volatility, impacting investment decisioning and the prioritization of resources. The aftermath of the pandemic also continues to affect technology decisioning – though less directly than during the height of the pandemic – as some workers permanently return to the office, some remain at home full time, and others adopt a hybrid approach.

CYBERSECURITY DOMINATES AS AI FALLS

Cybersecurity has retained its position as the number one fintech opportunity for financial services firms in 2023, with 52% of respondents ranking it as most significant and an additional 40% citing it as very important (Figure C). In fact, more than 9 in 10 respondents view cybersecurity as a key consideration that requires investment. Cybersecurity was also the only area to receive over 50% of votes for ‘most significant’, further solidifying its place as the key fintech opportunity for financial services firms over the coming years.

When looking ahead to 2028, over 60% of respondents ranked cybersecurity as the most significant fintech opportunity, with nobody rating it ‘not important’; notably, this was the only area to do so. In short, cybersecurity is here to stay as an opportunity, as an investment priority, and as an industry challenge and, according to our Fintech Advisory Board members, its importance is unlikely to diminish for the foreseeable future.

By contrast, artificial intelligence (AI) continues to fall in significance as a fintech opportunity, ranking in fifth place after topping the leader board in both 2020 and 2021. If this year’s respondents’ longer-term views are to be believed, then AI could see itself climbing back into the top three by 2028; over 40% expect it to be the most significant fintech opportunity in the next five years and an additional 43% rate it as very important.

[Fintech Leaders] provides clarity on the issues all firms are experiencing and information on tangible internal/external solutions… Our firm uses these annual reports to inform our enterprise risk and control strategy and broaden our near-term and long-term management and investment views.

Seth Giovanetti, Head of Operational Risk, Cross River Bank, Fintech Advisory Board Member, CeFPro

FIGURE C.

Advanced

Hakan Danis, Director, Macro Scenarios & OpRisk Models, MUFG, Fintech Advisory Board Member, CeFPro

CYBERSECURITY CONTINUES ITS REIGN AS FINTECH LEADER

Just like last year, cybersecurity remains a critically important area for financial services firms for 2023, both as a fintech opportunity and an investment priority, as well as an obstacle towards fintech implementation. Cybersecurity emerged in first place across all three rankings and was also listed in text responses as a key area in which AI can be applied practically, including preventing cyber attacks, monitoring/surveillance, and as a counter offensive. When questioned on the key fintech opportunities over the next five years to 2028, respondents confirmed that cybersecurity is set to remain a key priority, even increasing in importance for an additional 10% of those surveyed (Figure D).

D. WHAT DO YOU CONSIDER TO BE THE MOST

FIRMS IN 2023 AND IN THE NEXT FIVE YEARS?

In addition, more than 50 Fintech Leaders Advisory Board members were interviewed by CeFPro’s research team to contextualize the survey responses using their experience and insight. There was consensus within the group that cybersecurity should remain the primary fintech opportunity for the second year running. This area is continuing to advance, with threat actors constantly evolving their approaches and tactics – the fintech industry is in a prime position to drive innovation and help the industry stay ahead of criminal entities.

FIGURE

OVERCOMING REGULATORY LIMITATIONS

As the industry recovers from the pandemic, with working practices becoming more stabilized and attention moving away from survival mode towards driving business forward, many of the rankings for 2022 and 2023 have remained the same. The most significant positional change, however, is regulatory aid, which climbed from 12th place to ninth. Despite this shift, only 13% and 14% of respondents viewed this as a fintech opportunity in 2023 and 2028 respectively. (Figure C (2023) & Figure D (2028).

Nonetheless, Fintech Advisory Board members believe that the current challenges and limitations of the regulators could partly explain cybersecurity’s high standing as an opportunity, as getting ahead of regulatory requirements represents an opportunity that fintechs could exploit.

Regarding resilience regulations within financial services, these are expanding to include not only operational resilience but also technology and outsourced activities. In addition, third parties, including fintech companies, are increasingly falling within the scope of the regulators. Incumbents are now being expected to manage third parties and ensure their cybersecurity practices are at the same level as their own to minimize potential weaknesses.

CYBERSECURITY AS A FINTECH FACILITATOR

As Fintech Leaders reports from 2021 and 2022 highlighted, the global pandemic escalated the speed and implementation of digitalization for many organizations, not least because of increased numbers of staff working from home. As well as the benefits this brought, this digital acceleration also represents a threat, opening potential vulnerabilities and weaknesses as new products and players look to transform the risk landscape. As a result, cybersecurity remains a key fintech opportunity, with companies offering advanced technologies and developing new and innovative products to help firms identify and protect their vulnerabilities in a bid to keep ahead of bad actors.

What is also apparent is that many of the key opportunities cited in Figure C are dependent upon effective cybersecurity measures. A primary example is customer experience, which is currently ranked in third position as a fintech opportunity – if cybersecurity is not treated with paramount importance, customer experience will be severely impacted. Other areas which have the potential to open cyber vulnerabilities include cloud computing and mobile and digital services, further demonstrating the role of cybersecurity in accelerating other fintech opportunities. This at least partly explains its position at the top of the table for the second year in a row.

I see [Fintech Leaders] to have both strategic and operational value. The research assists management to decide the best areas to get the greatest return on their investments… As a fintech consultant, it will help me provide stronger guidance to my clients… I find sharing the information with them to be a great planning opportunity.

Craig Spielmann, Risk Intelligence Leader, CNM LLP, Fintech Advisory Board Member, CeFPro

THE CRYPTO EFFECT

Cryptocurrencies, both private and national backed, ranked extremely low with this year’s survey respondents as an area for fintech opportunity. However, given the headlines that private digital/cryptocurrency exchanges attracted throughout the second half of 2022, and controversy around potential criminal usage, it remains unclear as to why private currencies are still so unestablished.

In text responses as to whether the fintech industry is hyped, underestimated, or neither, some respondents highlighted the perceived failures of some private cryptocurrencies and exchanges as negatively impacting the perception of fintech more broadly. However, given that fintech and cryptocurrency as a central-backed currency are both still in a growth stage, uncertainty is to be expected. Encouragingly, the level of uncertainty has fallen significantly, with 58% last year representing uncertainty, or too soon to say in 2022, this fell to 43% for 2023. The drop of 15% in a single year demonstrates a growth trajectory.

WHAT NEXT FOR CBDC?

Perhaps more surprising was the low ranking of national digital/cryptocurrencies. Numerous governments and central banks have launched their own central backed digital currencies (CBDCs), with many others announcing their intention to do so or researching future uses. Given the number of developed countries building foundations and developing case studies, including Turkey and Argentina, CBDCs look set to launch – yet only 12% of respondents rated them the most significant fintech opportunity by 2028 and 29% ranked them as not important.

For now, over 40% of respondents are hesitant about the future of CBDCs, stating it is too soon to say or that they are uncertain (Figure E). This sparked some level of surprise among the Fintech Leaders Advisory Board, given the work that is being undertaken by governments and central banks in multiple developed countries. However, the number of respondents who saw CBDCs as inevitable in their jurisdiction grew from 11% in 2022 to 40% in 2023; a significant increase of almost 30%.

For their part, Fintech Leaders Advisory Board members believe there is an inevitable move to CBDCs and the question is when, rather than if, they will take off. At present, their implementation is piecemeal and still in an experimental phase, lacking real drive or determination. Should national governments and central banks – such as the United States or the European Union – throw their full force behind them, CBDCs could escalate rapidly, opening up significant opportunities across many areas in financial services. This would be a game changer and represent a fundamental shift.

Currently, the practical uses of CBDCs are uncertain. While countries such as Argentina leverage them to counterbalance inflation, other territories are looking to determine their success before committing to implementation in their own jurisdiction.

FIGURE E. CENTRAL BANK DIGITAL/CRYPTOCURRENCIES IN YOUR OPINION, AND IN YOUR JURISDICTION, DO YOU FORESEE A NATIONAL BACKED DIGITAL CURRENCY AS INEVITABLE?

CBDCS AS A FORCE FOR GOOD

Although uncertainty remains as to future uses of private cryptocurrencies, CBDCs appear to be on the rise; though with limited investment expected in 2023, the fintech industry could still be some way from standardized uses. There are questions over the practicalities of CBDCs, how far and how fast they can be implemented, and what their uses might look like. However, opportunities could include inflation hedging, trade balance currency monitoring, and paying carbon tax.

There also remains a social question as to how CBDCs could be used to service the underbanked or unbanked, particularly in less advanced communities. As regions further advance or move towards digital payments infrastructure, integration of underserved populations has long been an objective of such initiatives, however, Fintech Leaders Advisory Board members highlighted the fact that benefits and incentives to consumers currently remain unclear. Although backed by a central bank, CBDCs are still a new concept for consumers reluctant to change.

PRIORITIZE EDUCATION TO UNLOCK POTENTIAL OF AI

Artificial intelligence (AI) ranked fourth as a fintech investment opportunity for 2023 (see Figure H), with 58% rating it as most significant or very important. When respondents were asked to share their views on the most practical and applicable areas for AI within financial services, their answers were diverse, as demonstrated in Figure F.

AI clearly has potential across multiple areas, but according to Fintech Leaders Advisory Board members, for it to reach its potential, training, recruitment, and technical knowledge must be key considerations for the future. Current education offerings are seen to be lagging behind the fintech industry’s requirements, with many academic institutions failing to offer up-to-date options and few subject matter experts available to impart knowledge.

Graduates are also increasingly seeking career advancement outside of the financial services sector, with a job on Wall Street less of a sought-after role than in years gone by. Many are instead looking to tech companies that offer higher salaries and a more fintech-style working environment. Once a sought-after destination for the brightest and best, financial services is now facing strong competition from other sectors that can compete or beat it with regards to salary, work-life balance, and professional/personal rewards. Some of these careers also lack the high regulatory oversight common within financial institutions.

As outlined in Figure F, the possibilities and potential uses of AI within finance are extensive. However, with many

FIGURE

financial institutions still using archaic legacy systems and often operating in individual silos, there is a risk of investment being made at a departmental, rather than a company-wide, level. Leveraging fintech solutions to advance many of the above potential benefits falls across risk, marketing, business lines, and management. By adopting a siloed approach, firms could end up increasing their already significant investment.

BENEFITS OF AI FOR ESTABLISHED BANKS

When exploring the most important fintech themes for incumbents and established banks over the next five years, the use of AI, machine learning, and advanced analytics came out on top, with 73% rating this area as most significant and very important (Figure G). AI and machine learning has received considerable attention and focus within financial services, although some industry leaders are skeptical as to its potential. However, the fact that almost three-quarters of respondents rated AI, machine learning, and advanced analytics as the most important theme for financial institutions shows that many do see its potential and expect to see significant advances in this area over the next half-decade.

G. WHAT DO YOU CONSIDER TO BE THE MOST IMPORTANT FINTECH THEMES WITHIN INCUMBENT/ ESTABLISHED BANKS FOR THE NEXT 5 YEARS?

AI FOR ANTI-FRAUD AND CUSTOMER EXPERIENCE

AI and machine learning have been pegged as key tools within fraud and financial crime, particularly around the areas of know your customer (KYC) and transaction monitoring. For middle office functions – such as risk management, detection, and preventing payments fraud – the use of AI, machine learning, and advanced analytics has improved anti-money laundering efforts and assisted with KYC regulatory requirements. Advances are still being made, but as one Fintech Leaders Advisory Board member commented: “This is a good thing, as the fraudsters will constantly be trying, and the regulators will constantly be overseeing”.

There are plenty of other uses and opportunities for established banks around the growth of AI, machine learning, and advanced analytics, including enhanced risk management oversight, revenue generation through new products and greater digitalization, increased use of chatbots, and anti-payments fraud in middle office. The rise of digitalization and remote working has led to the key benefits of enhanced customer experience and greater interaction across retail banking, investment banking, and other financial services.

AI and machine learning also offer great cost-saving opportunities for front and middle office divisions – for example, leveraging algorithms to smooth the customer identification and authentication process, deepening and personalizing customer-bank relationships.

While AI, machine learning, and advanced analytics have the potential to reduce manual processes, efficient oversight and monitoring is essential. This requires specific expertise and knowledge, which was an area highlighted as a challenge throughout our survey, along with an increasing need for a holistic strategy that extends across business lines.

AI FOR DATA ANALYSIS

Quantum computing, so closely aligned to AI and advanced analytics, sits much further down the table. Only 7% of respondents rated it as the most significant theme, prompting Fintech Leaders Advisory Board members to highlight the close links between quantum computing and AI, which may account for its low standing. Nevertheless, quantum computing remains an opportunity to advance AI capabilities, even though its current accessibility for any organization outside of the largest financial institutions remains limited. Board members expect this to be an area of growth over the next three-to-five years as AI and machine learning mature and more firms invest in its potential analytical power.

Finally, data sources and usage was ranked the second most important potential AI benefit for established banks over the next five years. As technology continues to advance and areas including AI and machine learning require additional data inputs, sources of data are continuing to evolve, with organizations exploring the use of unstructured data to provide a wider view of customer behavior.

[Fintech Leaders] empowers readers to draw conclusions and make commercially sensible decisions in a highly competitive marketplace.

Frank Morisano, Senior Managing Director, Treliant, Fintech Advisory Board Member, CeFPro

ONES TO WATCH: OPPORTUNITIES FOR 2028

Cybersecurity’s position at the top of the table is clear, with respondents and Fintech Leaders Advisory Board members ranking it the primary fintech opportunity both now and in 2028. However, as the industry moves further away from post-pandemic hesitancy towards a stronger appetite for growth, other areas are poised to climb their way up the leader board in the coming years. Below are some of the areas aside from cybersecurity that are set to become key fintech opportunities by 2028.

QUANTUM COMPUTING

An area which looks set to rise in importance within fintech over the next five years is quantum computing. Ranking low in 13th place for the second year running, quantum computing currently remains out of reach for many organizations as a result of the high implementation costs involved. However, there is an expectation of growth over the coming half-decade, with the percentage of respondents ranking this as the most significant area for future fintech opportunity tripling from 6% in 2023 to 18% in 2028. While this is a relatively low number compared to cybersecurity, it nonetheless marks quantum computing as a potentially up-and-coming area and certainly one to watch. As noted above, Fintech Leaders Advisory Board members highlighted the link between quantum computing and AI and its importance in building out future capabilities, with some expressing surprise that it remains such a low priority for 2023 given its potential for areas such as open banking. Others suspected this may be because of soaring implementation costs and limitations in subject matter expertise.

ADVANCED DATA & ANALYTICS

Advanced data & analytics remains a consistently high ranker as per all CeFPro reports, including previous Fintech Leaders. Ranking second as an opportunity in 2023, 70% of respondents rated it as either very important or most significant, with this figure rising to nearly 80% for 2028. As the industry continues to advance, data requirements are only increasing, and analytical capabilities are becoming more deeply engrained in business processes. The need for increasing volumes of data makes this area ripe for continued growth and development.

ARTIFICIAL INTELLIGENCE

Artificial intelligence (AI) climbed from fifth place as a fintech opportunity in 2023 to second place for 2028. Only 20% of respondents felt that AI was a key opportunity for 2023, yet this number more than doubled when looking ahead five years, with 41% rating it as most significant.

Fintech Leaders Advisory Board members attributed this to two potential reasons:

• With attention throughout the pandemic shifting because of new working practices, AI was seen as something for the future rather than an essential during ‘wartime’.

• AI has yet to deliver on what is considered to be its full potential. Initially hailed as a revolutionary technology for financial services firms with the potential to fill data gaps, automate manual functions, and increase accuracy and efficiency, it was touted as a silver bullet. To date, it has not lived up to its hype, potentially because resources and attention were diverted to more immediate Covid-19-related challenges.

[Fintech Leaders is] a source of valuable information on the competitive landscape, enabling stakeholders to make informed decisions. It will help my team identify potential areas for improvement, as well as potential opportunities for collaboration and innovation. This will help us ensure that we are ahead of the curve and staying competitive.

Alessia Falsarone, Adjunct Faculty, The University of Chicago, Fintech Advisory Board Member, CeFPro

SECURITY DRIVES INVESTMENT PRIORITIES

Investment in fintech for 2023 looks set to remain focused towards security and defenses as firms seek to protect their products, customers, and data, with cybersecurity, anti-fraud, regulation, AI, and AML making up the top five priority areas. Investment in data and people to effectively manage and oversee technological advances also remains strong. As financial services and fintechs strive to develop new working practices, whether remotely, at home, or in a hybrid environment, bad actors continue to manipulate vulnerabilities and develop new tactics to infiltrate systems. The recent geopolitical and economic landscapes have only led to increased risks, with rising tensions and threats from state actors. Economic turmoil has enhanced human-related risks, with increased potential and opportunity for insider fraud. For this year at least, it appears that many infrastructural changes that look to further advance fintech and digital advances will have to take second place to security and resilience.

CYBER TAKES CENTER STAGE

Cybersecurity not only dominated the rankings as a fintech opportunity, but also ranked as the highest investment priority among survey respondents. As Fintech Leaders Advisory Board members highlighted, although this area represents a significant opportunity for enhancing security and enabling further fintech advances, it also represents the largest single risk for bringing down or causing significant disruption to an organization.

Investing in cybersecurity enables firms to increase protection of their products, which are continuing to evolve across the industry. As new products are launched and digitalization advances, cybersecurity is only increasing in importance and expanding in its remit. It is therefore unsurprising that 58% of respondents listed cybersecurity as the most significant investment area for 2023 (Figure H). Its standing remains almost identical to 2022, when 56% rated it as most significant and 29% as very important. In fact, the top four investment priorities year-on-year remain unchanged, namely: cybersecurity, anti-fraud, regulatory & compliance, AI and AML.

H. WHAT DO YOU CONSIDER TO BE THE MOST IMPORTANT FINTECH INVESTMENT AREAS FOR 2023?

FIGURE

FOCUS ON FRAUD

For 2023, anti-fraud retained its position as the second highest fintech investment priority area, with 23% of respondents rating it as most significant and 48% as very important; an identical match to 2022. It was highlighted that fraud is responsible for the largest operational losses seen within organizations.

As fraudsters’ activities continue to evolve, new weaknesses and vulnerabilities are constantly revealed. The financial services industry has seen a drastic increase in authorized push payment (APP) fraud in recent years, becoming more challenging to identify and resulting in larger losses. As regulators continue to focus on fraud, the regulatory burden is only becoming heavier. Globally, regulators are reviewing reimbursement models and placing the onus more directly on financial institutions. As a result, fintech is increasingly falling within the scope of the regulatory agenda, placing more stringent fraud monitoring regulations on a wider range of companies.

Alongside APP fraud, the global pandemic also gave rise to an increase in internal fraud. Though losses were minimal, investment was required to ensure employees were not manipulating the new remote work environment and reduced levels of controls. As the industry enters a less volatile working environment, investment in antifraud, both internal and external, nonetheless remains a key priority.

Aside from anti-fraud, another area receiving significant investment attention was AI. Ranked fourth, 31% of respondents rated AI as very important and 27% as most significant; in fact, it was one of the few areas that saw a rise in votes for ‘most significant’ investment priorities in this year’s survey. Fintech Leaders Advisory Board members felt that this could be a result of firms investing in people and developing technology talent to drive forward AI initiatives.

THE SLEEPING GIANT: ESG

ESG (referred to as ESGtech) is an area facing increased external pressure and scrutiny from regulators and investors, and much uncertainty as to future expectations. Yet only 14% of respondents rated ESGtech as a top investment priority for 2023, with 12% viewing it as not important. Many of our Advisory Board members were surprised to see ESG so far down the rankings, speculating that this could be because much of the work around developing industry standards is being conducted outside of large financial institutions and residing with ratings agencies.

However, ESG is a key focus for global regulators, with the UK and Europe advancing regulatory programs. As the area of regulation and compliance was ranked in third place, it could be argued that some respondents may have viewed ESG under the umbrella of regulation, as opposed to ESGtech. Financial institutions and fintech companies both face long-term changes and will need to

adapt to various strategies to encapsulate the diversity of upcoming ESG regulations. This area could therefore be seen as an ongoing spend/budget priority, as opposed to a short-term investment.

In addition, many organizations currently lack dedicated personnel or teams to lead their ESG change, while many smaller fintech organizations do not consider themselves to be within the scope of ESG at all, according to some Fintech Leaders Advisory Board members. There is an argument that smaller organizations may not recognize their environmental or social impact compared to larger financial institutions, which may have dedicated ESGfocused teams or personnel already in place.

What is clear is that ESG will continue to rise in importance. Whereas CeFPro’s Non-Financial Risk (NFR) Leaders report showed that for non-financial and operational risk professionals, ESG is clearly identified as a significant challenge and investment priority, in the fintech world this realization has not yet transpired. However, the general consensus among Fintech Leaders Advisory Board members is that it is only a matter of time until a dramatic shift in focus towards ESG occurs, causing it to rise up the rankings.

PAYMENTS BRACED FOR OVERHAUL

Following significant advances in European payment schemes, the area of payments remains mid-table for 2023. In comparison, some jurisdictions remain further behind, with US systems requiring more significant reform and infrastructure investment.

The US payments system is dominated by a small number of service providers which require high levels of cash to maintain performance. However, the Federal Reserve is moving towards introducing an alternative instant payment service: FedNow. FedNow could reduce the monopolized nature of the current set-up, creating opportunities for fintech companies to facilitate instant payments, as well as providing disruption to some existing business models. Organizations that operate by leveraging the current payment rails, including P2P payment service firms, may face difficulties.

As seen in jurisdictions offering instant or real-time payments, an around-the-clock service can enhance the customer experience. Yet despite various advances throughout 2023, only 9% of respondents rated payments as their most significant investment priority. Encouragingly, 41% viewed it as very important, and with 50% of respondents expecting a high or significant level of investment over the course of 2023, payment services is an area which may climb up the rankings in the coming years.

CYBER LEADS REGTECH INVESTMENT PRIORITIES

As a key fintech subset, this year’s survey also looked to explore the most important regtech investment areas for 2023. The rankings from 2022 to 2023 are relatively unchanged, with the top six areas remaining in the same order and viewed at similar levels of importance. Investment for 2023, therefore, does not look set to drastically alter – the theme of security remains top for regtech, for and fintech more broadly.

As in previous sections, cybersecurity ranked significantly higher as a regtech investment priority area than others, with 54% of respondents rating it as most significant and 32% as very important. This can be partially attributed to the Covid-19 pandemic and the rise of the remote landscape, resulting in efforts to further strengthen cyber resilience. As cybersecurity risks including phishing rise, continued or increased use of third parties and fintech/ regtech services has become a key regulatory focus, to ensure firms are developing adequate cybersecurity practices both internally and across their external partner or service provider network.

ALL ROADS LEAD TO DATA

Data (comprising privacy, regulatory, and governance) ranked second, attracting almost 80% of very important or most significant votes. Given recent advances and investment in cybersecurity, anti-fraud, and AML, it is clear that data has a crucial role to play in providing valuable insight. However, collecting, storing, and protecting data (as well as complying with regulatory requirements, including privacy expectations) remains a significant undertaking. Yet insights from data allow organizations to develop products and services, and better understand customer behavior and risks.

Fintech Leaders Advisory Board members highlighted the fact that data remains fundamental to every one of the top four regtech investment areas. There are also many others lower down in the rankings that could fall under the area of data strategy and investment. One

such example is ESG; a relatively immature area within fintech and financial services, it currently sits inside the bottom half of the table. One reason behind this could be the current challenge around insufficient or inaccurate ESG data, meaning it may have been viewed under the area of data as opposed to ESG. The same could be argued for AML/KYC, where much of the investment is focused towards data and analytical capabilities to detect behavioral patterns and identify anomalies.

NO APPETITE FOR ESG

ESG as a regtech investment priority received the largest proportion of ‘not important’ votes, with 10% of respondents anticipating no investment in ESG during 2023. As outlined above, this could partly be explained by ESG falling across several categories, including data, compliance, and regulation. It can also be argued that for some less established organizations, ESG is not currently a top priority. Limited system infrastructure may also be a contributory factor, making investment in IT and any level of advanced technology unlikely. However, Fintech Leaders Advisory Board members expect investment in ESG to grow over the next two-to-three years, making this an area to watch as the industry progresses.

[Fintech Leaders] will help us to get an understanding of the needs of our clients and their expectations for the future. It will also show how our peers collaborate with fintech solutions and what their experiences have been.

Tibor Bartels, Head of Transaction Services Americas, ING, Fintech Advisory Board Member, CeFPro

OBSTACLES FOR FUTURE ADOPTION

When reviewing the most important obstacles for successful fintech adoption, cybersecurity once again comes out on top, with 55% of respondents rating it as most significant and a further 31% as very important (Figure I). This is perhaps unsurprising as, with regulators continuing to tighten their grip around defenses both internally and across third parties (inclusive of fintech companies), effective cybersecurity measures in all areas are becoming increasingly necessary.

FIGURE I. WHAT DO YOU

Customer confidence/trust

Consumer

Regulatory or licensing requirements

Client retention risk/losing clients

Inability to serve underserved

THE IMPORTANCE OF EXPERTS

As fintech adoption continues to develop, larger organizations are becoming ever more reliant on experts to ensure effective implementation. However, there is still a shortage of technological subject matter experts within the industry, particularly in areas such as data and computer science. The global pandemic hampered firms’ abilities to nurture and attract talent – with remote working more readily accessible, geographical location of individuals and their proximity to the office became less important, opening up a wider talent pool and

increasing competition for labor. The Great Resignation also impacted head count, while financial services as an industry faces ongoing competition from technology companies too, which arguably offer potential employees more opportunities for growth, development, pay, and perks. Not only does this impact recruitment and retention but, by default, financial services firms also risk falling behind in regard to their product offerings and customer-facing technology.

Technological subject matter experts were therefore the main noticeable change from 2022 to 2023, moving up

four places in the rankings to third position and attracting 12% more votes in the ‘most significant’ category. Attracting and retaining technology subject matter experts is critical to the fintech and financial services industries, without whom innovation and advances may stagnate.

Data integrity and quality was ranked as the second most important obstacle for successful fintech adoption, with 82% rating it as very important or most significant. Data should be considered synonymous with cybersecurity given the insights required to monitor many of the highlighted areas in Figure H, its position is therefore unsurprising. Strengthening data processes is the starting point for many fintech advances, feeding technology inputs and allowing for advanced analytic and monitoring capabilities.

At the bottom of the table, partnerships and mergers & acquisitions (M&A) were not considered obstacles to successful fintech adoption, despite the potential cyber vulnerabilities opened up as a result of merging systems and security. However, there is an argument that this challenge could be encapsulated within cybersecurity, which ranked in first place.

COVID-19: HELP OR HINDRANCE?

Within the remit of potential obstacles for fintech adoption, CeFPro also analyzed the impact of Covid-19, exploring which areas were either impacted or aided throughout the pandemic and subsequently. Digital customer experience was viewed as the area that was most aided by Covid-19. Given that branches were forced to close almost overnight, digital services became vital to successful operation, making it unsurprising that 84% of respondents rated digital customer experience as a help, with only 14% saying it made no difference.

Several of the other top-five ranked options could be said to fall under the header of digital customer service, such as ease of payments and online banking. These enabled banks to provide faster payments and deliver critical online services at a time when the industry was forced into an entirely remote environment.

The next highest rated area was data and analytics, with 70% of respondents viewing it as very important or most significant, causing it to rise five places from the 2022 rankings. It is also interesting to note that during the early days of the pandemic, data and analytics was viewed less favorably, with the industry placing significantly more importance on its role during recent years.

The areas of client relationships and business interaction dropped down the rankings this year, though each still received 50%+ as many ‘helped’ votes as the alternative options. Many of the Fintech Leaders Advisory Board members attributed this to the fact that certain client groups may be less technologically advanced and therefore reluctant to change. For those more resistant to technological advances, ongoing client relationships proved a vital aid throughout the pandemic, ensuring that access to key services was still provided. Positive customer treatment throughout crises such as the Covid-19 pandemic can serve to strengthen competitive advantage among the less technologically minded, who are often legacy customers with rigid brand loyalty.

Overall, technological advances and efforts to advance digital products and services prior to the pandemic ensured success for many throughout. Digital customer experiences, mobile payments and banking, instant payments, and AI advances all served to support the maintenance of key business processes throughout this challenging period.

CeFPro draws its insights from a diverse group of individuals, which includes not only the largest global banks but smaller regional banks as well. [Fintech Leaders] insightful analysis encourages retrospect against current industry trends and intellectual conversation to encourage free-thinking for the next big thing.

Albert Chin, Model Development and Risk Management, Freelance, Fintech Advisory Board Member, CeFPro

BENEFITS OF FINTECH ADOPTION

Many of the fintech opportunities and much of the investment priorities within our research focused on back-office processes to enhance security. However, the benefits of fintech within respondents’ organizations was spread across front- and back-end processes. The most important benefits for organizations in this question focus on both back-office and front-office areas with direct impact on customers, including customer experience and digital banking.

When examining the key benefits of fintech adoption, the top three areas were very closely ranked. Automation and

speed, enhanced customer experience, and innovation/ forward looking all received a vote split of between 1-2% of each other.

Automation and speed emerged as the most important benefit of fintech, with 31% of respondents rating it as most significant and 43% as very important (Figure J). This year’s key themes of cybersecurity and anti-fraud play into this area, with automation and speed driving efficiency, and the automation of security defenses potentially advancing capabilities further.

Automation and speed

Enhance customer experience

Innovation and forward looking

Improve cost efficiencies

Digitalization opportunities

Responsiveness to changing demand

leadership/reputation

Decreased exposure to fines/ regulatory investigations

Expand to new business areas and revenue streams (increased resilience) Redesign of customer engagement model

The previously mentioned lack of subject matter experts and talent within financial services is also relevant here: labor resource requirements could be minimized by enhanced automation and speed. Automation enables organizations to operate with reduced head count, allowing them to target more tailored subject matter experts who may otherwise choose to work for technology companies.

Fintech also offers firms the opportunity to diversify and increase their digital offerings. As customer expectations and demands evolve, fintech integration could allow for more tailored product placement and customer-specific outreach. The results for 2023 remain largely the same as those from 2022, with 75% of respondents rating enhanced customer experience as either very important or most significant. Despite some hesitation around the perception of fintech progress, it is clear that respondents still see value in several areas.

As the industry continues to emerge from the pandemic, priorities are evolving. Firms that previously relied on a

less digital model were less focused on the digitalization benefits of fintech, while others saw a benefit in leveraging fintech to manage costs and efficiencies, even within a more traditional model. An area falling to middle of the ratings was responsiveness to changing demand, with 22% rating this as most significant and 41% ranking it as very important. Given the evolution of customer expectations pre- and post-Covid-19, it was surprising that more respondents did not see the value of fintech in enhancing responsiveness as demand evolves.

Customers increasingly expect more digital products and services, with enhanced customer experience, greater speed, and embedded automation, alongside adequate security methods. Many customers who once opted exclusively to use branches and were hesitant to adopt digital banking options were forced to adapt to remote or digital solutions throughout the pandemic. Once they leverage the benefits and convenience of digital banking, however, they are unlikely to return; therefore, it remains a surprise that changing demands were not a higher-rated benefit.

FIGURE J. OVERALL, WHAT DO YOU CONSIDER TO BE THE MOST IMPORTANT BENEFITS OF FINTECH FOR YOUR ORGANIZATION?

PERCEPTIONS OF FINTECH

Many topics viewed within the remit of fintech frequently feature as a headline risk, with areas including cryptocurrency and cybersecurity becoming mainstream news during the past year. This perceived headline risk can influence both businesses and customers when considering future direction.

In this year’s survey, 32% of respondents viewed the general status of the fintech industry as just right (Figure K), with an additional 31% rating it as understated or underhyped. This reflects relatively well, with 63% leaning towards a more positive stance. Given the headline risks mentioned above, this might have been expected to account for a significant drop.

CeFPro further explored whether respondents felt the industry was overstated or over/underhyped. The consensus appeared largely positive with many citing regulatory challenges as a hindrance to further advancement. There also appears to be a disconnect when it comes to the ability of larger organizations to adopt or partner with fintech organizations, with management sometimes reluctant to embrace change.

THE VOICE OF THE INDUSTRY

When asked to describe whether the fintech industry as a whole is overhyped, underestimated, or not, individual text responses included:

• Many ideas are still in an experimental phase and customer adoption, driven by regulatory oversight, will be the key to a successful future.

• Applications of fintech are not fully stated or appreciated in many industries, especially crypto, digital assets, and blockchain innovations.

• At the height of the pandemic, governments mandated less human interaction in daily activities; this is the very essence of fintech.

• Some fintechs have great technologies that haven’t yet been discovered by the wider market, while others are overhyped.

• It’s still early days for data sharing, insights, and better outcomes for customers through digitalization.

• Fintech has some successes, but once the regulatory landscape is equalized, it will suffer.

• Fintech is not overhyped; rather, it is what needed to happen, especially in Africa and Asia where it delivers financial inclusivity. It is delivering finance and banking services to numerous unbanked markets.

ADOPTION AND EVOLUTION

It appears that, for many, fintech adoption is slow at the higher level of larger financial institutions. Though its potential is often recognized, the flexibility, willingness, and capabilities needed to delve into fintech collaborations and adoptions are lacking. Given the size of many incumbents, change is challenging – with systems often operating on outdated mainframes overloaded with add-ons, integrating technology remains a pain point.

Collaboration opportunities are also hampered to some degree by regulators, who often require security and defensive controls at the level of larger organizations, and which may be unfeasible for the scale. In addition, as a result of recent M&A activity, many key systems across acquired firms are duplicated, with some never fully integrating under one system. For now, fintech companies are managing to maintain their nimble nature, though with many being acquired by or merging with larger organizations, the pace of change will inevitably slow.

• Fintech is deemed risky without significant partnerships which, in many cases, hampers innovation. Many financial services firms are missing opportunities as current risk management practices favor incumbents rather than fintech.

• Business leaders’ literacy on technology subjects is oftentimes ‘patchy’.

• Negative news and regulatory concerns can take everyone’s eye off the positives; the challenges are manageable and if tackled head on, the best is yet to come!

• The industry has not yet hit prime, even though the solutions are there.

• Not all executives understand the importance of fintech and its value to banks’ monetary functions.

• Poorly managed fintechs have impacted the industry’s reputation; those managed well will disrupt the industry.

Some respondents appear disillusioned with the promises made by some technologies and the perception of failed delivery. However, with the disruption caused by the pandemic and the subsequent geopolitical and economic turmoil, one could question whether fintech innovation has been top of mind.

A final point on fintech’s general status is the evolution of opinion over the last three years (Figure K). The percentage of votes for ‘just right’ grew steadily from 2021 through 2022, rising from 24% to 44%, but the 2023 results show a 12% decrease at only 32%. However, the proportion of those who consider the industry to be overhyped or overstated has fallen slightly from 45% in 2020 to 37% in 2023. Overall, there remains uncertainty as to whether fintech can truly live up to expectations. Sifting the opportunity from the noise will be a key focus as the industry progresses, alongside regulatory updates and better understanding of its direction and ultimate potential.

FINTECH LEADERS SURVEY, RANKING, AND METHODOLOGY

CeFPro’s Fintech Leaders Report is unlike other fintech studies and reports, which focus on capital investment, technology rankings, or expert opinions of analysts within the research company. Instead, CeFPro® has devised a painstaking methodology that reflects the views and opinions of the sector: ‘the voice of the industry’. The Fintech Leaders Report is the most comprehensive study of its kind, examining the business requirements and status of financial technology in financial services, and the key solution providers.

Initial work on the survey and report began in late September 2022, followed by several rounds of one-to-one and group calls with the Fintech Leaders Advisory Board members. This was further supplemented by CeFPro’s research team, who gathered the opinions of independent industry professionals and past respondents. The online survey went live on October 11, closing on December 31. Anyone with an interest in financial technology within financial services was invited to participate, although votes for rankings were only selected from end-users and any conflicts of interest were discarded. In addition, all shortlisted companies, including last year’s winners, were invited to participate and to provide additional supporting data.

The rankings in the report reflect the views, opinions, and experiences of industry professionals, specifically the end-users of solutions and services. In addition, CeFPro® undertakes extensive research, gathering the insight and opinions of the 60+ Fintech Leaders Advisory Board members, whose votes and opinions are both incorporated within the overall ecosystem, and used as a benchmark and validation process. In addition, CeFPro’s research and analysis team also undertakes an extensive review of all votes, data, and report drafting. Best in categories are determined by eligible votes cast on a ‘first past the post’ voting system. Rankings of the overall Fintech Leaders ecosystem are taken predominantly from the collated weighted scores of each of the categories, plus the open text responses within the survey, and ranked accordingly.

CeFPro® aims to continuously refine the process and methodology each year, to develop, define, and ensure that the most accurate end-user rankings report is delivered. In short, CeFPro validates the data and report through several stages of independent verification.

KEY STAGES OF CEFPRO’S FINTECH LEADERS RESEARCH AND METHODOLOGY

Extensive research with past respondents of Fintech Leaders, industry professionals, and key Fintech Leaders Advisory Board members.

One-to-one and group discussions with Fintech Leaders Advisory Board members to define the survey scope, market participants, and key industry categories.

Sign-off of the final survey by CeFPro's research team and members of the Advisory Board.

‘Push survey’ campaign to industry professionals, as well as members of the Fintech Leaders Advisory Board, gathering more than 2,278 eligible votes.

50 individual interviews with Fintech Leaders Advisory Board members, based on findings of the survey results and key themes in the industry.

Review of data provided by vendors and consultants, including case studies, insights, and interviews.

Hundreds of independent reference checks by CeFPro analysts to validate data.

FINTECH LEADERS 2023: TOP 30 OVERALL ECOSYSTEM RANKINGS

Moody’s Analytics retains top spot

SAS rises 3 places to 2nd position

Refinitiv (LSEG) is a rising star, showing leaps year on year, now in top 5

Significant rise in places for Accenture, EY, MetricStream, and MSCI

Professional services have strongest performance to date, with McKinsey & Co. and Boston Consulting Group entering top 30

FINTECH LEADERS 2023: CATEGORY RANKINGS

Accounting & Treasury Management

1st Place: Oracle 2022: Wolters Kluwer

Advanced Analytics

1st Place: Bloomberg 2022: Bloomberg

Anti-Fraud

1st Place: NICE Actimize 2022: LexisNexis

Anti-Money Laundering

1st Place: NICE Actimize 2022: NICE Actimize

Artificial Intelligence

1st Place: Google 2022: Google

Balance Sheet Risk

1st Place: Moody’s Analytics 2022: Moody’s Analytics

Blockchain/DLT

1st Place: Coinbase 2022: Coinbase

Business Process Management (BPM)

1st Place: Oracle 2022: Oracle

Business & Consumer Lending

1st Place: Funding Circle 2022: Kabbage

Capital Markets & Trading

1st Place: Bloomberg 2022: Bloomberg

Cloud Solution Provider

1st Place: Amazon Web Services (AWS) 2022: Amazon Web Services (AWS)

Compliance Reporting

1st Place: Wolters Kluwer 2022: Wolters Kluwer

Conduct Risk

1st Place: Refinitive (LSEG) 2022: MetricStream

Core Banking / Bank-End Systems

1st Place: Finastra 2022: SAP Fioneer

Credit Risk

1st Place: Moody’s Analytics 2022: Moody’s Analytics

Cybersecurity

1st Place: Cisco 2022: Cisco

Data Management & Governance

1st Place: Bloomberg 2022: Oracle

Environmental, Social, Governance (ESGTech)

1st Place: Refinitive (LSEG) 2022: Sustainalytics

Financial Data

1st Place: Bloomberg 2022: Bloomberg

Infrastructure

1st Place: Amazon 2022: Amazon

Insurance

1st Place: Guidewire 2022: Guidewire

Know Your Customer (KYC)

1st Place: NICE Actimize 2022: Accuity

Market Risk

1st Place: Bloomberg 2022: Bloomberg

Model Risk

1st Place: Moody’s Analytics 2022: Moody’s Analytics

Money Transfer & Wallets

1st Place: Venmo 2022: Revolut

Most Innovative Established FI

1st Place: JP Morgan

Operational Risk

1st Place: Archer (an RSA Company)

2022: IBM

Payments Services

1st Place: Fiserv 2022: Paystack

Personal Finance

1st Place: Moneytree 2022: Moneytree

Professional Services (Consulting)

1st Place: EY 2022: EY

Regulatory Reporting (for adhering to a regulator’s requirements)

1st Place: Moody’s Analytics 2022: Wolters Kluwer

Stress Testing

1st Place: Moody’s Analytics 2022: Moody’s Analytics

Third-Party Risk

1st Place: Process Unity 2022: Archer (an RSA Company)

CEFPRO RESEARCH AND SERVICES

The Center for Financial Professionals, CeFPro®, is an international research organization dedicated to the advancement of the profession, offering customized information and information services. CeFPro has a long history of engagement within the industry, and with industry professionals, that allows us to provide in-depth research, reports, and information on a range of financial, risk, and technology subject matters. We have assisted numerous clients with their content requirements, as well as providing suppliers with a deeper understanding of market practices, future opportunities, and investment requirements.

Just some of the opportunities that CeFPro can offer your organization include:

MARKET PLACEMENT, POSITIONING, AND PROMOTION

CeFPro’s clients include consultancies, vendors, financial institutions, and regulatory bodies. Our positioning is unique, guided by advisory boards made up of industry professionals from a variety of backgrounds across the world. CeFPro can offer a greater insight into the marketplace, using our clear understanding of the industry and technical knowledge to provide tailored and bespoke analysis of specific challenges being faced by our clients.

In addition to placement in a dynamic and competitive marketplace, CeFPro offers compelling, robust, and independent research. Research can be co-branded, targeting critical business needs, industry sectors, and geographies. We assist clients by delivering a greater understanding of their position in the marketplace, as well as supporting them to better position their solutions. We can offer a clear differentiator in a crowded sector, assisting in the enhancement of clients’ branding and awareness.

All CeFPro’s research papers are based on a partnership, with direct business applications to end-users that are current and relevant. Our understanding of the marketplace and knowledge of institutions also enables us to assist with competitor analysis, helping our clients gain a greater understanding of their competition and their relative positioning, and assisting in their strategy to pursue a better market position for increased success.

RESEARCH AND REPORTS

Our co-branded projects provide insight into businesscritical challenges. All co-branded research and reports are bespoke, tailored to the needs and requirements of each individual client, from mass online surveys to bespoke qualitative approaches, such as one-on-one interviews with industry professionals. Our deep and widespread expertise allows for a blend of differing approaches.

ROUNDTABLES AND EVENTS

CeFPro’s international events are established as world leading, allowing us to host targeted roundtable discussions or bespoke events, with research and market challenges at the center of the discussion.

MEDIA AND PROMOTION

CeFPro offers members a complimentary bi-monthly magazine, weekly e-newsletter, and online membership area, allowing our research partners the opportunity to leverage their products and services across multiple channels to maximize outreach, awareness, and branding.

INFRONT MAGAZINE

A bespoke, bi-monthly magazine created by the industry, for the industry, iNFRont provides insight and thought leadership-driven content from industry experts across all areas of non-financial risk. Aiming to provide clarity on key challenges, benchmark approaches with industry peers, and spark ideas for future development, iNFRont is a leading resource for all non-financial risk silos.

OTHER CEFPRO REPORTS

Center for Financial Professionals offer an extensive library of market intelligence reports available to download for free with CeFPro Connect:

FINTECH LEADERS 2022

Find out just how much the the rapidly evolving financial technology industry is changing year on year by reading the Fintech Leaders 2022 report. With the outcomes of the 2023 results in mind, how has the landscape changed in just one short year since we last heard from the industry experts that are involved with fintech day in, day out?

Whilst this year’s research was conducted during a time of global sanctions and economic volatility, the 2022 report came around at a time when the world was adapting to a new normal as we emerged from the Covid-19 pandemic. Was the industry’s reaction to the pandemic the same as that of this year’s events? Are there any differences in what was deemed an opportunity? Have investment priorities changed in such a short span of time?

Download the Fintech Leaders 2022 report to gain a complete understanding of the financial technology industry and how external events are having an impact, enabling you to full understand how the industry is changing and successfully plan the future ahead.

ESG STATE OF PLAY: BANKS COMPLIANCE AND AUTOMATED REPORTING TRENDS

Conducted in partnership with solution provider Workiva, ESG state of play seeks to establish where the industry stands with ESG reporting, and benchmarking technology capabilities with the influx of ESG changes that are occurring as ESG continues to gain prominence within the industry.

This report centers around expectations for increased regulatory change and scrutiny as banks increasingly incorporate ESG mandates within their operations.

NON-FINANCIAL RISK LEADERS 2022 REPORT

Non-Financial Risk Leaders is an annual report providing clarity on upcoming trends and opportunities within non-financial risk, including a top 10 ranking of the most prominent non-financial/operational risks as voted for by almost 1000 industry professionals.

With non-financial risk rapidly building momentum and encompassing some of the most volatile risks of current times, the ability to understand the cause and effects of these risks and how to overcome them is essential for any institution looking to rise above the rest and prepare for their future. Non-Financial Risk Leaders is your new go-to resource for doing so.

EFFECTIVE SPREADSHEET MANAGEMENT

Conducted in partnership with Incisive Software, this report investigated the current industry status of management and oversight of spreadsheets, and what methods institutions are using to establish solid foundations to promote accurate date used to support critical business decisions.

The findings of the survey aim to provide insight into the key benefits companies can expect to receive from an effective spreadsheet management program.

COMING SOON…

• Third party risk

• Cybersecurity

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