Reflections on 2022
As we hurtle towards the end of the year, I wanted to reflect on 2022 and see how my forecasts for the year have turned out.
At the start of 2022, I predicted that the metaverse and Web3 would start to trend, banks would embrace climate tech, and personalisation in digital banking would be more of a priority.
Reflecting on these predictions, my hit rate was two out of three.
Web3 and the metaverse have hogged column inches in 2022. Following crypto’s extraordinary Covid boom, we have had the inevitable bust, with the FTX debacle providing a nice full stop. However, interest and hype surrounding crypto, Web3 and the metaverse remain undiminished.
In a rush to understand the why and the what, a few banks – HSBC, Standard Chartered and JP Morgan, for example – have staked a claim to virtual lands. Barbados has recently joined them by setting up the first embassy in the metaverse with a diplomatic compound in Decentraland.
And yet, beyond PR and insight, it seems there is not much to be gained from these forays. It appears people are yet to find their way into these virtual lands. For example, an October 2022 report from DappRadar mentioned the measly number of 516 active users for the previous 30 days on Decentraland – a figure Decentraland hotly disputes, claiming the number is closer to 56,000. Yet this still feels ridiculously low.
Meanwhile, game platforms have evolved at dizzying rates. Three billion of the eight billion people on planet Earth now play video games if you include smartphones and tablets in the statistics. We are becoming addicted to games. Surely, games are the gateway to the metaverse. The platforms remain as islands, with gamers island hopping. But in the background, using Web3 technologies, companies are looking at ways of stitching this vast array of platforms together. That is an exciting possibility.
In my conversations with brands, I have started to point at game platforms as having maximum interest. The audiences are enormous, and many gamers practically live in the virtual. My challenge to brands is understanding how these virtual worlds could impact their products and services. Now is a great time to study, gather insight, understand what is happening and start strategising what it means to take finance into virtual worlds, asking questions such as: What does insurance look like in the virtual? Will gamers buy a policy for an avatar? What currencies will be used to drive virtual commerce?
Moving on to my next prediction, we have seen tremendous interest in climate tech for the financial services community. Banks from NatWest to DBS and CommBank to Tandem have started deploying carbon calculators based on transactional data into their digital banking platforms, partnering with firms such as Cogo, Ecolytiq and Doconomy. Visa also invested in Ecolytiq in 2022 (Mastercard invested in Doconomy in 2019). This transaction-level data has raised consumer awareness, and the evidence suggests these services are starting to shift the needle in terms of helping consumers decarbonise. Other organisations and businesses have focused on green products, ESG investments, measurement, and off-setting. Off-setting is set to become a big deal moving forward, and regulators are starting to take notice. For instance, Air Carbon Exchange (ACX), based out of Abu Dhabi, has recently secured investment from Mubadala, the Abu Dhabi sovereign investor, supporting ACX’s establishment of the first fully regulated carbon trading exchange.
I have had the good fortune to work with a Tier 1 financial services company looking at options around how it can use its scale and audience to promote climate awareness. This has led to me directly working with some of the leading climate tech companies and researching consumers. It seems that people are genuinely interested in their carbon footprint. But there is a danger that interest wanes quickly. I now worry that transactional-level carbon calculations could become a fad like PFM (which everyone thought was a great idea, except for the end user). Ensuring that consumers make big decisions rapidly is imperative. But you should recognise that often, these choices are unpalatable. It is no coincidence that Cogo, Doconomy and Ecolytiq have dialed up the behavioural science aspect of what they offer.
Climate tech will continue to be a big deal in 2023. Finance and climate tech remains a winning combination, but flexibility is the watchword as we understand more about how the end customer engages in the topic. I love that this spirit of evolution and adaptation seems part of the DNA of many climate tech companies, which I think will help them succeed.
Finally, to the prediction around personalisation. This I got wrong. Despite the ever-greater numbers of digital subscribers to banking and financial applications (particularly on mobile), there appears to be very little evidence of a move into hyper-personalisation. Why? There remains a curious blind spot around engagement and building deeper customer relationships through digital channels. And it’s okay, banks. It’s not just you. Most corporations seem to be struggling.
I have worked with two blue chip companies, neither in the FS sector, but both of which have millions of digital customers who offer nothing more than utility. They know digital is the priority and customer engagement is vital, but like the banks, they cannot make the necessary changes. The reason why is simple. There is a tremendous sunk cost in existing experiences, with IT backlogs measured in years, not months. Until something is invented that can slot in seamlessly and work with existing platforms, I doubt personalisation and engagement will be a priority. And that is a real problem and a missed opportunity. Adding value to existing customers and building relationships is low-hanging fruit and should be a priority.
The biggest thing that I failed to predict in 2022 is generative AI. Generative AI is a megatrend that is just getting going. What can be achieved now is significantly better than 12 months ago, especially with the launch of ChatGPT. It appears to be on an exponential curve, so I believe what we will see in 2023 will be incredible. Prepare to be amazed, entertained, and perhaps have deep misgivings! Much more from me on that topic in 2023!
About the author
He is a passionate customer advocate and champion and a successful entrepreneur.