Do you know there has been a significant change in the global environment of financial technology or FinTech? Moreover, this significant growth was swift. During these years, FinTech has intensely revamped many areas of financial services using their innovative ideas. There are plenty of FinTech trends available that are growing speedily among many financial technologies. These trends are helping many economic sectors to solve complex issues that have risen in the past few years.
Because of mobile and cloud computers, consumers have embraced the concept of on-demand financing. People are less prepared to tolerate the occasionally slow speed and bureaucracy of some traditional financial services, according to FinTech industry trends, and they are more at ease handling their money and businesses online.
In a few years, the sector will have undergone yet another transformation. One of the practical methods to stay up to date with the always-changing FinTech sector is to take upbeat steps. It helps to remain ahead of the curve by studying the top financial services trends.
Keep exploring the blog to learn more about FinTech marketing trends that will surely blow your mind in 2024.
Table of Contents
What is FinTech?
FinTech or Financial Technology denotes a new technology that intends to improve the facility and utilization of financial services. Fundamentally, FinTech assists individuals, businesses, and entrepreneurs in managing their financial lives, operations, and procedures better. It has specific algorithms and software that cell phones and PCs use frequently. The term “FinTech” is a condensed form of “financial technology.”
FinTech emerged as a way to support customers in overcoming financial obstacles. Moreover, they are moving closer to their financial objectives as they embraced digital technologies more and more over time. As a result, clientele now depends on FinTech for a variety of determinations, including banking, budgeting, lending, and investing, in addition to its obvious daily advantages.
What is the Significance of FinTech Trends in 2024?
According to a press release from QED Partners and Boston Consulting Group (BCG) New York, the FinTech sector’s revenue has an expectation to increase sixfold, from USD 245 billion in 2023 to USD 1.5 trillion in 2030.
It is important to note that the FinTech industry, which now accounts for 2% of the USD 12.5 trillion in worldwide banking and financial services revenue, will increase by up to 7% by 2030.
These are undoubtedly astounding statistics, but companies and other FinTech stakeholders can only take advantage of and benefit from the predicted figures if they are aware of the present and upcoming trends in the financial services sector and know how to incorporate them easily.
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Top 8 FinTech Trends Growing in 2024
Here are the top 8 trends in FinTech industry you must follow in 2024:
Consumers Will Utilize More FinTech Applications Than Ever
Following the widespread acceptance of FinTech in 2020–2021, which was spurred by the pandemic, FinTech apps became a commonplace part of daily life. With 55% of customers saying that FinTech applications are assisting them in overcoming financial difficulties, this increase has persisted in recent years. FinTech users are consequently downloading more applications to help them manage their finances and make financial decisions.
Consumer banking expectations are being shaped by this growing dependence, as more people anticipate being able to effortlessly link their bank accounts to the various FinTech apps they use daily. The typical FinTech user now uses three to four applications, and it is anticipated that the number of FinTech apps used by consumers will continue to increase.
Open Banking (also known as Banking as a Service or BaaS)
One of the most popular FinTech concepts in the sector is open banking. It makes it possible for consumers, tech firms, and financial institutions to collaborate and share data securely. Users may take advantage of individualized solutions like loan marketplaces, investing platforms, and budgeting applications by granting approved third-party service providers access to their financial data.
With services such as marketing and shopping, Facebook and Instagram are at the forefront of this FinTech movement, but many others are following suit. Open banking will remain one of the most popular FinTech trends in 2024 and beyond as it has gained widespread recognition and been successfully incorporated into financial ecosystems in recent years.
Blockchain Heads for the Mainstream
The word “blockchain” is mysterious to many customers and evokes ideas of cryptocurrencies and unusual financial transactions that are still not well understood and are even regarded with mistrust in certain places.
Nevertheless, blockchain is still a FinTech movement, whether they realize it or not. As the conventional finance sector (TradFi) begins to adopt decentralized finance (DeFi), it may soon serve as the foundation for an increasing number of their financial operations, allowing them to conduct bitcoin transactions and other activities.
What was formerly viewed as a danger to the current financial system is now an opportunity to improve the speed, security, and transparency of transactions. Blockchain technology, which assists as the foundation for DeFi, generates an unchangeable digital record of all transactions. It is present across various computer systems and networks, with each transaction serving as a block in the chain.
From aiding in anti-money laundering initiatives to identifying questionable transactions, blockchain will be crucial in preventing fraud because of its time-stamped and encrypted records, as well as its real-time financial tracking features. Additionally, blockchain makes it possible to include innovative protocols—self-executing, self-verifying contracts with built-in controls and compliance—in the financial ecosystem, which strengthens and streamlines procedures like KYC.
Increasing Interest in Embedded Finance
Embedded finance is the incorporation of financial services into non-financial websites and applications. Embedded finance is also one of the best FinTech trends 2024. Convenience is the primary motivator for embedded finance services.
Customers may obtain credit without ever leaving the platform they are on. It eliminates the need to go to a bank and spend hours filling out paperwork.
Embedded payments are a further example. The card information is already there, so customers don’t have to enter it each time they want to make transactions.
By 2032, the embedded finance industry will have grown from its present $63.2 billion to over $248 billion.
Digital wallets are currently the most popular in integrated financial technology.
To provide a more thorough consumer experience, embedded finance has a significant value in several industries. It includes social networking platforms, medical services, ride-sharing, and e-commerce.
It is anticipated that the number of people using open banking will rise by almost 50% year on average between 2020 and 2024. Globally, there were roughly 24.7 million open banking users in 2020; by 2024, that number will continue to rise to 132.2 million.
Alternatives To Credit Scores Will Transform Consumer Credit
An estimated 49 million Americans have no access to loans, housing, and jobs in some situations because they do not have a typical credit score. This covers the underbanked, young people, and new immigrants. Furthermore, according to 63% of Americans, credit ratings are insufficient to fully comprehend their financial situation.
Alternative data to credit scores, such as cash flow data, pay stubs, and utility bills, are used in new credit determination algorithms to provide a better response.
In order to provide a more comprehensive picture of a borrower’s financial situation, new credit determination techniques incorporate information other than credit scores, such as cash flow data, pay stubs, and utility bills.
Lenders may quickly connect to data sources that offer this alternative data using API-based FinTech trends solution, facilitating quicker and better-informed loan choices. As a result, their clientele grows, and millions of Americans have better access to financial services.
Machine Learning And Artificial Intelligence
There is a huge potential that artificial intelligence and machine learning offer to the financial banking sector. In less time, this amazing technology has made noteworthy progress. Its integration empowers enhanced risk administration, better efficiency, and customizable investment portfolios.
Some of the latest FinTech trends that are expected to further assist the banking industry in detecting fraud and risk by 2024 include AI and ML. Finance apps are now unable to run without the help of AI chatbots, which provide modified recommendations and constant assistance.
The Way Forward For Sustainable Growth
Given the present market unpredictability, FinTech is a sensible option for considering their next course of action prudently. After all, the environment in which they function has changed suggestively throughout the years. FinTech had access to funding throughout their hypergrowth phase, which enabled them to take risks with their business plans. They might prioritize generating revenue, with the expectation that profits would follow.
Since last year, the story has changed. Between the first and fourth quarters of 2022, the interval between FinTech investment rounds grew by almost five months. Over the same period, the fundraising rounds’ average value dropped by 50%.
FinTechs are being forced by these shifts to come up with more inventive methods to prolong runways and modify their business models in order to make diminishing sums of money last longer.
For the time being, at least, the sector has moved past its days of expansion at any cost. FinTech and its investors are focusing on profitability in a liquidity-constrained market rather than merely increasing the number of customers they have or their overall revenue.
Also Read: Artificial Intelligence Stocks Under $10: Investing the Future
Alternatives To Credit Scores Will Transform Consumer Credit
An estimated 49 million Americans are not given any access to loans, housing, and jobs in some situations. It happens because they do not have a typical credit score. This covers the underbanked, young people, and new immigrants. Furthermore, according to 63% of Americans, credit ratings are insufficient to comprehend their financial situation fully.
To provide a more comprehensive picture of a borrower’s financial situation, new credit determination techniques incorporate information other than credit scores, such as revenue data, pay stubs, and utility bills.
Lenders may quickly connect to data sources that offer this alternative data using API-based FinTech solutions, facilitating quicker and better-informed loan choices. As a result, their clientele grows, and millions of Americans have better access to financial services.
Conclusion
Consumers are the actual driver behind all of the FinTech trends 2024 that define the sector. FinTech’s emphasis is on providing customers with services they have never had before. It has allowed it to flourish to its current state. These patterns show how customer tastes are changing and how FinTech may adapt to suit them. That concludes our list of eight FinTech industry trends to keep an eye on at the moment.
All types of financial services are rushing to adjust in this new, digital-first environment. Financial firms that are prepared to employ technology to increase efficiency, steer clear of security pitfalls, and adapt to shifting customer tastes seem to be the ones that will prosper. If you have more trends in mind about FinTech, you can make suggestions in the comments. We will surely try to add them to our upcoming series of trends in the FinTech world.
FAQs (Frequently Asked Questions)
What Is The Trend In FinTech?
With this FinTech movement, Open Finance and Open Payments expand on the opportunities provided by Open Banking, allowing data exchange on products like mortgages, insurance, pensions, and investments. They also streamline payments by eliminating several stages in the process.
What Are The Top 5 FinTech Trends In 2024?
The top 5 FinTech trends in 2024 are:
- Defi
- Open Banking
- Embedded Finance
- Decentralization
- AI and ML
What Is The Next Big Thing In FinTech?
The opportunities provided by Open Banking are expanded by Open Finance and Open Payments, which facilitate data exchange on goods like investments, pensions, insurance, and mortgages and streamline payments by eliminating several processes.
What Is The Future Of FinTech?
In the coming years, FinTech will probably see a lot of growth. The distinction between FinTech startups and established businesses may soon become more hazy as traditional financial organizations increasingly collaborate with or adopt FinTech solutions and customer demand for easy-to-use digital financial apps increases.