Article written by Contentworks Agency and published at MarketWatch.
The fintech sector is primed for a transformative shift in 2024, primarily driven by the software as a service (SaaS) industry. Contentworks Agency, a leading marketing agency for the financial services space is looking at the top fintech trends for 2024.
The global fintech market size is projected to reach $492.81 billion, at a CAGR of 16.8% between 2023 and 2028. Key drivers shaping fintech trends today are customer-centricity, tighter regulatory oversight and stronger security measures.
#1 AI and ML
“I haven’t seen a single pitch in the last three months without AI or ML, ” says fintech banker Dushyant “D” Shahrawat, Director of Strategic Insights & Advisory at Rosenblatt Securities. He insists that rather than just leading on with buzzwords, it is essential that businesses focus on the value they derive and offer to their customers.
With the stunning pace at which AI is taking over operations across industries, its adoption in fintech has become a business imperative. AI technologies are already utilised for marketing and customer analytics and are expected to guide further business decisions going forward.
Generative and prescriptive ML-based analytics will assist in addressing customer grievances, setting financial goals and providing advice on adequate planning to meet these goals. Predictive analytics, leveraging neural networks, will facilitate credit-decisioning and preparing for upcoming industry demands. WellTech, a fusion of wellness and technology to empower users for financial planning in sync with their overall wellness, including financial soundness, is another trend taking shape.
AI-powered cybersecurity and hyperpersonalisation services are also set to transform the fintech ecosystem.
#2 Blockchain and Cryptos
Blockchain and cryptocurrencies are nothing new. But their integration into the fintech space will be. The most significant drivers of the adoption of digital currencies are escalating costs and recurrent failures in the traditional financial ecosystem. “As we look ahead to 2024 and beyond, a significant trend is a need for safer, more reliable banking alternatives,” says Uldis Teraudkalns, CEO of payment provider Nexpay. Teraudkalns also emphasises the need to instil resilience in the financial space.
The ability of blockchain to effectively secure decentralised and immutable digital ledgers has enticed the financial industry for over a decade. Now, governments and central banks are exploring CBDCs (central bank digital currencies) to digitise national currencies. This is an attempt to not only keep the financial ecosystem stable, but to assert control amid the increased adoption of cryptocurrencies. This enhanced payment infrastructure is expected to bolster the valuation and demand for fintech companies.
To maximise nascent technology, pioneering solutions will materialise to preserve user privacy, standardise protocols industry-wide, ensure scalability, and frame a clearer global regulatory framework. The EU’s MiCA regulation is a first step in this regard.
While cryptos form the primary component of decentralised finance (DeFi), fintech firms are experimenting to make it more mainstream by expanding their services beyond the digital currency landscape. NFTs, P2P transaction protocols and Web 3-ready infrastructure are propelling the DeFi industry towards greater adoption, enhancing brand value and bolstering customer trust.
Remember: Only 19% of millennials perceive themselves as financially literate. Your fintech marketing strategy for 2024 should focus on consumer-friendly education.
#3 Open Banking
According to Helen Child, Founder of Open Banking Excellence, the explosive rate of open banking adoption correlates with the perception of it being “suitable for a diverse set of use cases” across the financial industry. The UK has developed, and set, a benchmark for open banking implementation with OBIE. The framework is expected to serve as a guideline for nations across the world to follow suit and enable open banking.
Effortless third-party integrations using APIs have made space for open banking, making customer data accessible to third-party providers securely. Open finance has made the ecosystem more transparent and is driving innovation in the competitive fintech marketplace. The segment has created a trillion-dollar growth opportunity for fintech firms as it presents individuals and businesses with the opportunity to gain control over all aspects of their financial lives. This includes savings, investments, loans, pensions and mortgages.
The synergy of diverse providers in the financial ecosystem is a route to bridge gaps between the banked and unbanked, making financial services more accessible and affordable.
Insurtech platforms are digitising insurance processes from application to claim using NLP and RPA. The proliferation of digital currencies and the metaverse may further help insurtech penetrate the digital economy realm as well. The adoption of deep analytics and embedded financial services has taken the shape of real-time digital bundling, bite-sized insurance, sachet covers and embedded insurance to give rise to insurtech. As a result, the industry is projected to expand with a whopping CAGR of 52.7% from 2023 to 2030.
Propelled by strengthened regulatory oversight, enhanced customer awareness and a snowballing of cyberattacks, regulatory technology is gaining ground in the financial ecosystem. Advanced security protocols and technologies are set to be adopted to automate compliance and monitoring, ensure data privacy and transaction security, while minimising the risk of breaches, non-compliance and reporting.
Biometrics, quantum cryptography, and other advanced technologies will be leveraged to ensure security. While AI and ML algorithms evolve to enhance prediction, prevention and detection, cybersafety measures will transform security into a proactive approach using vulnerability assessment and preparing for incidence mitigation.
“For the financial sector, investment priorities appear to be in risk management and the use of AI. Inadequate governance, management practices and audit failures are often the cause of failures. Having the appropriate systems and software in place to ensure compliance will be important in 2024,” says Ben Dorks, CEO of software solution provider Ideagen.
Financial inclusion is considered the next phase of growth for the financial industry, providing access to underserved segments. Fuelled by AI and blockchain, the industry is projected to reach $30.16 billion by 2033.
Peer-to-peer lending, crowd funding and digital lending marketplaces will facilitate instant loans, better assessment of creditworthiness and flexible interest rates for retail and institutional borrowers. The sometimes controversial BNPL model will penetrate further and be refined into a more customisable option for instant, bite-sized loans. Technology will serve as a medium of effective underwriting, risk evaluation and management in the intermediary-free, open banking-powered lending ecosystem.
Remember: Fintechs are increasingly embracing CSR (Corporate Social Responsibility). “Organizations that are not aligned with millennial and Gen-Z values, risk losing favor with this large and increasingly influential cohort,” says Michele Parmelee, Deloitte Global Deputy CEO and Chief People & Purpose Officer at Forbes.
#7 Customer Centric Finance
One of the most prominent trends for 2024 is bolstering customer engagement with innovative tech. For instance, Entroq Technologies enabled a Gamified Investment Learning platform. In fact, some experts believe that fintechs might introduce NLP-powered voice-to-text features for conversational banking and voice-enabled payments for elevated customer experiences. Plus, AR/VR integrations will expand to make virtual experiential transactions a reality.
Contentworks Agency has extensive experience working with world leading banks, brokers and fintechs. Book a free Zoom call to learn how we can help your fintech grow its marketing impact in 2024.