To help separate the signal from the noise, here’s my list of what to watch for the rest of 2023.
Digital Currencies
Don’t Watch: The FTX Drama
Many people lump together cryptocurrency, bitcoin, and the blockchain. Unfortunately, that means the implosion of FTX and the collateral damage are overshadowing legitimate blockchain applications that are starting to transform finance.
Do Watch: Central Bank Digital Currencies
Blockchain fluency will be a fundamental competency for CFOs by 2025, according to Gartner. The killer apps of the blockchain universe may turn out to be central bank digital currencies (CBDCs). These emerging digital currencies have many cryptocurrency-like benefits but mitigate the biggest risks. For finance leaders, a CBDC’s stability—plus the potential for increased speed, efficiency, security, and transparency (as well as lower transaction costs)—is enormously appealing. And they’re nearly ready for prime time.
The killer apps of the blockchain universe may turn out to be central bank digital currencies.
The New York Fed is close to concluding a digital dollar pilot program involving commercial banks and the SWIFT global payments network. And the Fed is only a fast follower in a global trend. In 2020, 35 central banks were exploring CBDCs, according to the Atlantic Council, a nonpartisan think tank. Today there are over 100. All of the G7 economies are working on programs, and 11 countries have a fully launched digital currency. China’s digital Yuan has been rolled out in 15 provinces and used in more than 360 million transactions.
It’s clear that CBDC deployment is accelerating around the world, and I’m especially excited about its potential in emerging markets where the banking infrastructure and access to traditional payment channels oftentimes are still limited. Many emerging countries leapfrogged the setup of a fixed communications infrastructure and went straight into a mobile-only world that will be particularly receptive to digital currencies.
Tech Innovation
Don’t Watch: Tech Layoffs
Yes, the US economy is likely headed for a recession. Venture investments in seed-stage startups are down, and layoffs are big news at blue-chip tech companies, including behemoths such as Microsoft to Meta to Google. Many see these risks of cuts as a risk to innovation. However, when large tech companies lose talent, other companies of all sizes (and industries) gain an opportunity.
Do Watch: Tech Spending and Hiring
Many tech firms I talk to are still hiring rather than laying off. They may be growing at a slower rate, but they’re still growing. Lots of them need highly skilled tech talent because the demand for what they’re producing remains strong. Forecasts for IT spending are expected to grow a healthy 5.1 percent in 2023, according to Gartner. Combined with a 29 percent increase in federal innovation dollars, the money to fuel innovation is there.
Smaller and less well-known tech companies or non-tech firms could have an easier time hiring. They won’t be facing as much competition from big brands offering outsized salaries and luxurious perk packages.
So people may be getting laid off from Twitter, but they’ll get hired at some company you’ve never heard of. Exciting advances may come from some unexpected companies and places. Witness the nearly three dozen companies in Chicago trying to hire H-1B visa holders laid off by tech giants. This could be the year of unusual suspects. Companies that gain great talent and also have the right financing may realize some big ambitions.
Artificial Intelligence
Don’t Watch: ChatGPT’s Next Star Turn
Recently, the AI behind ChatGPT has captured the popular imagination by writing everything from college essays to dating profiles with human-like fluency. ChatGPT is attracting all sorts of attention and generating plenty of anxiety about what AI will mean for creativity, jobs, and education. Don’t get too worked up about ChatGPT for now, but it’s worth paying attention to GPT-4, the newest iteration that launched this year.
Do Watch: AI’s Impact on Financial Forecasting
Over the next five years, spending on tech that integrates AI is projected to reach a compound annual growth rate (CAGR) of 26.5 percent and reach $300 billion by 2026, according to IDC.
For finance leaders, integrating AI will improve their cash forecasting abilities—a core part of their job and one of the most difficult to get right. Lack of visibility to exposures and reliability of forecasts was named as the top challenge of CFOs in 2022, according to Deloitte. And that directly impacts their ability to cost-efficiently plan, fund, and manage their company’s working capital.
For finance leaders, integrating AI will improve their cash forecasting abilities—a core part of their job and one of the most difficult to get right.
Forecasting gets harder during uncertain economic times, such as during recessions or rising rate environments. Today’s volatile markets, global currency fluctuations, and inflationary environment mean finance teams are truly in the hot seat.
But as AI improves and becomes more widely deployed by finance teams this year, it will become easier to get the balance right on investment, borrowing, and exposure to volatile exchange rates. That’s exciting for finance teams but also for AI itself. A technology fulfilling its promise of doing good things in the enterprise is much better than one simply helping teenagers avoid reading Shakespeare.
So, if we can ignore the headline hype and hyperbole, I believe we’ll look back on 2023 as a pivotal year for CBDCs, innovation, and AI advances in finance.
This article originally appeared on Forbes.com.
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