The digital adoption of banks is stealing the spotlight in this year’s fintech trends, making traditional banking feel like a thing of the past!
As proof of that: The Digital Banking Survey in March 2021 found that one-third of the respondents agreed that they are using digital banking channels much more now compared to the pre-pandemic days.
It is also worth mentioning that a lot of banks have seen a significant rise in the adoption of digital banking services and have welcomed many first-time users.
In this article, we will lay down all the trends in financial technology in 2024 that are expected to make a bang.
Key Takeaways:
- AI and machine learning are transforming fintech cybersecurity, enabling early detection of fraudulent activities and creating a safer financial ecosystem.
- BNPL market continues to thrive, driven by Gen Z and expanding into the B2B fintech space.
- Blockchain technology continues to disrupt traditional financial services with more use cases.
- Collaboration among fintechs and banks to revolutionize global finance is expected to grow in 2024.
- The fintech industry embraces sustainability with increased investments in green alternatives and focuses on ESG factors.
Digital Banking to Become Mainstream
This is not the first time that we see digital banking as part of the yearly fintech trends list. With that being said, we can expect this trend to accelerate significantly in 2024 and beyond.
It is enough to say that digital-only banks, or neobanks, have revolutionized the way we bank.
More than that, they offer plenty of benefits for their users:
- Accessibility round the clock
- Intuitive websites and mobile apps
- Low banking fees
While some may argue that physical branches and a wider range of financial products are needed, these neobanks are rewriting the rules of traditional banking. But, not only digital-only banks are leveraging this trend. Traditional banks also see the value in investing in their online banking platforms and apps to provide a better customer experience.
The American Bankers Association discovered that an overwhelming majority of consumers (71 percent) opt to manage their bank accounts through a mobile app or computer.
With no need to visit a physical bank, no lines to test your patience, and no tedious paperwork to deal with, it’s no wonder people are embracing the switch. It’s just a matter of time before digital-only banking rises to prominence and seamlessly integrates into our daily lives.
AI-Powered Fintech Solutions
With the rise of Artificial Intelligence (AI), it is not a surprise that AI solutions are a part of the latest financial technology trends. In 2024, we will see AI being put to use in the financial sector more than ever before.
But how exactly will this trend manifest?
AI Finance Advisors
Believe it or not, the Securities and Exchange Commission (SEC) has just approved an artificial intelligence-powered investment platform as a registered financial advisor. That’s right, a non-human entity breaking new ground in the fintech industry!
PortfolioPilot is a cutting-edge investment management tool officially registered with the SEC under its parent company, Global Predictions. Its creators claim it has numerous advantages over its mortal counterparts.
PortfolioPilot combines AI and Global Predictions’ proprietary Economic Insight Engine to provide retail investors with personalized financial advice. The AI financial advisor offers a one-click portfolio overhaul, considering factors like risk tolerance, investment goals, and macroeconomic conditions. It also includes an AI equity search feature to help customers discover investment opportunities based on selected criteria.
Extracting and handling financial data
AI is really good at spotting patterns in financial data and giving suggestions to make your spending more efficient. Fintech solutions deal with a ton of data, and there’s no tech better equipped to handle it all than artificial intelligence. Specifically, machine learning.
With these technologies, many fintech companies use AI to keep an eye on customers’ financial health. To be more specific, AI can be helpful in various areas, such as:
- risk management
- preventing fraud
- reducing operating costs through optimization
- making the banking experience more personal
- automating workflows for team members and customers
AI and machine learning are already transforming business finances in various ways. In 2024, we will see an even bigger shift as more companies adopt and integrate these technologies into their operations.
To strengthen cybersecurity
The global AI in fintech market is poised for significant growth. Valued at USD 9.45 billion in 2021, it is projected to experience a compound annual growth rate (CAGR) of 16.5% from 2022 to 2030. With this, you can expect banks, both traditional and neobanks, to invest more in their AI capabilities in 2024, especially in cybersecurity.
For AI to recognize and analyze patterns in data, machine learning algorithms need heaps of data to learn from. That’s why it’s perfect for fraud detection! When banks use AI for cybersecurity, they can spot suspicious patterns early on and nip fraudulent activities in the bud.
The impact of AI on fintech cybersecurity is not just about technology—it’s a whole new way of doing things. By tapping into the power of AI, fintech companies can build a safer and more secure financial ecosystem that benefits us all.
Buy Now, Pay Later (BNPL) Still Reigns
The BNPL market is not new in the trends in fintech list. It has been a big thing for the past several years. However, it’s still going strong and is expected to continue so in 2024.
What’s interesting is that the percentage of Gen Z’s using autonomous BNPL has skyrocketed from 6% in 2019 to 36% in 2021. It proves that younger consumers are the ones driving this trend.
Why?
With BNPL, you can buy stuff and pay for it later in installments. They don’t require credit checks and are even interest-free in some cases. While it helps improve affordability and credit history, it can also lead to debt if you spend more than you can handle. Missing payment deadlines can hurt your credit scores.
Companies like Clearpay and Klarna have been leading the way in the B2C market for years. But guess what? BNPL is not just limited to B2C anymore. It’s actually witnessing substantial growth in the B2B fintech space, too.
What we can expect this year is that platforms will undoubtedly start considering offering BNPL solutions as a competitive differentiator. These solutions provide convenience and a cash flow boost that could be really attractive to organizations worldwide.
There’s no doubt that this initiative is rife. And with the right business model, innovative fintech startups can totally thrive in this space. How exciting is that?
Leveraging Blockchain Technology
Among these fintech trends for 2024, blockchain technology is among the most prominent. Blockchain has its roots in cryptocurrency. However, it’s now slowly making its way into other financial arenas.
Blockchain has become quite the buzzword in the fintech industry, with loads of companies trying to get in on the action. According to a report by Meticulous Research, the fintech blockchain technology market is set to reach $36.04 billion by 2028, with a high compound annual growth rate of 59.9% from 2021 to 2028.
Blockchain is the perfect technology to support the economy of this virtual space. It keeps fintech security top-notch and provides the essential financial infrastructure.
Plus, it’s transparent and decentralized, making financial transactions faster and more efficient without any middlemen. As a peer-to-peer transaction, financial services find it so appealing—a secure platform for payments and data management.
But, that doesn’t mean traditional banks are left behind.
In 2021, J.P. Morgan, the American banking company, announced the use of blockchain technology in its new Confirm solution. It’s designed to reduce the cost of payments between banking institutions worldwide.
By leveraging blockchain technology, you can make your product shine in terms of speed, security, and effectiveness. Transactions with these three advantages can greatly facilitate the exchange of digital assets for organizations.
[Read more: 12 Best Blockchain Projects to Start for Beginners]
Embracing Embedded Financial Services
The fintech industry continues to look for ways to make financial services more accessible and convenient with embedded finance. In 2024, we’ll see more companies embracing this trend as they integrate financial services into various platforms.
Embedded finance is the integration of financial services into non-financial products, platforms, or applications. Think about how you can make a payment directly through your messaging app (like Venmo on WhatsApp) or purchase insurance while booking a flight online.
This solution experienced exponential growth at the peak of the pandemic, and the exciting part is that it’s projected to continue growing as the years unfold. According to Future Market Insights, the embedded finance market was worth a staggering $43 billion in 2021, and it’s poised to skyrocket to $248.4 billion in the next ten years.
Taking advantage of embedded finance can greatly benefit businesses. By offering financial services within their platforms, companies can increase customer engagement and loyalty, generate new revenue streams, and improve customer convenience.
Additionally, it opens up opportunities for smaller fintech startups to partner with established companies without needing a banking license. This collaboration creates more innovative products and services that cater to specific market segments.
Investing in Tighter Cybersecurity
More of a necessity than a part of the 2024 fintech trends, investing in cybersecurity is a top priority for everyone in the industry.
In 2022, cyberattacks spiked by 38% worldwide, and in Q4, organizations surveyed reported an all-time high of over 1,000 threats per week. This surge followed increased investments in new software solutions.
But what if the employees working with new technologies aren’t knowledgeable in cybersecurity? They would be vulnerable to malware, phishing scams, and other related threats.
According to research from Stanford University, around 88% of all data breaches happen due to human error. That’s why people play a crucial role in the effectiveness of any cybersecurity strategy.
For organizations of any size and maturity, it’s essential to create a culture of cybersecurity and data compliance and make sure there are dedicated systems and programs to educate team members.
As AI continues to shape the financial world, cyberattacks and digital threats will also advance, making detection and prevention more challenging. That’s why it’s crucial to invest in cutting-edge security measures like biometric authentication, encryption techniques, and even AI-powered fraud detection systems.
Fintech companies go all-in on cybersecurity to safeguard their customers’ data and financial assets. It’s no wonder that beefing up cybersecurity measures is a trend that’ll stick around well beyond 2024.
Growing Collaboration and Partnership Among Fintech Companies
Competition among financial companies is heating up; however, collaborations and partnerships will also continue to rise in 2024.
The fintech sector is all about collaboration, so we’ll see established banks and other financial institutions taking a keen interest in the tech innovations that startups bring. They’re already making a big impact in the markets and would absolutely love to shake up the entire financial industry worldwide.
In March 2022, Goldman Sachs sealed the deal on its $2.2 billion acquisition of the massive BNPL online loan platform Greensky. Goldman has been making big moves to boost its online presence, offering a range of financial products from ETF portfolio management and high-yield savings accounts to fixed-rate personal loans, all accessible digitally.
Another major player in the banking industry is Capital One.
With 15 fintech acquisitions, it has become a real powerhouse among banks looking to dominate in the fintech space. Their recent purchase of TripleTree LLC, an investment banking platform focused on healthcare investments, shows how specific acquisitions can expand a bank’s involvement in a particular industry while increasing its product offerings.
Suffice it to say that financial institutions are evolving to become more agile and adaptive, thanks to the fintech startups that provide them with innovative solutions. As this trend continues, we expect collaborations and partnerships between financial companies to grow stronger in 2024.
Further Integration of the Internet of Things (IoT)
Digital payments are getting easier and easier every day! Thanks to IoT, you don’t even need to dig out your wallet or phone to pay. Your smartwatch, car, and even your fridge can handle transactions for you.
In 2024, we’ll witness a rise in wearables and other connected devices used in finance services. For instance, thanks to IoT tech, insurance companies can gain access to driving habits in real time and tweak premiums accordingly.
Also, homeowners can even set up smart sensors that catch leaks in a jiffy and quickly notify their insurance provider for fast-tracked claims processing.
Furthermore, the treasure trove of data gathered from these interconnected devices offers financial institutions a sneak peek into their customers’ quirks and cravings. With this intel, they can dish out personalized financial services and products, leaving customers grinning from ear to ear and sticking around for more.
In 2024, get ready for the IoT to invade the global market of finance like never before! Brace yourself for a wave of wearable wonders, from payment rings to bracelets and smartwatches.
The Switch to Green(er) Fintech Industry
In 2024, we’ll witness fintech companies embracing sustainability like never before. Globally, fintech investments are increasing, and the industry has been making waves by switching to greener alternatives.
With the rise of advanced technology, the fintech market is better equipped to handle the challenges that come with incorporating sustainability. They can create sustainable solutions for everything from payments and lending to investments and insurance.
Industry leaders are all about investing in green initiatives like renewable energy. According to Statista, in 2022, these investments hit $495 billion worldwide, which is a 17% increase compared to 2021.
Sure, customers prefer organizations that contribute to the environment. And even if you’re not passionate about reducing your carbon footprint, big companies will soon have to report their carbon emissions. So, it’s important to find technology that simplifies carbon reporting.
Investing in sustainable finance may not be the most “profitable” move at first, but it’s necessary for companies to stay relevant in an ever-changing world. This year, we’re witnessing more people, both individuals and institutions, seeking sustainable investment options.
It’s all about investing in companies that consider environmental, social, and governance (ESG) factors. With innovative solutions, businesses can easily spot ESG-friendly investment opportunities and measure the sustainability of their portfolio. This way, we can direct our resources to companies that prioritize sustainability and work towards environmental goals.
If you’re a fintech company, you’ll want to show the world how much you care about protecting our planet. And, if you are about to build your fintech startup, be sure to consider adopting sustainable practices from the very beginning.
It’s only a matter of time before sustainability becomes an essential aspect of any fintech business model. So, why not get ahead of the game and start now?
Get SaaS Solutions for Your Fintech App Today!
The future of fintech is looking bright! It’s crucial to stay updated with the latest trends to avoid falling behind. One great way to stay ahead is by investing in Software as a Service (SaaS) solutions for your fintech app.
As a SaaS provider, StarTechUP offers a range of solutions. Whether you are looking to build a new app or upgrade an existing one, our team of experts can provide you with cutting-edge technology and support. We offer seamless integration, cloud-based solutions, and advanced security features.
What are you waiting for? Embrace the latest trends and technology to stay ahead of the game and provide your customers with the best financial services possible.
Contact us today to learn more about our SaaS solutions and how we can help you stay ahead in the rapidly evolving world of fintech!
