14 Fintech Trends Worth Checking Out in 2024

Curious about how the fintech industry will look in a few years? Check out the 14 trends shaping the financial landscape.

fintech trends

14 Fintech Trends Worth Checking Out in 2024

Fintech professionals have to be know-it-alls. They need to stay on top of the latest fintech industry developments, or they risk falling behind their peers. 

It can be a difficult task due to the loads of fintech news and insights being released every day. 

Fortunately, there’s a shortcut. 

Fintech trends help you see the bigger picture of all the changes happening in the industry. That’s why we have rounded up a list of 14 important fintech trends to help you make sense of the financial world. 

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Let’s dive right in!

The fintech market is diverse, ranging from services such as banks, mobile payments, crypto, and more. With that in mind, we’ve curated 14 trends that are impacting the lives of customers and fintech professionals:

1. Neobanks Are Becoming Popular For Their Convenience 

While the 2020 pandemic normalized working from home, it also introduced banking from home in the form of neobanks.

According to Google Trends, Neobanks started trending around March 2020, and have continued to peak in popularity ever since.

Neobanks are digital banks that offer financial services without physical locations. Like regular banks, they offer accounts, debit cards, and loans. Their users can utilize these services from a single app.

But why are these online-only banks still popular after lockdown restrictions have been lifted?

61% of Neobank users in the US use a digital bank because of its easy-to-use app. These apps have superior UX (User Experience) as compared to clunky traditional banking websites. 

By offering innovations like AI recommendations, personalized digital experiences, cryptocurrency wallets, and instant credit, Neobanks offers frictionless experiences to young users.

Millennials and Gen Z seem to be the biggest digital banking users, with 11% of them having a Neobank account.

The Neobank market is on the way up. Currently valued at 98.4 billion dollars in 2023, it is projected to reach 3,406.47 billion by 2032.

Revolut is one of the biggest players in the market, with 35 million global users in 2023. Other popular Neobanks include N26, Chime, and Monzo.

2. Banks Will Continue To Use Artificial Intelligence To Improve Their Services

If banks were a videogame character, then Generative AI would be a powerup.

It boosts banks by eliminating errors, simplifying processes, and reducing the amount of manual labor.

Let’s see how Generative AI is used by the banking sector:

  • For admin tasks, AI is used to eliminate data entry errors. Automating these tasks allows bank employees to focus on more complex and valuable work.
  • In the underwriting process, lenders can use AI to generate credit memo sections, including the executive summary, business description, market analysis, etc.
  • 48% of US bank execs plan to use AI to improve chatbots and virtual assistants for routine queries and basic financial transactions.
  • The US Department of Treasury reported it recovered more than 375 million dollars in 2023 through its AI-enabled detection process for check frauds.

As a whole, Generative AI’s added value could be around 200 – 340 billion dollars, almost 3-5% of the banking industry revenue!

Socure is an example of a crop of companies that tackle fraud using AI. It works with top banks like Bank of America and American Express to verify customer identity across online, in-person, and mobile channels. They also use neural language models to identify and flag risky emails.

3. Open Banking Is Becoming Increasingly Popular

Open banking is a system where financial institutions allow fintech companies to access their customers’ data. 

Sounds risky, right?

To share data securely, banks use API (Application Programming Interface) software, which links them to fintech companies. These APIs are designed by software development teams to comply with strict security standards and regulatory requirements.

Open banking drives fintech innovation as it opens a range of possibilities for new startups. A fintech startup can use open banking to offer helpful financial services like expense tracking, budgeting, financial planning, etc.

For example, Cleo is an AI-enabled fintech app that connects to users’ bank accounts, tracks their spending, and offers personalized advice to help them reach their financial goals.

Almost every traditional bank has resisted open banking because it threatens their model. However, the sentiment seems to be shifting. According to a 2021 Tink survey of financial executives, 71% of executives feel positive about open banking, compared to 55% in 2019.

Banks and financial institutions trust open banking more because it has become safer through multi-factor authentication and encryption of financial data. 

But that’s not all. 

In late 2024 or early 2025, new directives, PSD3 & PSR, would be approved by the European Parliament and Council. These directives provide rules for the authorization and supervision of non-bank service providers in order to protect consumer’s rights and personal information. 

Once passed, we predict that more fintech companies and banks will be more willing to utilize open banking. The number of open banking users in Europe is expected to reach 63.8 million users by 2024.

4. People Are Using Buy Now, Pay Later With Caution

One thing you’ll notice when browsing through e-commerce sites is the option to ‘Buy Now Pay Later.’ 

In this model, customers pay only a portion of the cost upfront and the rest in installments every few weeks. Many consumers prefer BNPL because it has zero interest and doesn’t require a credit check.

BNPL became popular around the pandemic when online shopping became essential.

However, this fintech market trend is slowing down as consumers are now wary of the risks involved. Instead of reducing financial difficulties, BNPL was creating a debt trap.

42% of BNPL customers borrowed money through loans and credit cards to make installment payments. By doing so, they piled the borrowing on top of borrowing, with no end in sight.

What’s more the adoption of BNPL is slowing down. According to Bank of America, global BNPL app download growth slowed from 36.2% to 21.4% in 2022.

Some of the reasons for this slowdown include:

  • Rising cost of living and increasing interest rates are making consumers reconsider making big purchases.
  • BNPL providers are losing money due to high operational costs and potential changes due to higher regulation.

5. The Number of Crypto Payments Are Increasing

Most people think of crypto as an investment, but there seems to be growing interest in using it as a method of payment.

The more people own crypto, the higher the chances of them using it. According to a 2024 Crypto.com report, there are 580 million cryptocurrency owners — a 34% increase from the previous year.

Businesses have reacted to this growing change. As of 2024, 250+ companies, including Adidas, Best Buy, and Burger King, take crypto payments. 

But why?

For starters, crypto is safe due to blockchain technology, which reduces the risk of fraud. 

Plus, cryptocurrencies go beyond geographical boundaries, allowing businesses to reach a wider audience without getting involved in the complicated currency conversion process.

Crypto payments market value is predicted to grow at a CAGR (Compound Annual Growth Rate) of 17% between 2022 to 2029.

6. More People Will Use Digital Wallets 

Digital wallets are apps that allow you to link your bank account, debit cards, or credit cards. This way, you can pay through the app without carrying your cards to the store or entering card details at an e-commerce checkout.

According to a study by PYMNTS and AWS, 79% of Gen Z consumers and 67% of Millennials use a digital wallet.

Both these target groups prefer digital wallets because they are more convenient and offer frictionless experiences such as making digital payments or transferring money from banks to wallets. 

Some people even opt out of physical cards and use digital wallets instead to adopt an environmentally conscious lifestyle.

Today, digital wallets also allow users to store documents like passports, event tickets, and driver’s licenses. 78% and 75% of Gen Z and Millennials, respectively, show some interest in these additional features.

The preference for digital wallets is predicted to continue. According to The Global Payments Report 2024, digital wallets will account for 61% of e-commerce payments and 46% of point-of-sale payments worldwide by 2027.

7. The Demand for Regtech Companies Is Increasing

A financial institution has to crunch tons of data every day, and the data is too complex to analyze manually. 

They’re also expected to understand the hundreds and thousands of laws and regulations that govern their operations. Which can make their employees feel like this:

That’s where Regtech (regulation technology) companies come to their aid. They use AI and big data analysis to comb through data and identify risks while maintaining compliance.

Regtech solutions use cloud technology, machine learning, and big data analytics to analyze documents and identify risks and threats to compliance.

Behavox is one of the leading tech companies that provides tools to analyze vast amounts of data, such as voice and text-based communications, financial transactions, and other digital interactions, to detect risks and potential frauds. 

Regtech is more popular than ever due to the rapid influx of new laws and regulations since the 2008-2009 financial crisis. 

Many banks risk attracting fines for not abiding by the laws. For example, Danske Bank had to pay a 2 billion dollar fine for not having a proper AML (Anti Money Laundering) system in place.

Additionally, Regtech solutions are needed to save employee time. Around 10-15% of employees dedicate time to compliance tasks, which could otherwise be done with AI.

Due to these factors, the Regtech industry is expected to grow by 124% between 2023 and 2028 and have a predicted value of 207 billion dollars. 

8. ESG-Focused Fintech Companies Are Becoming Popular

With rising global temperatures, companies are expected to be accountable and step up their efforts to battle climate change.

As a result, ESG (Environmental, Social, and Governance) has become popular with fintech businesses. ESG-focused tech companies emphasize the following:

  • Minimizing the carbon footprint and resource usage.
  • Implementing fair labor practices and fostering diversity.
  • Ensuring transparency, ethical behavior, and accountability.

What does an ESG-focused fintech company look like?

Take the example of Aspiration, a financial technology company that allows users to invest in sustainable, green, and ethical businesses. 

Every time you use Aspiration’s card for a purchase, Aspiration rounds up the transaction to the nearest dollar and uses the additional amount to plant trees.

Why are such companies picking up?

Many consumers, especially millennials and Gen Z, demand sustainable and environmentally conscious products. According to a 2021 PwC report, 76% of people say they will stop doing business with companies that treat the employees, community, or the environment poorly.

Plus, investors are also seeking out companies with a strong ESG proposition. ESG-focused tech companies have a positive impact on investment returns 63% of the time.

To meet the demand, the budgets allocated to developing ESG financial services and products increased by 35.2% between 2023 and 2023. KPMG predicts that ESG fintech investments will reach 123.7 billion dollars by 2026.

Source: https://assets.kpmg.com/content/dam/kpmg/sg/pdf/2023/11/accelerating-transformation-amidst-economic-slowdown-the-resilient-esg-fintech-sector-research.pdf 

9. The Emergence of Super Apps Is Inevitable

As of 2024, a person has an average of 18 apps on their phone. 

What if there was a fintech app that would eliminate the need for other apps by offering services such as payments, insurance, e-commerce, messaging, and social media?

They do exist and are called super apps. Super apps like Gojek, Wechat, Paytm, etc., are spreading like wildfire, with around 2.68 billion users!

Here’s why a growing number of people are flocking to super apps:

  • People don’t need to download and manage multiple apps, which can improve customer experience.
  • Users save time by avoiding logging in multiple times and navigating various user interfaces.
  • Users can save money by using the discounts or bundled financial services provided by the app.

While super apps are breaking records in Southeast Asia, they have not caught on in the European and American markets. 

This could be due to cultural differences. People in eastern countries are wary of new fintech companies and startups and would prefer known brands instead. Hence, they are willing to trust new financial services from an existing company.

However, the outlook is starting to change. 

Elon Musk plans to turn X into an ‘everything app’ in the coming years, with X potentially offering payments and banking services. Additionally, Facebook’s app now includes Meta Pay, gaming, podcasts, and even dating!

According to Gartner, more than 50% of the world will be active users of multiple super apps by 2027.

10. Peer to Peer Lending Will Continue To Prosper

Peer-to-peer lending or crowdfunding allows individual lenders to lend money to borrowers without the need for traditional banks. 

It’s a win-win situation, as borrowers get better interest rates and lenders earn more. Advancements in smartphones and technology are one reason for the P2P lending boom. The value of P2P loans rose from 9 billion to 64 billion in just 3 years (2012-2015)!

AI and big data have further improved P2P lending services. P2P platforms are able to match borrowers to ideal lenders efficiently, streamlining processes like risk assessment and loan processing. 

While borrowers face risks, new regulations such as the ‘European crowdfunding service providers for business’ might ease their minds. The regulations call for scrutinizing borrowers further and disclosing loan default rates.

The P2P lending market is projected to be a trillion-dollar industry by 2032, having a Compound Annual Growth rate of 27.5%

Prosper is the industry leader in the United States. Its 1.7 million customers can choose from a range of loan products, including home improvement loans, medical loans, student loans, and home equity loans.

Prosper’s loan marketplace allows lenders to go through borrower profiles and identify the right ones for their risk appetite.

11. More Companies Will Offer Financial Services Through Embedded Finance

Embedded finance is integrating financial services such as lending, insurance, and payments into non-financial apps and websites. 

You might have encountered embedded finance in your daily life without even knowing it. For example, if you’re booking flight tickets, you might notice that the airline offers insurance even though it’s not a financial institution. 

Airlines aren’t the only ones doing this; you might have seen restaurants, e-commerce sites, and ride-sharing apps offer installment payment plans. 

But why is this trend so popular in the fintech industry?
Simple, embedded finance is very profitable. According to a Capterra survey, 94% of businesses that offer a form of embedded finance say their revenue has risen since implementation.

Financial institutions love embedded finance, too, because it allows them to access a large pool of borrowers and harness their financial data.

What about the customers?
According to a survey by Temenos, more than half of customers prefer embedded finance because it makes it easier and quicker to access financial services such as BNPL, loans, insurance, etc.

Embedded finance seems to be the new norm in the coming years.

The embedded finance market was worth 82.3 billion in 2023 and is predicted to grow further at a CAGR of 32.8% from 2024 to 2030. In a survey by EY, 72% of respondents believe that financial services and products will be offered by non-financial platforms in the future.

12. Data Analytics Will Help Fintech Businesses Stay Competitive

Every day, banking customers generate a whopping 2.5 quintillion bytes of data

Because of the richness of data, almost every financial institution is now aware of the importance of advanced data analytics. FinTech Futures’ report reveals that 86% of fintech executives believe that data analytics is important for their business.

Through data analytics, financial institutions can create unique experiences for their customers. 60% of customers expect their bank to be as personalized as a personal shopper or Amazon.

Banks can find patterns in data and create comprehensive customer profiles. These profiles map out customer behavior, preferences, and financial history, allowing banks to offer personalized services like specialized loan offers and customized wealth management advice. 

Almost every financial institution uses data to protect itself from threats. By analyzing customer spending patterns and social media activity, they can identify which customers are more likely to default on a loan. 

Additionally, they use AI to identify transaction patterns that indicate potential fraudulent activity.

Due to these use cases and more, the market for big data analytics in the banking sector is predicted to reach 24 million dollars by 2029.

13. Security Will Improve Through Biometric Technology

With artificial intelligence, cyberattacks are becoming more effective. A data breach in 2023 could cause damages averaging 4.45 million dollars. 

Financial institutions have to constantly improve their authentication systems. In the age of deep fakes and false identities, biometrics are dependable because they generate unique data that is hard to replicate. 

Biometric authentication through fingerprint scanners, iris scanners, and voice recognition is becoming more common for critical tasks (such as user login, payment confirmation, and accessing sensitive reports). 

According to a survey by VISA, 91% of people think fingerprint and iris recognition is the most secure form of authentication.

The growing trust of biometric technology, can be reflected in the rising value of the fintech biometrics market from 332 billion to 1.2 trillion dollars by 2027.

An innovative solution like Nuance Gatekeeper takes this trend forward by using voice print technology. It can analyze hundreds of characteristics in a person’s voice to determine if the person is a fraudster or a real customer.

14. Smart Contracts Will Unlock New Opportunities

A smart contract is like a digital contract that includes the terms and conditions of the agreement between two parties. 

Here, there is no mediator between the buyer and seller. 

What’s smart about a smart contract?
The contract is written in code on the blockchain and is automatically executed when conditions are met.

For example, an entrepreneur is looking for 500 dollars in funds and has set up a crowdfunding campaign for a month. If the funding goal is met, the funds are directly transferred to them without any need for manual transfer by any party. If the campaign fails, the money will be transferred back to the investors.

This financial product is rising in popularity because it reduces legal and commercial disputes. 

The contracts ensure financial transactions are executed precisely and without ambiguities. Since the system is on a blockchain, it records all transactions between the parties, holding them both accountable.

Now, multiple individuals can invest and fractionally own luxury real estate with a smart contract. 

The ownership of property can be divided into tokens, where each token represents a percentage of ownership. So when the property is sold, all the investors will get a percentage of the cut. 

Companies like Arrived Homes allow customers to invest in rental homes and earn a fraction of the rent.

Smart contracts also solve the sticky problem of insurance claims. They can automatically verify claims based on conditions and external data.

Let’s say you have purchased a travel insurance policy. The contract monitors flight data to see if flights are delayed or canceled. If that happens, the contract automatically approves the claim and pays the amount to the insurance holder.

As of 2023, the smart contracts market was worth around 236.4 million dollars and is expected to be a billion-dollar industry by 2031.

Some More Noteworthy Fintech Trends

Want extra insights to feed your mind? 

Here are a few more fintech trends in brief:

  • Central Bank Digital Currency (CBDC): CBDCs are digital versions of national currencies. Issued by central banks, they are designed to enhance payment efficiency and financial inclusion.
  • Quantum Computing: Once developed, quantum computing might revolutionize fintech by exponentially increasing processing power and enabling faster data analysis.
  • Contactless Payments: Contactless payments continue to grow, offering convenience and speed through methods like NFC-enabled cards and mobile wallets.
  • Decentralized Finance (DeFi): DeFi uses blockchain technology to create financial systems that bypass banks, offering more accessible alternatives to traditional banking services.

With artificial intelligence leading the way, the fintech world rapidly transforms every few months. 

These fintech insights should help you see the bigger picture and help you make better decisions in the coming years.

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