Business
Fintech Trends Business Leaders Must Watch Out for in 2024
Global Banking & Finance Review®
Company
For businesses in the fintech industry, 2024 will be an exciting year as technologies evolve to fulfill the ever-changing needs of global consumers. Aside from advancements in digital solutions, fintech companies can also look forward to a year full of growth opportunities.
As of 2023, the market has a valuation of $226.76 billion and a 16.8 percent compound annual growth rate (CAGR) in the 2024 to 2032 forecast period. At this rate, the industry could have a market valuation worth $917.17 billion by 2032.
Companies looking to take advantage of this advancement must monitor industry trends. This way, they can quickly profit from new opportunities as they arise. To help in this effort, we underscore key industry trends relevant for fintech firms in 2024.
Growth of Software-as-a-Service (SaaS) Model
In 2024, there is a promise of a profound transformation in the fintech landscape primarily driven by the Software-as-a-Service (SaaS) industry. The SaaS model is reshaping the space through its cloud capabilities by removing installation complexities and expenses from the equation. This advantage allows businesses to prioritize customer experience, increasing profits and customer satisfaction.
The rise of SaaS in fintech can also be attributed to the model’s capability to implement stringent security measures, instilling confidence in fintech companies. Moreover, SaaS provides entrepreneurs with inherent scalability and flexibility, two factors that enable easy adaptation to the dynamic needs of clients.
One of the fintech institutions that will benefit from this trend is lending digital platforms. These platforms can take advantage of the model’s scalability, user-friendly nature, and easy maintenance. Moreover, the SaaS model makes data integration more convenient and accessible, which is a benefit digital lenders will surely enjoy.
SaaS is changing fintech by empowering entrepreneurs to offer secure and adaptable financial services solutions.
Increased Reliance on Automation for Efficiency
In recent years, artificial intelligence (AI) has captured the attention of almost every industry. Automation solutions fueled the exponential growth of digital payments and heavily contributed to the success of crucial fintech industry players.
However, AI’s impact did not end with transforming payment processes. The introduction of generative AI tools like ChatGPT changed not only the fintech industry but other sectors as well.
With ChatGPT, AI was no longer a tool that was too expensive and accessible only to data scientists. Now, anyone, even high schoolers who need help completing their homework, can use it. As of November 2023, the platform records 100 million active users per week.
Next year, fintech business leaders should expect to see large language models (LLMs) help drive productivity, whether through writing corporate content materials or code generation.
Unique User Experience Through Open Banking API
In 2024, one transformative force will be the integration of open banking application programming interfaces (APIs). Open banking refers to the unique practice of sharing financial data and services with third parties that help the bank’s customers.
Next year, various factors will drive this trend, including the potential for transformation, growth, and collaboration within fintech software development firms.
Through open banking, fintech institutions will discover how to offer unique experiences through standardized APIs. With this advantage, entrepreneurs can develop personalized financial services that elevate the customer experience.
Greater Accessibility
While technology plays a prominent role in driving trends in 2024, consumer demands remain the most significant factor that will shape the industry in the year ahead.
The most successful players in the fintech sector understand that consumer demands have changed. Now that mobile devices empower users like never before, fintech organizations must catch up and address immediate consumer needs.
To support this effort, financial institutions will continue to strive to provide services with the lowest entry barriers. For example, a credit card company should streamline its processes to make it easy for clients to apply for a credit card, pay their bills, or review previous transactions.
One consumer demand that fintech companies must be able to cater to is greater accessibility. This means providing clients with more options along with security, reliability, and availability.
For businesses, this change means offering alternative payment methods in addition to the traditional payment systems. Clients must be able to pay through their electronic wallets and not only by credit or debit cards.
For example, online personal finance company SoFi offers different financial products and services, including mortgages, personal loans, student loan refinancing, and banking. The online bank allows users to access these services through desktop and mobile app interfaces.
Evolution of Existing Trends
Next year, fintech organizations should watch out for evolutions of trends forecasted in 2023 that did not reach their full potential. One example is embedded payments.
In 2024, fintech companies should think of new ways to take full advantage of embedded payment solutions. Leaders should not only focus on digital wallets but should seek greater levels of integration of payment services into non-financial services platforms.
Through embedded payments, fintech companies can combine financial products with varied features, such as loyalty schemes. Doing so can help them provide greater added value to consumers.
Another crucial trend that will continue to evolve in 2024 is the use of decentralized finance and non-fungible tokens (NFTs). This year, these concepts were viewed with excitement, and many organizations took the initial steps to adopt them.
Unfortunately, there have also been significant headwinds, such as increased regulation and lack of consumer attention. However, proponents of decentralization can continue to build on what they started and realize the potential of decentralized finance in 2024.
These are only some of the trends in the fintech sector that entrepreneurs must watch out for to stay competitive. While monitoring them can be an effective strategy, those wanting to boost profits in the next few years should look further ahead and consider what could change the industry beyond 2024.
Software-as-a-Service (SaaS) is a cloud-based service where applications are hosted by a provider and made available to users over the internet, eliminating the need for installation and maintenance.
Automation in fintech refers to the use of technology to perform tasks without human intervention, enhancing efficiency, reducing errors, and streamlining processes in financial services.
Consumer accessibility in banking refers to the ease with which customers can access financial services, including options like mobile banking, online applications, and alternative payment methods.
Digital banking involves the use of digital technologies to offer banking services online, allowing customers to perform transactions, manage accounts, and access financial products via the internet.
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