As one of the most dynamic and innovative industries on the planet, fintech constantly seeks to disrupt traditional financial services with innovative technologies, in previously undiscovered markets and seeking to revolutionise the way consumers, regulators and businesses view their financial world.
2023 was a metamorphic year for fintech with the emergence of Generative AI being frantically implemented into everything from payments to trading, though it seems negotiable how effective these implementations actually are. The digitally native Gen Z generation took money into their own hands and challenges such as the economic downturn, geopolitical turbulence and rising interest rates arose.
Fintech in 2024 is set for total transformative shift, and again is set to be shaped by emerging technologies as these innovative solutions move into the mainstream next year. SMEs, startups and incumbent banks alike will need to adapt and leverage fintech solutions in 2024 to meet rising customer expectations and remain ahead of the curve in the future. Fintech in 2024 looks as exciting as ever, and these developments are establishing a wide range of new possibilities in how both businesses, consumers and regulators manage, use and think about money and wider financial services.
As 2023 draws to a close, now is the time to build excitement for fintech in 2024. FF News have polished off our crystal ball and asked a selection of executives from the fintech community to see what they think is in store for the fintech industry in 2024.
Fintech in 2024
Laurent Descout, Founder and CEO of Neo: “SMEs are the engines of the global economy accounting for 95% of the world’s businesses. Yet, this segment of the market is repeatedly overlooked and underserviced by the banks. In recent months, banks have started pulling out of the SME lending market at a time when firms need access to capital the most. There are a number of reasons for this, ranging from regulatory to legacy issues, but it ultimately boils down to SMEs often being seen as too small to be worth the time and resources of a big bank.
“The good news is that services and functions that were once monopolised by banks are opening up, and challengers are making significant in-roads by offering more for less. In 2024, SMEs need to move away from legacy relationships which are holding them back and instead embrace fintechs which have offerings tailored to their needs which will help them realise their full potential.”
Ansgar Finken, Chief Risk Officer at Solaris: "The European fintech sector is still catching up on compliance in some respects. The Wirecard scandal in 2020 led to regulators going full steam ahead to put fintech rules in line with those of established banks.
“While bricks and mortar banks already have extensive compliance processes and years of "growing-up" with regulation, fintechs are still evolving and developing. They face a tough challenge of catch-up. In 2024, we’re likely to see more regulatory convergence between established banks and electronic money institutions, creating a landscape where banks and challengers operate under increasingly similar rules. To keep up with changing fintech regulation, FS firms of all types and sizes must look to invest in the tools that can streamline their compliance processes and improve transparency.”
Stéphie Ndinga, Chief Compliance Officer at Swan, “Recent regulatory and industry developments mean a stronger eye on the fintech industry. Looking ahead to 2024, none will affect the space more than PSD3.
“With its first amendment arriving next year, a primary focus of PSD3 will be to combat the new wave of fraud that the financial services industry is witnessing. Indeed, losses in authorised push payment (APP) fraud rose to £485 million in the UK this year. Given this new regulation’s heavy emphasis on protecting customers and businesses, PSD3 will ensure that reimbursements in the case of fraud are much larger than they are currently. As such, in the coming year we will see a lot more focus from fintechs on monitoring risk and protecting customers, in order to avoid losing more money should the worst happen.”
Karine Martinez, Head of Sales at Edenred Payment Solutions: BaaS has been on quite a rollercoaster over the last few years. Lauded as ‘the next big thing in fintech’ many people saw a significant opportunity in the business model, but a flurry of recent issues has shown it’s not an easy thing to deliver.
In 2024 I think we’ll see a bigger focus from BaaS companies and their customers on reliability and compliance capabilities. The very core of the solution is to take care of these things so customers don’t have to worry, and this will be the only priority for businesses looking to outsource in 2024. Anything extra, no matter how new and shiny, will take second place.
But this should lead to good things. It will lead to clearer expectations of what partners need from BaaS companies and payment solutions providers, more reliable and compliant services, and ultimately better and more trusted partnerships between providers and their customers. It’s going to be an exciting year as BaaS continues to mature and develop."
AI and Fintech in 2024
Pranav Sood, Executive General Manager, EMEA at Airwallex: “While AI isn’t a new technology, generative AI has recently entered the spotlight for its ability to analyse vast datasets and create text, imagery and sounds. Generative AI will be a catalyst for how businesses can improve operational processes and efficiencies in AML protocols and KYC onboarding. Businesses using generative AI would be able to not only enhance the onboarding process for low-risk merchants but also improve the security guidelines for high-risk customers.
A great example of this would be for a company that sells phone cases for Apple iPhones vs a company selling apple branded products without permission. With a generative AI model, it would be able to distinguish between the two companies and identify the non-prohibited customer vs the prohibited customer. Generative AI models can also speed up the KYC process for qualified customers and help to discern which are outside the company’s acceptable use cases. However powerful AI will become, it will always be vital for businesses to continue to have human oversight, especially in heavily regulated industries like fintech and financial services.”
Nick Holt, Head of Solutions and Delivery, Europe at Marqeta: "Against a backdrop of economic uncertainty, consumers are also reevaluating how new technologies can help with budgeting, investing and increasing savings, and Marqeta’s Consumer Pulse survey found that over a third of consumers generally say they’re interested in using Generative AI (GenAI) to help manage their finances, rising to more than 50% for those respondents under the age of 50.
While we can’t foresee the full impact that the integration of AI will have on financial services, I predict consumers will soon be able to use Gen AI to get personalised, real time updates on their finances which will improve their financial literacy and wellbeing. I would also predict that the deployment of AI could lead to new credit options emerging, such as “Predictive Credit Cards,” where AI anticipates a consumer’s spending needs based on their past behaviour and adjusts the credit limit or offers tailored rewards accordingly. Increased automation and data analysis could also revolutionise how consumers apply for and obtain credit, as due to the scope of accessible information widening, individuals credit applications could be analysed and considered outside of a traditional, singular credit score."
Theodora Lau, Founder, Unconventional Ventures: "I think 2024 is the year we think ‘differently with data’. How can we leverage data to generate insights to change the world we live in? AI will continue to dominate much of the conversations, especially around risk management. But with so much turmoil and continued uncertainty in our economies and in our world, I hope we can get more real action on solving real problems that we face.
From solving social inequity to climate change, there is much that data can do.
- Putting spend data in the hands of consumers to help them understand the impact of their actions on the environment
- Using remote sensing tech and AI to validate crops and extend credit to small hold farmers, and provide transparency throughout the supply chain
- Leveraging new data sources to assess credit worthiness of micro and small businesses
- Tackling employees’ financial well-being with hyper focus on bankable moments (new job, promotion, life stage change, new year)"
Fraud Prevention in 2024
Dan Holmes, Fraud SME at Feedzai: “Although criminals stole a mighty £580m in the first half of 2023, the amount of prevented fraud has increased by 11%, marking the highest level of prevented fraud in six years. As we head into 2024, we can expect to see banks adopting more sophisticated technology to continue to stop fraudsters in their tracks.
“AI has been exploited by criminals to take advantage of unsuspecting customers and fool banks’ defences. In 2024, this shows no sign of slowing down. Banks must be vigilant and prepare for an increase in all types of scams, custom malware attacks, and money mules.
“To combat this, banks fight AI with AI and leverage the power of AI and machine learning to automate tasks, enhance accuracy, and identify new fraud patterns, in real-time. AI will play a crucial role in fraud prevention, utilising advanced algorithms to detect and mitigate emerging threats and intervene before any financial loss occurs. Importantly, we will see greater collaboration between financial institutions. Banks will forge stronger partnerships with other financial institutions, including fintechs and regtechs, to share data and insights on fraud trends. This collaboration will enhance the ability to detect and prevent fraud, particularly in cross-border schemes.”
Simon Horswell, Senior Fraud Specialist, Onfido: “It’s been another busy year for hackers. The world has witnessed a surge in AI manipulated or synthesised media with deepfake fraud attempts jumping 3000% year-on-year in 2023. Driven by the accessibility of cheap online tools, apps and the proliferation of generative AI platforms like ChatGPT and DALL-E, fraudsters have scaled sophisticated attacks without needing technical skills or heavy resources.
“This is already having a big impact with politicians, like Keir Starmer and Sadiq Khan, falling victim to deepfake attacks, while it has also impacted celebrities and business leaders. With a General Election on the horizon next year, deepfakes have the potential to inflict serious reputational damage, destabilise trust in public leaders and spread misinformation. What’s more, we are bound to see improvements over the next year to make deepfakes even harder to spot visually, and fraudsters are very quick to find new use cases for any technological advances. This will potentially make scams even more convincing to the unsuspecting or unaware.
“In 2024, businesses and individuals alike will need to remain vigilant. Our research shows that 80% of attacks on biometric systems, not dissimilar to those used in e-voting, were videos of videos displayed on a screen. This suggests fraudsters will always opt for the easiest, most cost-effective route, but are looking to scale attacks. Should they go mainstream, deep fakes will be a major threat to contend with.”
Payments in 2024
Barry Rodrigues, EVP, Payments at Finastra: "Instant payments will dominate the headlines and board agendas in 2024. In 2023, we saw the launch of the US FedNow Service, while the European Commission announced its plan to mandate instant payments in euros. Around the world, more consumers and businesses will continue to demand instant, seamless payment services to manage their cash flow in real-time and improve user journeys.
Underpinning many instant payment infrastructures is ISO 20022. Banks are required to transition to the new messaging standard before November 2025, but many will implement the necessary changes ahead of time for a competitive advantage. Instant payments underpinned by ISO 20022 give banks access to richer and more structured data sets in real-time, enabling them to better automate processes, improve efficiencies and truly understand their customers to offer them more personalised services.
However, as payment innovation accelerates, so too does innovation in fraud. Payments operating in real-time bring increased risks of instant financial crime. Banks will need to invest in technologies such as machine learning (ML) and artificial intelligence (AI) for faster and more accurate sanctions screening, transaction monitoring and fraud detection. Additionally, more institutions will explore the use of generative AI (Gen AI). For example, to produce synthetic data that looks like fraud transactions, which will enable banks to build more robust models to identify new sets of fraud they’ve never seen before.
For banks to truly benefit from the move towards frictionless, instant and data-rich payments – without compromising fraud prevention – investment in payments modernization will be key. Cloud solutions provide the agility that banks need to quickly transform and scale their operations to cope with increasing payment volumes. With Payments as a Service (PaaS), banks gain additional benefits, such as reduced time to market and value for new services, and at a lower Total Cost of Ownership (TCO)."
Nick Botha, Global Payments Manager at AutoRek: “2024 will see the next natural phase in real-time payments. Modern consumers already expect instant payments, with payment innovations like QR codes and Request to Pay leading to irreversible changes in the way that end users make payments today. The direct link between real-time payments and economic growth is opening governments’ eyes to its potential – leading to a central push towards widespread adoption next year and beyond.
“Instant payments are set to become ubiquitous for both national and regional payments networks as central banks continue developing real-time infrastructure to satisfy consumer demand. Evolving developments in Central Bank Digital Currencies (CBDCs) and work on emerging payments infrastructure will cement real-time payments as more than a ‘nice-to-have’ in most markets, and ensure they are well on the way to becoming a mandatory part of bank and payment firms’ propositions.
“But the central push towards real-time payments will add pressure to the back and middle office as firms battle to accommodate higher transaction volumes. Firms will need to ensure their existing infrastructure and systems are set up to process payments in real-time and keep up with consumers’ ever-evolving spending habits.”
Maximilian Lehmann, SVP & Head of Enterprise Growth, Nium: “It’s no secret that financial services is undergoing a seismic shift in digital transformation. Frictionless cross-border payments are a crucial catalyst of this change, enabling economies and businesses around the world to increasingly become more global. If 2026 will be the year that the global payments system reaches $3 trillion (as Mckinsey predicts), 2024 must be the year that we begin to fully unlock this potential and pave the way for transformational growth.
“Next year, new regulations such as an updated PSD2/3 framework and the development of the New Payments Architecture in the UK will create new challenges for business leaders whilst opening the doors to payment innovation. As a result, traditional banks will face even more competition from digital disruptors, driving strategic fintech partnerships to keep pace with the evolving needs of their customers.
“Beyond traditional remittance services, we can also expect new use cases for real-time global payments to continue to emerge 2024. Whether its online marketplaces sending funds to their global merchant sellers, streaming platforms paying their content creators around the world, or insurance companies disbursing claims to businesses across borders, we’re seeing many industries begin to embrace real-time global payment infrastructure.”
Roisin Levine, Head of UK&I, Wise Platform:“In 2024, we expect to see greater demand for transparency and, as a result, more collaboration across the industry. As consumers become aware of transparent, lower-cost, more efficient product alternatives, they are moving to providers they can trust to provide these. This is particularly true for international payments. To retain customers and aid transparency, banks are looking to partner with fintechs. For fintechs, used to offering fully-transparent services, this provides a significant opportunity. It allows them to access banks' scale and reach scores of new customers.
For banks, collaborating with fintechs enables them to leverage existing infrastructure to offer services that meet consumers’ expectations. Additionally, it also helps them be upfront about their fees and operations. These collaborations can work really efficiently, delivering clear and major benefits for consumers and financial firms as well. For example, earlier this year, Bank Mandiri partnered with Wise Platform to become the first fully-transparent bank in Indonesia. Through the partnership, Bank Mandiri’s customers can now make international payments quickly and conveniently with end-to-end transparency.”
