fintech trends 2024 14 | 02 | 2024

What Are the Main Fintech Trends in 2024?

The financial industry is by far one of the most technologically advanced today. The pace of how new technologies are adopted within the industry is equally impressive and challenging. With current trends, e.g., machine learning and artificial intelligence, the fintech sector has even greater potential in enhancing asset management and data processing processes.

In the article, we are discovering the major trends that are ruling in the fintech industry and what to expect in 2024.

Fintech Industry Overview

The fintech sector has been showing steady growth in the past, and today experts estimate it to reach $557 billion by 2030 with 19.5% CAGR over the analyzed period. According to Statista, in 2024, Digital Assets are expected to take over the market, boasting an asset under management (AUM) of US$80.08 billion with an average AUM per user reaching US$96.05. Revenue growth for Digital Assets is anticipated to grow by 17.38% in 2025. By 2028, the Digital Payments sector is forecasted to reach a staggering 4,805.00 million users.

What is Trending in FinTech?

In 2024, the industry is placing a heightened focus on implementing advanced cybersecurity measures to protect against cyber threats and data breaches. With the increasing adoption of cloud-based services and the interconnected nature of financial systems, robust cybersecurity protocols are essential to maintaining trust and ensuring the security of sensitive financial information.

Below we analyze major technologies and payment types that have been dominating and transforming the fintech industry for the past few years.

#1 Integration of Artificial Intelligence (AI) and Machine Learning (ML)

The global wealth under management is also increasing, approaching $4 trillion in 2024, and is driven by several major investment trends dominating fintech today. Firstly, the rise of passive investing is caused primarily by accessibility to information regarding the charges related to active management. Secondly, the growth of digital asset management allows for automating various tasks such as building or changing your investment portfolio with the help of technology. And, thirdly, increasing interest in diverse types of investments, e.g., hedge funds, private equity, real assets, etc. is usually caused by investors wanting to get higher returns on their investments.

AI and ML are currently on top of the technology chain as they tend to revolutionize every business landscape they are introduced to. Within fintech, AI-based financial consultant is probably one of the aspects that develops the fastest as their use proves to be efficient and accurate.

Among the advantages of these digital consultants, we will point out their simplicity and personalization features. After analyzing a user’s financial situation, spending, and earnings, the AI-based consultant normally produces solutions on how to best manage your budget and not overspend, control, and get rid of existing debts, and invest per your established financial plans.

Such an evolution in financial advisory services will inevitably lead to greater accessibility for the public, marking a shift away from traditional singular approaches towards more personalized ones. Additionally, asset management within the broader meaning of financial services will increasingly rely on AI and ML-based tools.

It also anticipated that the use of AI and ML algorithms for tasks such as fraud detection, risk management, and personalized customer experiences will be progressing and is nowhere near slowing down. With the help of these technologies, financial institutions can analyze large scopes of data in real-time, and receive valuable insights, therefore, improving decision-making processes. We will just have to wait and see how AI and ML will be transforming the world of fintech in the future.

#2 Analytics and Big Data Remain Strong

Harnessing the power of Big Data in fintech has led to great transformations within the industry. Organizations across the globe gain insightful perspectives on their customers’ needs, drive targeted marketing campaigns to ensure a personalized approach toward each client, and streamline their operations to obtain maximum business benefits. With the help of Big Data, fintech players receive various advantages:

Personalized Marketing

Big data facilitates precise customer segmentation and allows fintech service providers to tailor their marketing campaigns to meet those expectations from the consumers, thereby maximizing engagement and conversion rates.

Preventing Fraud

Big Data analytics enables financial institutions to detect and prevent illegal activities, e.g., money laundering, or any other type of theft by scanning and analyzing their transaction history. The more security they offer, the higher the chances of getting loyal and long-term clients.

Enhanced Risk Management

Predictive analytics models fueled by Big Data foster informed decision-making, identifying trends, business nonconformities, etc. to mitigate risks effectively. By delving into piles of historical data, financial institutions can modify their risk assessment strategies to prevent economic loss.

Automation

Big Data integration with automation technologies reduces reliance on manual work while providing precise results. Spotting the upcoming issues is yet another advantage that allows organizations to fix them early, hence, avoiding wasting time and resources, as well as protecting their reputation.

So, the use of Big Data with financial services not only improves operational efficiency but also builds customer trust, mitigates risks, and fosters cost-effectiveness.

#3 Blockchain, NFTs and Tokenization

Blockchain has taken the fintech world by storm and is still going strong owing to its key features: enhanced security and transparency, especially when it comes to making financial transactions. It is yet another technology that aims at simplifying access to financial services and helps to optimize costs for service providers in, for example, IT maintenance.

The rise of NFTs and tokenization goes way beyond the world of art and collectibles. In 2024, we anticipate an increase in tokenized assets, ranging from real estate to traditional financial instruments. This trend not only provides increased liquidity but also opens up new investment opportunities for a broader range of investors.

Be that lending/borrowing, payment, or trading applications, blockchain ensures better efficiency, stronger security, and faster transaction performance, you name it.

fintech AI ML

#4 NFC and Contactless Payments

Contactless payments have been here for years following the advent of NFC technologies. And, of course, people love it. Especially, when COVID hit, and it became crucial to reduce the spreading of the virus. And contactless payments did contribute to that too. Since the number of such types of payments is growing, more and more business owners place payment terminals at their places of business.

Another popular and secure type of contactless transaction is QR code payments when consumers can send money by scanning a QR code. The research says that the QR code payment market will reach a value of $3 trillion by 2025. This only shows that the popularity of this payment method is not going anywhere either.

The third growing trend is Host Card Emulation (HCE) technologies which are gaining a significant share of the NFC market. Users can make payments with the help of their smartwatches, rings, or any other HCE device. They connect to the NFC device, receive authentication data, and perform the necessary transactions, when necessary.

#5 Lower Transaction Costs with Request-To-Pay Technology

Request-to-Pay (RTP) technology was first introduced in the UK in 2020. It allows one party to request funds from another party. This process grants the recipient the autonomy to either approve or decline the request, with approved payments seamlessly transferred in real-time.

Ensuring security, RTP operates by sending payment requests to the proxy billing address of a payer, at the same time protecting sensitive payment information. The payer then decides whether to allow the payment request or reject it. It is also gaining more popularity among banking institutions owing to the lowered transaction costs and is getting more widespread across Europe, the US, and Asia.

Final Words

The fintech industry is going through significant transformations so that financial services become more accessible and transparent for both business owners and consumers of these services.

Advanced security, adoption of AI and ML, Big Data, blockchain, contactless payments, and RTP are among the top trending topics in the world of fintech as their impact on the industry is huge. And the numbers prove that we will see even more positive changes in the years to come.

If you are looking for a team that will help you build your product, contact our experts and book a call to discuss your business needs.

READ ALSO: How to Transform Business Operations Using Conversational AI Solutions: Case Studies

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