Unveiling FinTech Trends for 2024: Letting the Cat Out of the Bag By Sameer Danave, Senior Director Marketing, MSys Technologies

Unveiling FinTech Trends for 2024: Letting the Cat Out of the Bag

Sameer Danave, Senior Director Marketing, MSys Technologies | Thursday, 25 January 2024, 09:11 IST

Sameer, an MBA graduate with over 15 years of experience, serves as the Senior Director of Marketing at MSys Technologies. He oversees the brand vision, global marketing strategy, product and services marketing, campaigns, budgets, and team management with strategic prowess.

With FinTech all set to intensify its domination across product categories and service domains, we look at the trends and developments that will likely remain in the limelight in 2024 and beyond.

With the revolution in financial technology (FinTech) being led by software as a service (SaaS), the sector is all set to go through transformative change in 2024. As per Virtue Market research, Global FinTechSaaS will become $300 bn in size by 2030 with an estimated growth rate of 25% CAGR between 2022 and 2030. The integration of AI, ML, and blockchain will enable FinTech to triple its revenue and grow at 15% YoY between 2023 and 2028. With all such exciting prospects on the horizon, here's a list of key developments that will dominate the FinTech sector in 2024:

1) Banking as a Service (BaaS) and Embedded Finance: Capable of changing the very way banking is being done, BaaS and embedded finance will combine to offer a holistic, convenient, and safe banking experience to customers. These technologies will be embedded into banking platforms and offer tailored solutions to the varying needs of customers. The enhanced use of AI will help elevate banking efficiency while payments based on biometrics ensure the safety of transactions. The growing anticipation in CBDCs is also likely to result in increased demand for embedded finance, thereby adding one more avenue of growth to the field of FinTech.

2) A2A Payments: Flexibility, convenience, and speed are the building blocks behind the growing popularity of A2A payments globally. Going forward in 2024, A2A is likely to expand its reach significantly and will emerge as a star performer in the FinTech sector. With popularity in emerging economies already reaching sky-high, A2A payments are likely to gain more acceptancein developed countries in 2024, which, in turn, will prove enormously beneficial for the adoption of FinTech around the world.

3) Expansion of CBDCs: The rising popularity of Central Bank Digital currencies (CBDCs) is likely to reach a whole new level in 2024. CBDCs have demonstrated their utility as an important crisis-aiding tool, and coupled with their safety, security, and convenience, these make for an ideal means of exchange. Going forward, CBDCs will continue to disrupt the existing transaction systems and lead to a renewed push to the FinTech sector.

4) Generative AI in Banking: Just like other industries, the application of generative AI in banking is going to be a game changer. The scope of generative AI in banking is encompassing, and by offering hyper-personalized service experience to users on several crucial parameters, the emerging technology will spawn new use cases to further intensify its application in the FinTech sector.

5) Digital Wallet Integration: By encouraging the integration of digital wallets with digital identities, the popularity of FinTech is going to grow beyond traditional banking practices. The integration will also fuel innovations in the digital identity segment, which will lead to novel solutions and services for users in the banking sector.

6) AML Tools: The fast-growing use of alternative payments has put the spotlight on anti-money laundering (AML) tools. The use of these tools is only going to grow further in 2024 as governments, policymakers, and regulators are ratcheting up the pressure by comprehensively tightening the norms to avoid any misuse of the transacted money.

7) Rise of ESG: The need to address environmental, social, and governance (ESG) concerns couldn't be overemphasized today. Compliance with ESG also means that FinTech will play an important role in enhancing sustainability and contributing to the well-being of society at large. Align with these requirements, FinTech companies are likely to upgrade their ESG efforts and will come up with serious interventions to ensure the prospects of holistic development.

8) FedNow Emergence: Although not as popular as Pix and UPI, FedNow is likely to gain ground in 2024 owing to its value-addition capabilities and the convenience it offers to users. The technology is ramping up at a rather quick pace, and its ability to differentiate itself from others will become instrumental in raising its appeal among potential segments in the future.

9. Mobile Financial Evolution: Accompanying the smartphone revolution is banking on mobile, which is proving extremely beneficial to widen the scope of FinTech among a wide variety of users. Mobile banking is fast emerging as a preferred choice of users across demographics, and by reducing dependence on traditional practices, mobile financial services are emerging as a credible tool for ensuring financial inclusion across the globe.

10. Biometrics at Checkout: Touted to be a game-changing revolution, the use of biometrics at checkout will strengthen the safety and security of transactions. The added layer of safety will also ensure that illegal attempts to access accounts will never become successful. This will strengthen the trust of users and help the FinTech sector to position itself as a secure avenue of making transactions besides availing other services.

11. B2B BNPL: While the majority of users relate Buy Now Pay Later (BNPL) to the customer domain, the technology is becoming instrumental in meeting the funding needs of small and medium enterprises (SMEs). The BNPL format will widen its application areas in 2024 as many new use cases are expected to make their way into the market in 2024.

As we step into the uncharted waters of 2024, the stage is all set for the transformative change in the FinTech sector. The trends mentioned above will be at the forefront of the change, and by offering significantly superior value and experience to customers, these will help the financial technology domain rise in popularity, application scope, and acceptability among target users.