The fintech landscape is poised for dynamic evolution in 2024, with technological advancements reshaping the industry. As we navigate through transformative changes, traditional notions of banking and physical cash are being reimagined. Artificial Intelligence (AI), Machine Learning (ML), blockchain, and innovative financial models are at the forefront of this revolution, offering enhanced efficiency and security. Let's delve into the top tech trends that will define fintech in 2024.
1. AI and Machine Learning: Artificial intelligence has become a cornerstone of the fintech world, catalysing a remarkable transformation. AI and ML, along with custom financial software development, empower fintech companies to seize new opportunities and foster innovation. These technologies enhance various banking processes, including payments, investments, and risk management. AI-driven tools enable swift fraud detection and elevate customer experience, with chatbots and virtual assistants playing a crucial role in providing personalised and round-the-clock support.
2. Buy Now, Pay Later (BNPL): The BNPL model, allowing consumers to purchase products and pay for them in the long term without interest rates, has gained immense popularity. With a projected market value of $6.13 billion in 2022, BNPL is expected to grow at a compound annual rate of 26.1% from 2023 to 2030. This flexible financing option appeals to millennials and Generation X, promoting financial responsibility. As BNPL providers integrate with retailers and eCommerce platforms, sales surge, demonstrating its potential as a significant fintech trend in 2024.
3. Software as a Service (SaaS): The fintech sector is experiencing a transformative shift fueled by the growing Software as a Service (SaaS) industry. SaaS offers cloud-based applications, eliminating installation hassles and costs while enhancing scalability. Projections indicate a remarkable growth of $623 billion in 2024, with an 18% annual growth rate. Lending digital platforms leverage SaaS for its scalability, ease of use, and maintenance, revolutionising the fintech landscape with secure and adaptable financial services.
4. Mobile Payments: The trend of mobile payments is set to significantly shape the fintech landscape in 2024. With a forecasted 8.7% share of total retail by 2026, mobile payments are gaining traction. Factors such as the integration of payment systems into platforms (embedded finance) and on-demand pay highlight the shift towards flexible, mobile-centric payments. The convenience and security offered by mobile payments are driving their popularity, with digital wallets expected to become the most preferred online payment method.
5. Open Banking API: Open banking API integrations are poised to be game-changers, fostering collaboration between fintechs and traditional banks. Enabling seamless data sharing, open banking enhances the efficiency and speed of financial services. The anticipated global growth of API calls for open banking by 645% in 2024 reflects the industry's commitment to providing personalised financial experiences and improving customer satisfaction.
6. Biometric Authentication: Biometric security features, including facial recognition and fingerprint scanning, are becoming the new norm in fintech. Offering convenience, enhanced security, and privacy, biometric authentication is replacing traditional methods like passwords and PINs. In 2024, fintech apps are expected to increasingly adopt biometric authentication, providing users with secure and hassle-free access.
7. AI-powered Personal Finance Advisors: AI and ML are transforming personal finance management, paving the way for AI-powered personal finance advisors. These advisors analyse spending habits and financial goals to offer tailored recommendations, covering areas such as budgeting, investing, and debt repayment. Users can expect 24/7 access to personalised financial advice, revolutionizing the way individuals manage their finances.
8. Stablecoins: Stablecoins, acting as a bridge between traditional and digital currencies, are poised to revolutionize payment methods. With transparency rooted in blockchain technology, stablecoins offer efficiency and global reach, facilitating quick and seamless cross-border transactions. As the technology matures and becomes more regulated, stablecoins are expected to witness wider adoption, including issuance by central banks.
9. Neobanking Applications: Neobanks, digital disruptors of traditional banking, continue their rapid expansion, offering convenience, affordability, and innovation. Users can open accounts and access services within minutes through user-friendly mobile apps. With over 145 million customers in 2021, the number is expected to surpass 360 million by 2026, marking a significant shift in banking preferences towards digital platforms.
10. Blockchain Integration: Blockchain technology is gaining prominence in fintech products, offering transparency and security in online financial processes. Promising uses include cross-border payments, decentralized lending and borrowing, and improved efficiency in trade finance. As blockchain integration progresses, users can anticipate faster, cheaper, and more secure transactions.
11. Embedded Finance: Embedded finance, integrating financial services into non-financial products and platforms, is changing the landscape of payments, financing, and loans. Offering convenience, affordability, and choice, embedded finance is gaining traction. With services like Buy Now, Pay Later seamlessly integrated into non-financial platforms, users can expect a future where financial transactions occur within their favorite fintech products.
12. Financial Inclusion Initiatives: Fintech companies are actively working towards bridging the financial inclusion gap by using innovative technologies. Mobile banking, digital payments, alternative credit scoring, and microfinance are among the initiatives aimed at making affordable financial services accessible to underserved populations.
In conclusion, the fintech industry is on the brink of transformative changes in 2024, driven by technological innovations and evolving consumer preferences. From AI-driven advancements to the widespread adoption of mobile payments and the rise of neobanking, these trends collectively define the future of fintech, promising a landscape that is secure, personalized, and accessible to all.
In this rapidly evolving fintech landscape, SAXE Global remains at the forefront, diligently monitoring all new advancements to ensure our clients are well-positioned to seize the opportunities that arise.