Report-in-Brief: McKinsey's 2023 Technology Trends

It has always been important for the C-suite to understand key technology trends impacting businesses today and tomorrow. In successive years, however, a global pandemic, interconnected political destabilisation, inflation, global warming and the introduction of generative AI tools have all had the dual effect of overwhelming leaders as they prioritise, even as the need to prioritise intensifies because of these events. Yes, it is still important to understand new technologies, but it has also never been harder.


McKinsey has released its latest Technology Trends Outlook for 2023, which has been abridged below for HotTopics audiences to learn and understand.


The HotTopics global technology leaders community regularly come together to discuss their views, and so specific trends have been brought forward, given their relative importance to the CIOs, CTOs, CISOs, Chief Digital and Data Leaders with whom we speak and feature in our events.


Many of these events, from filmed panel discussions at The Studio, to intimate lunches for the C-suite, to our regular virtual Meet-Ups, will feature discussions on the trends detailed in this article, details of which can be found below:

The Studio | Food for thought


Technology trends

  1. AI Revolution: Applied AI; Industrialised machine learning; Generative AI
  2. Building the Digital Future: Next-gen software development; trust architectures and identity; Web3
  3. Compute and Connectivity Frontiers: Advanced connectivity; immersive-reality technologies; cloud and edge computing; quantum technologies
  4. Cutting-edge engineering: Future of mobility; Future of bioengineering; Future of space technologies
  5. A Sustainable World: Electrification and renewables; Climate technologies beyond electrification and renewables



AI Revolution:

Applied AI; Industrialised machine learning; Generative AI


Of the three AI technology trends sections listed in the report, Applied AI has the biggest potential impact on business for the C-suite to recognise.


McKinsey estimates the potential economic value at stake from applied AI to be $17 trillion to $26 trillion, and the share of companies pursuing that value has been increasing. The 2022 McKinsey Global Survey shows the proportion of organisations adopting AI has more than doubled. It also indicated 25 percent of those same businesses attributed 5 percent or more of their companies’ EBIT to AI.


What’s new?

  • Perhaps surprisingly, AI investments were down to $104 billion in 2022 from a high of $146.8 billion in 2021. But the cost to train image classification systems, for example, has decreased by almost 64 percent; training times have improved by 95 percent since 2018.
  • The AIAAIC Repository tracks incidents related to the ethical misuse of AI, algorithms and automation, and indicates AI controversies increased by 26 times in a decade.
  • 36 new laws containing the words “artificial intelligence” emerged globally between 2016 and 2022.
  • Global AI adoption has more than doubled from 2017, yet the proportion of organisations using AI has levelled off to around 55 percent; those companies have nearly doubled the number of AI capabilities they use, however.


Key uncertainties for the C-suite to consider:

  • Lack of talent and funding mean AI application pipelines are not guaranteed;
  • Cybersecurity and privacy concerns, notably on data risks and vulnerabilities, are prevalent—51 percent of McKinsey survey respondents cited cybersecurity as a leading risk in 2022;
  • Regulation and compliance directly impact AI research and applications;
  • Ethical considerations, including data governance, equity, fairness, and explainability, surround the responsible and trustworthy use of AI.


Key question the C-suite should ask themselves:

How might companies better determine which AI applications benefit them and their stakeholders most?




Building the Digital Future:

Next-gen software development; trust architectures and identity; Web3


The digital future is all but guaranteed, yet of the three, Web3 is the most opaque of the technology trends in terms of opportunities, risks, players and supply chains.


Web3 is more than a platform for cryptocurrency investments; it refers to a future internet model that decentralises authority—and democratises access—for users. This provides increased control over how data is monetised and a stronger ownership of digital assets. It also creates new commercial opportunities: “new business models governed by decentralised autonomous organisations (DAOs) and enabled by eliminating intermediaries through secure, or smart contract, automation, new services involving digital programmable assets, and new data storage and governance using blockchain technology,” the report outlines.


Web3 has attracted huge amounts of capital, talent—and bylines. The industry is still nascent, however, and new ventures are still being tested as incumbent businesses continue to explore use cases.


What’s new?

  • The crypto market saw market capitalisation fall more than 50 percent in 2022— token values declined impacting certain currencies and forcing closures of crypto exchanges.
  • At the same time there was a 68 percent increase in nonfungible-token (NFT) sales count, 87 percent growth in Ethereum core tool downloads, 51 percent growth in on-chain stablecoin payment volume, and a 60 percent increase in active users of Web3 gaming. Concurrently, the global tokenisation market size, enabling conversion of assets into unique units, grew by about 23 percent.
  • Additionally, 2022 saw the progression of “zero knowledge” systems, which can prove a statement without providing additional information and have the potential to unlock blockchain scalability and new use cases, such as increased privacy.
  • US Congress has proposed more than 50 crypto regulations; this year, the US Securities and Exchange Commission (SEC) initiated legal proceedings against major cryptocurrency platforms such as Coinbase and Binance, claiming most digital assets are securities.
  • In parallel, the US House Financial Services Committee issued a draft bill that would create more clarity on what makes a digital asset a security as opposed to a commodity, where the majority of market capitalisation would likely be deemed commodities.


Case study material

Last November, JPMorgan Chase executed its first ever on-chain cross-border blockchain transaction, which involved tokenised Singaporean dollar and Japanese yen deposits, and was executed on the Polygon blockchain. The trade is part of a larger partnership between JPMorgan Chase and DBS Bank, called Project Guardian.


Key uncertainties for the C-suite to consider:

  • Regulation is evolving as authorities choose approaches to ongoing governing issues and its implications on the global finance system.
  • Infrastructure is nascent but will continue to mature as business models and value chains are tested and refined or discarded.


Key question the C-suite should ask themselves:

As a cultural phenomenon, how will patterns of Web3 adoption vary among different populations and markets?




Compute and Connectivity Frontiers:

Advanced connectivity; immersive-reality technologies; cloud and edge computing; quantum technologies


Cloud and edge computing remains one of the key technology trends for the HotTopics technology leaders community.


According to McKinsey, enterprises will leverage an infrastructure footprint that involves compute and storage at multiple location points, from on-premises to the edge, and from small regional data centres to remote hyperscale data centres.


Edge computing provides flexibility for those to process data closer to their origins faster, and achieve data sovereignty and enhanced data privacy compared with cloud. Reduced distance to end users will shrink data transmission delays and costs, as well as provide faster access to more relevant sets of data, which helps companies comply with data residency laws.


The public cloud will still be important for the enterprise of the future by performing non-time-sensitive computing use cases at much better economies of scale. Ongoing cloud and edge integration should, in theory, accelerate innovation, lift productivity and create business value.


What’s new?

  • There has been a slowdown in cloud migration, attributed to ballooning costs, data privacy and latency-related issues. In some situations enterprises are even “repatriating” from the cloud.
  • In sustainability-related news, Google announced a complete transition to 24/7 carbon-free energy by 2030, and Microsoft made a commitment to a 100 percent renewable-energy supply by 2025.


Case studies

Wildlife conservation efforts in Africa use IoT and edge computing to monitor the movements of rhinoceroses and detect the presence of poachers over large areas of land, such as the Hluhluwe-Imfolozi Park in South Africa; elsewhere, Aramco uses edge-powered computer vision solutions to enhance safety, provide proactive monitoring for equipment failure, and enable automation of drilling equipment and processes for its offshore drilling rigs.


Key uncertainties for the C-suite to consider:

  • Scaling issues may arise as the number of edge nodes and devices grows because edge computing does not benefit from the same economies of scale as traditional cloud computing.


Key question the C-suite should ask themselves:

Will flexibility and positioning in a business and regulatory sweet spot make edge more disruptive than cloud, or will inhibitors such as lack of interoperability and commonality of standards in networking prevent edge from reaching its full potential?


Computer connectivity


Cutting-edge engineering:

Future of mobility; Future of bioengineering; Future of space technologies


Do not dismiss the impact of the future of bioengineering: the combination of technology and biology has implications for healthcare, food and agriculture, consumer products, sustainability, and energy and materials production industries. C-suite leaders in other sectors may still well use any lessons learned as they interact with adjacent technology trends.


McKinsey research suggests that 400 use cases for bioengineering, almost all of which are scientifically feasible today, could have an economic impact of around $3 trillion per year from 2030 to 2040. While certain gene therapies and bioproducts have gained acceptance, ethical, regulatory, and public-perception issues will need to be settled for bioengineering to realise its full economic potential.


What’s new?

  • Greater focus on mRNA tunability and gene therapies will develop better personalised drugs.
  • Investments in manufacturing facilities will be driven to obtain higher yields, achieve lower cost of goods sold and produce these personalised medicines; this will enable innovators to better capture the increasing demand for novel therapeutics.
  • Bioengineering and medical technologies often require years—or decades—of research before going to market, creating long hiring cycles and high demand for scientific and research talent: in order for these opportunities to be realised, this demand must be realised.


Case study

Korea-based LG Chem and ADM launched a joint venture in August 2022 for US-based production of lactic acid and polylactic acid to meet growing demand for a variety of plant-based products, including bioplastics.


Key uncertainties for the C-suite to consider:

  • Public perceptions of the safety, cost and quality of bioengineered products could determine how quickly markets develop;
  • Regulation of bioengineering technology and products will play a part in governing the pace of advancements;
  • Ethical concerns rightly surround the possibilities for modifying living organisms. 


Key question the C-suite should ask themselves:

How will mainstream audiences perceive and adopt bioengineering inline with businesses? (For example, how does cultivated meat fit within existing diets?)




A Sustainable world:

Electrification and renewables; Climate technologies beyond electrification and renewables


Interestingly, this technology trends section does not receive the level of detail or scrutiny enjoyed by the previous trends. Nonetheless, figures shared offer a positive view of the ambition the economy has for this sector.

  1. Electrification and renewables help drive net-zero commitments, and include solar, wind and hydro-powered renewables and other renewables, such as nuclear energy, hydrogen, sustainable fuels and electric-vehicle charging.

    In 2022, equity investment here was valued at $288 billion and the sector saw a +27 percent increase in job postings YoY 2021-2022.

  2. Climate technologies include carbon capture, utilisation, and storage (CCUS), carbon removals, natural climate solutions, circular technologies, alternative proteins and agriculture, water and biodiversity solutions and adaptation, and technologies to track net-zero progress.

    In 2022, equity investment here was valued at $86 billion and the sector saw a +8 percent increase in job postings YoY 2021-2022.


To read more technology trends and insights from members of HotTopics technology leaders community of CIOs, CTOs, CISOs, and Chief Digital and Data Officers, discover our insights section now.


Read McKinsey's full 2023 Technology Trends report here

Mask group-2


We love getting input from our communities, please feel free to share your thoughts on this article. Simply leave a comment below and one of our moderators will review
Mask group

Join the community

To join the HotTopics Community and gain access to our exclusive content, events and networking opportunities simply fill in the form below.

Mask group