Fintech has disrupted the financial industry in ways thought unlikely just a few years ago and people have responded. Experts at Fortine Business Insights predict the fintech market could reach $340 billion in 2024 as more than 14 million people in the US are now using digital as their primary banking solution.
The rapid adoption will continue even as the industry continues to evolve and mature.
Here are some of the top fintech trends startups, entrepreneurs, and industry watchers are keeping their eyes on in 2024 and beyond.
Dealing with Compliance
In 2024, we’re already seeing signs that regulators are focusing increased attention on regulations involving:
- Licensing Requirements
- Know Your Customer (KYC) identification
- Anti-Money Laundering (AML)
- Data Security and Privacy
- Cybersecurity Regulations
- Blockchain and Cryptocurrency
Many Fintech companies have been exempted from SEC, FINRA, federal, state, and country regulations or registrations to date. That may all be about to change as organizations grow in size and asset accumulation.
Virtual Currency
2024 will continue to see digital currency grow as cryptocurrency price volatility gives investors an opportunity to make profits. With the increase in the number of people in the digital currency market, there are more people using these coins in their daily lives. Many are turning to other coins besides Bitcoin that offer faster and more affordable transactions.
Altcoins like XRP are a great example. XRP was developed by Ripple Labs to improve the efficiency of cross-border payments making global commerce more accessible. XRP is the 7th largest cryptocurrency with a market cap of $34.05 billion, according to Binance. This massive crypto user adoption has caught the eye of businesses who look to best serve a new customer base.
More companies are starting to accept it as payments. Inc reports that around 32% of small businesses now accept cryptocurrency in the US. The list of places where you can use digital currency continues to grow and it’s not just online. Here are just a few of the companies accepting crypto:
- AT&T
- Burger King
- KFC
- Microsoft
- NewEgg
- Overstock
- Pizza Hut
Many third-party fintech companies will also handle cryptocurrency payments which can be used at Amazon.
Mobile Banking
89% of people in the US use mobile banking already. When it comes to millennials, that number rises to 97%. Mobile banking has gone mainstream.
Creating an optimal user experience will be essential to growing fintech companies.
Mobile Payments
Cashless payment options, virtual currency, and cryptocurrency have fueled the adoption of mobile payments. The near-ubiquity of smartphones and the emergence of 5G will facilitate more transactions to only accelerate the trend.
The COVID pandemic greatly accelerated the use of contactless payments by consumers. While much of the world had already adopted contactless payment cards – 64% in the UK and 96% in South Korea – the US lagged in contactless payment card use at just 3%. That changed in 2020. The use of contactless payments in the US grew by 150% since 2019.
Voice Tech
Fintech voice assistants are also growing in popularity, especially with Gen Z consumers. Voice tech makes handling finances easy while biometric data for payment information is providing secure payment authorization.
Partnerships
Traditional banks and fintech companies are working together more frequently than in the past and providing benefits for both.
Fintech organizations get access to more customers while banks get access to technology and avoid the high cost of trying to develop it themselves. Fintech solutions built to be compliant with digital privacy concerns, such as GDPR, have maintained an advantage over legacy financial institutions that have had to adapt to comply.
Fintech as a Platform
Companies will also accelerate offerings that move beyond Fintech as a Service (Faas?) and provide Fintech as a Platform (FaaP?). This isn’t just about using APIs to integrate services with other fintech solutions or incumbent financial institutions.
For banks that don’t want to do partnership agreements with fintech organizations, they are able to opt for FaaP to provide the back-end functionality to compete directly with online banks.
Other incumbents will simply offload portions of the business to integration providers, payment hubs, or digital cores.
Increased Competition
While partnerships with legacy financial institutions have opened up new opportunities for fintech companies, it is also leading to new competition. The top 250 fintech companies globally have raised nearly $50 billion in aggregate funding in the last five years and another $8.8 billion in just the first half of 2020.
As more traditional banks move into the fintech space, they have huge development funds at the ready to try to compete.
Autonomous Financing
A hot trend for 2024 is autonomous financing. AI can relieve consumers of the burden of handling car payments, streaming services, insurance, and utility bills. Consumers delegate their routine financial decisions and algorithms act on their behalf to provide customized and personalized services.
These include services such as automated payments and savings, management of investments, and managing subscriptions.
Robotic Process Automation
Software bots are increasingly being deployed to create process automation and avoid the need for manual handling. While fintech has made great use of robotic process automation (RPA) to streamline costs, look for an increase in RPA to manage security, onboarding, account maintenance, billing, and card processing.