The fintech industry is predicted to soar this year, in light of the increasing popularity of digital currencies like cryptocurrencies and CBDC, and the inevitable boom of e-commerce across Africa and the globe, it is a given that digital payment technologies are in high demand.
Fintech can be seen as fulfilling, and propagating digital transformation initiatives and is undeniably strong driving force in major modern economic endeavours.
Fintech is particularly appealing because it provides access to pre-qualified finance deals which means businesses have faster access to cash, enabling companies to invest and grow faster. Embedded finance has a predicted market growth of $350 billion in 2024.
On a global scale, according to proprietary SVB data, 53% of fintechs will be out of cash by Q3 2024 if they do not raise or exit. The data predicts high-profile fintech bankruptcies to persist as has been evident over the past few years.
Despite the negative trend, there seems to be significant opportunity especially among regtech startups as there is an increasing demand for fintechs to continue to ensure that they are compliant with policy on the regulatory front.
Reliance on FaaS in Underserved Populations
The fintech as a service market (FaaS) has experienced a notable surge in adopting digital banking and payments globally. Moreover, digital banking and payment solutions have expanded financial access to previously underserved populations.
This increased reliance on digital solutions during the pandemic and in its aftermath, further solidified its position for banking and payments. Online banking, contactless payments and mobile payment apps will become essential to ensure providing a seamless financial transaction experience for users.
Increased Pressure for Regulatory Compliance
The European Commission’s Corporate Sustainability Reporting Directive that requires banks and insurance companies to disclose more information about how they will navigate environmental changes, may steer Fintechs and banks towards responding to the need for more sustainable financial solutions.
Fintech companies will need to take heed to changes concerning data privacy, cybersecurity and financial services – due to AI security threats and new DeFi (decentralised finance) regulations.
Ease of Transference of Stablecoins
With the further introduction of the stablecoin, a more stable version of the bitcoin that is linked to commodities like gold, into the realm of cryptocurrency and its use in propelling economic activity, opportunities for fintechs to develop faster ways to convert them into fiat currencies. Companies like Western Union and MoneyGram now offer Stablecoins for cross-border transfers.
The Power of AI in Fraud Detection
Other trends that are predicted to arise throughout the year AI and ML will hold significant promise of revolutionising fraud detection systems, improving the accuracy of risk assessments, streamlining financial planning and changing the game in the customer service front. This is according to CEO of Cashflows, a UK-based paytech for SMEs.
Embedded Card Payments
Additionally, there is a trend that is likely to accelerate in coming month where consumers are becoming comfortable with accepting financial services provided by brands instead of traditional providers. Which may lead to further transformations taking place with embedded card payments and deposit offerings.
Predictive Credit Cards
This, together with the alarmingly rapid advancement of AI technology and its application in Fintech services, other options like predictive credit cards, where AI can anticipate consumers spending needs based on historical behaviour and automatically adjust credit limits. These are only a few of the predictions anticipated in the Fintech realm making the rounds for 2024.