Finance has changed significantly in recent years. Traditional banking is no longer the only option. Digital solutions now streamline financial operations and enhance customer experiences. The growth of fintech, combining technology and finance, has driven these changes.
Fintech startups and enterprises leverage the latest technologies to meet customer demands. This helps them stay competitive in the fintech market. As we look ahead to 2024, the fintech sector shows no signs of slowing down. Established products and services will continue to develop. New trends will also emerge in both financial technology and regulation.
For businesses looking to implement fintech products, staying ahead of the industry trends is crucial. This awareness helps navigate the fintech landscape and make informed decisions about developing competitive fintech software solutions.
Fintech Trends to Watch in 2024
In 2024, the fintech market is expected to grow significantly. By 2032, it is projected to reach $1,152 billion, with a compound annual growth rate (CAGR) of 16.5%. Despite this growth, investments in fintech have dropped compared to previous years.
In 2021, investments were substantial, but in 2023, they reached $113.7 billion. This indicates that investors are becoming more selective. Only companies developing competitive and in-demand solutions can attract funds from investors. Therefore, staying aware of industry trends is crucial.
1. Growing Adoption of Embedded Finance
Embedded finance integrates financial services into non-financial businesses. This empowers non-finance companies to handle monetary operations. It is a fast-growing trend. The embedded finance market is expected to reach $7.2 trillion by 2030. Many modern businesses use embedded finance to streamline customer experience.
Examples include:
- Payments on platforms like Netflix or Spotify.
- Payments in online games like Roblox or Genshin Impact.
- Payments on online learning platforms like Coursera or Udemy.
Other embedded finance services include insurance, lending, banking, and wealth management. E-commerce sites offering purchase installments or travel insurance are examples.
2. Intelligent Management of Personal Finance
Investments in AI-powered fintech startups are growing. In 2017, they were at $500 million, reaching $2,500 million in 2023. AI-powered financial applications are becoming more popular. These apps provide valuable advice and simplify finance management.
Popular AI money management apps include Cleo, Eva Money, and Wizely. They offer services such as:
- Budgeting: Analyzing income and spending patterns.
- Expense tracking: Categorizing spending and identifying reduction opportunities.
- Investment advice: Analyzing investment areas and forecasting returns.
- Bill payment reminders: Aggregating bill data and alerting users about payments.
- Financial planning: Offering advice based on specific situations.
3. Rise of Central Bank Digital Currencies (CBDCs)
CBDCs create new realities for fintech businesses. They enable new use cases and open up new regions for fintech services. CBDCs are digital currencies controlled by central banks, serving as legal means of payment in electronic form. They can be used for payments, investments, and other transactions.
More than 80 countries are planning to develop their own digital currencies. The USA, UK, Australia, New Zealand, France, Switzerland, and Ukraine are among them. Fintech companies should monitor these developments and adapt their services accordingly.
4. Emergence of New Open Banking Products
Open banking allows banks and financial institutions to share customer data through APIs securely. This enables new cooperation forms and advanced fintech products. Examples include:
- Account aggregators: Gathering all user’s financial accounts in one place.
- Non-banking card issuers: Offering payment card issuance services.
- Real-time fraud detection: Analyzing transactions in real-time.
- Instant loans and credit scoring: Quickly formulating credit scores for loan requests.
The open banking market is projected to grow significantly by 2027.
Comparison of CBDCs and Mobile Money
| Feature | CBDCs | Mobile Money |
| Control | Central banks | Mobile operators |
| Currency | Digital form of fiat currency | Mobile payments |
| Regulation | Backed by central authority | Tied to specific mobile operator |
| Use Cases | Cross-border payments, government disbursements, financial inclusion | Peer-to-peer transfers, bill payments, remittances |
Reincarnation of Decentralized Finance (DeFi)
After a decline in investments in 2023, DeFi funding is expected to grow in 2024. DeFi organizes finance operations without intermediaries, using smart contracts. Users control their assets independently. In 2024, DeFi will become a significant fintech industry trend. More users trust decentralized platforms due to transparency and independence from central authorities.
The current investment landscape offers opportunities to develop DeFi products. This includes decentralized lending platforms, yield farming protocols, and decentralized exchanges.
Regulatory Compliance Trends in Fintech Industry 2024
The growth of fintech introduces new cybersecurity threats. Fintech companies must comply with security standards mandated by regulations like GDPR and PSD2. In 2024, new regulatory standards will emerge. Key regulations include:
- AI Act: Regulates AI usage in the European Union.
- PSD3: Strengthens consumer rights and fintech business regulations.
- Fair Lending Act: Avoids bias in lending operations.
- DeFi Regulations: DeFi companies must operate within legal frameworks, considering country-specific regulations.
How Fintech Development Providers Can Help
Fintech development providers can help companies stay up to date with trends. They offer specialized fintech expertise, accelerating time to market and ensuring regulatory compliance. Partnering with a reputable fintech vendor provides access to expertise, accelerates development, and offers control over the development process.
