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<\/p>\nIn the past few years, big things have happened in the FinTech space.<\/p>\n
<\/p>\n
As an industry veteran, you\u2019ve probably heard all this before:<\/p>\n
So, will there be any really new financial services industry trends in 2024? Yes and no.<\/p>\n
We believe that 2024 trends in FinTech will be defined by the rise of the connected consumer, whose pains, needs, and demands will drive product development and shape the overall vector of the financial industry. The potential of AI will be actively explored to meet these pains and needs.<\/p>\n
This year, instead of talking about individual tech trends, let\u2019s go on a bit of a journey through the customer looking glass.<\/p>\n
Financial Services & Insurance<\/p>\n
Once upon a time, all a customer expected from a bank was to store their hard-earned cash and provide some way to spend and withdraw it. Then came challenger banks and other FinTechs, who showed that all things finance could be lightning-fast, mobile-friendly, and affordable.<\/p>\n
Meanwhile, customers grew accustomed to top-notch omnichannel experiences thanks to Amazon, Uber, and others, condensing once-daunting processes into one click. Gradually, customers have developed a digital ecosystem of products to fulfill their every need. Now, FinTech apps have the opportunity to find their place in the heart of that ecosystem.<\/p>\n
As we highlighted in our New Age in Banking<\/em> whitepaper<\/a>, Millennial and Gen Z consumers \u2014 the key target demographics for 2020\u20132030 \u2014 want to see their banking products as companions and advisors who are helping them reach their financial goals. And Gen X is not far behind Millennials in FinTech adoption.<\/p>\n Plus, in the past few years, FinTech awareness has surged globally:<\/p>\n Source: DemandSage<\/a><\/em><\/p>\n In 2024, the customer experience (CX) is still a battlefield for FinTechs. Most financial companies have made huge progress in catching up with consumer FinTech trends. Collectively, FinTechs have reimagined the once-daunting tasks of opening a bank account, sending money to friends, applying for a loan, and planning for retirement.<\/p>\n Now, mature FinTechs will need to transpose that smooth CX from single-purpose to multi-purpose financial products. We\u2019ve come up with a good formula<\/a> for that:<\/p>\n Machine Learning (ML) + User Experience (UX) = Top FinTech Customer Experience (CX)<\/p>\n <\/div> \n <\/div>\n In a nutshell, connected customers want financial products that are:<\/p>\n We have already seen the efforts of both incumbent banks and FinTechs to meet these demands. In 2024, most will likely keep following consumer finance trends to build better, smarter, and more complex products.<\/p>\n FinTechs are now competing at the ecosystem level. In 2024, we\u2019ll likely see more marketplace banks<\/a>, a bunch of new super apps<\/a>, and loads of cross-industry partnerships \u2014 all aimed at meeting the demands of connected consumers. To bundle or not to bundle? That\u2019s the big industry question. Younger FinTechs are getting their slice of the market by going after digital trends in niche use cases: small business digital banking, bill consolidation, startup credit cards, you name it. Bigger unicorns are full-speed ahead, beefing up their core offerings with additional products. Consider Wealthfront\u2019s move into savings accounts<\/a>. Both approaches have their merits<\/p>\n Collecting and operationalizing customer data will remain imperative. FinTechs should continue to focus on viable machine learning and AI<\/a> use cases, deploying predictive analytics to gauge a user\u2019s current standing and future financial aspirations, devising the next best action strategies for them, and delighting with AI-driven personal finance management<\/a>.<\/p>\n And, yes \u2014 customer-centric is still a huge buzzword. We believe that the financial system as a whole is evolving to meet customers\u2019 needs.<\/p>\n In 2024, we should address the elephant in the room:<\/p>\n Most of your customers are bad with money.<\/p>\n <\/div> \n <\/div>\n Heck, they\u2019re the first to admit it.<\/p>\n Also, according to a 2023 Bankrate survey:<\/p>\n Generation X (ages 43\u201358) has the lowest financial security among all generations:<\/p>\n According to a CNBC Your Money Financial Confidence Survey<\/a>, 70% of Americans admit to being stressed about their personal finances these days.<\/p>\n <\/div> \n <\/div>\n How about offering these people some help?<\/p>\n FinTechs already have the tools to do so:<\/p>\n Investing in customers\u2019 financial literacy is the key to winning customers for the long term.<\/p>\n First, show customers how to avoid overspending on late bills or cancel unwanted subscriptions. Then, teach them how to save more (without sweating too much over it), spend smarter, and invest better.<\/p>\n As people get more savvy with their spending habits, AI is stepping up as a handy helper. One of the widely discussed current trends in FinTech, AI can help consumers identify savings opportunities, especially in managing liabilities. As users become more comfortable with AI managing liabilities like debt, more financial companies will consider integrating AI capabilities into their products. AI can automate or ease including managing checking, savings, and retirement accounts, tax filings, and more<\/p>\n Educating users about AI-driven financial management is vital for fostering satisfied, loyal, higher-net-worth customers who remain with your brand for the long term, resulting in mutual benefits.<\/p>\n Learn how we\u2019re integrating a digital wallet with the world\u2019s largest banks and payment networks to promote the Europe-wide adoption of the QR technology <\/p>\n Having computer code decide how we should save, spend, or invest our money isn\u2019t a futuristic idea. It\u2019s the AI-powered reality in 2024.<\/p>\n AI-driven personal finance and wealth management are already here, as we highlighted in our article on new-gen personal financial assistant applications<\/a>.<\/p>\n Consumers who are burned out and stressed out clearly vote in favor of this hands-free approach to managing their money.<\/p>\n Wealthfront, Acorns, Betterment, Credit Karma, and SoFi are on the road towards becoming one-stop shops for automated money management.<\/p>\n <\/div> \n <\/div>\n How comfortable would you feel using each of the following services?<\/p>\n Source: Quartz \u2013 Get ready for self-driving money<\/a><\/em><\/p>\n We expect to see the growth of AI in:<\/p>\n As AI becomes a commodity technology, great things can happen.<\/p>\n For a wider reach, FinTechs should coach. Finances excite too few consumers, as most view money management as a daunting, complex chore. FinTechs so far have done a good job of showing that investing, budgeting, and saving can be fun (thanks to gamification<\/a>). Now, they need to help customers build their skills even further. FinTechs can\u2019t grow if their customers remain bad with money. So it\u2019s time to teach (but not to preach).<\/p>\n We found people don\u2019t always want to be spoken to like a \u2018customer,\u2019 but engaged with as the breathing, living, well-rounded human beings they are.<\/p>\n <\/div> \n <\/div>\n Conversations like the one shown above are inevitable in 2024, as Alexa now knows how to track utility bills, send reminders, compare month-to-month payments, and give personalized financial advice.<\/p>\n Considering previous tech advancements in the voice payment space<\/a>, we expect that other voice assistants will pick up new skills and take a more proactive role in payments, money management, and other consumer finance trends in 2024.<\/p>\n In particular:<\/p>\n Connected car commerce<\/a> is growing as newer vehicles come furnished with connectivity and integrated payments. Since browsing and driving is bad practice, most drivers choose to place orders by voice.<\/p>\n In short<\/strong>: Voice payment technologies had a slow start, but they\u2019re expected to pick up speed in 2024. For FinTechs, the best opportunities will lie in connected car commerce and conversational AI assistants<\/a>.<\/p>\n Virtual cards are another not-so-new but rising FinTech payment trend. After all, the volume of credit card fraud is far from decreasing. With the latest series of high-profile card breaches, consumers feel wary of disclosing their information to just anyone.<\/p>\n In fact, most connected consumers use digital wallets (PayPal, Venmo, Google Pay, Apple Pay) to mask their card details and perform transactions securely. Or they opt for a virtual card if one is available from their digital bank.<\/p>\n Offering virtual cards is a quick way to delight customers and stave off the competition from FinTechs who are making a cautious foray into the payment card space:<\/p>\n However, the real revenue opportunity for virtual cards is in the B2B payment space.<\/p>\n 35.8 billion was the global volume of virtual card transactions in 2023<\/a>, with key segments of B2B sectors being Finance, Healthcare, and Fleets.<\/p>\n <\/div> \n <\/div>\n As we shared in our digital business banking post<\/a>, virtual cards are among the features most requested by customers, as they effectively address three big payment challenges:<\/p>\n In short<\/strong>: Virtual cards are leading the race in the corporate payment technology space. We expect to see more virtual card offerings from both challenger banks and FinTech players.<\/p>\n Open banking has come a long way since the concept was born in the UK. In the past few years, the open banking ecosystem has improved and enlarged:<\/p>\n Many banks struggle with outdated technology, being far from customer engagement trends. Meanwhile, open banking enables collaboration between banks and FinTechs, facilitating the development of modern APIs for faster funds transfers among stakeholders.<\/p>\n However, the general industry sentiment is that financial institutions have not fully figured out how their open banking setups will look regarding technology, products, branding, and technology. In 2024, regulatory trends worldwide show that governments are prioritizing instant, secure, and cost-effective transactions for businesses and consumers.<\/p>\n Open banking stands out as a crucial focal point in these efforts, first of all in the UK and the EU, which are the leaders in open banking:<\/p>\n As regulators deliberate on the concept of open banking, here are some bare facts<\/a> to prove open banking is one of the lasting trends in FinTech:<\/p>\n Plus, consumers who appreciate a connected customer experience are up for at least trying open banking<\/a>:<\/p>\n In short<\/strong>: Becoming PSD-compliant might feel challenging. But it is imperative in 2024 if you want to stay competitive and adopt new business models such as marketplace banking.<\/p>\n PSD2 (in force since 2018) as well as PSD3 (its upcoming successor) are the top-of-mind compliance hurdles for FinTechs in the EU. Let\u2019s look closely at them.<\/p>\n PSD2 mandated European banks to share data with licensed FinTech firms, paving the way for open banking in Europe.<\/p>\n PSD3 aims to refine existing data sharing and security standards, focusing on improving API quality. Proposed changes include stricter requirements, minimum functionality standards, and measures to tackle high latency issues. The regulation is expected to be finalized by late 2024.<\/p>\n PSD3 proposes some much-needed changes:<\/p>\n Source:\u00a0KPMG<\/a>\u00a0\u2013\u00a0Regulation and supervision of fintech<\/a>\u00a0<\/em><\/p>\n Overall, the PSD3 report proposes several sound steps that would ease FinTech operations. The strong focus, however, remains on customer data protection and customer privacy.<\/p>\n US regulators are taking a somewhat different stance on FinTechs.<\/p>\n The US has traditionally been of the approach that we\u2019ll try to fit [FinTech] into one of our regulatory boxes.<\/p>\n <\/div> \n <\/div>\n Navigating regulation trends in the US remains complex, with each state imposing its own laws, hindering nationwide FinTech services. Despite technological advancements, a significant portion of US consumer finance trends still rely on traditional banking methods. Despite these challenges, US FinTechs attract substantial capital, evidenced by eight out of the ten largest FinTech deals of 2023<\/a> being registered in the United States.<\/p>\n On a brighter note, US authorities have tried to boost the financial industry by introducing the FedNow service<\/a>.<\/p>\n Let\u2019s see how US regulators are going to play FinTech catch-up in 2024.<\/p>\n Most FinTech operations in the US are governed by outdated legislation such as the Gramm\u2013Leach\u2013Bliley Act (1999), the Fair Credit Reporting Act (1970), and the Electronic Fund Transfer Act (1978), among others. Clearly, these are hardly suitable for today\u2019s reality.<\/p>\n Last year, FedNow was launched by the Federal Reserve, and now they\u2019re hustling to get more banks on board with the instant payment service. The Fed\u2019s goal is to make real-time A2A payment solutions widely available, benefiting both consumers and businesses across the US.<\/p>\n FedNow allows banks and credit unions to make real-time transactions, making fund transfers smooth around the clock. Customers will appreciate getting their hands on cash faster, simplifying bill payments, and better managing cash flow. Still, we’ll have to wait and see if financial institutions will widely adopt FedNow in 2024.<\/p>\n Another step is from the Consumer Financial Protection Bureau. They\u2019re set to wrap up the Personal Financial Data Rights rule<\/a> by autumn 2024, giving consumers more control over accessing and sharing their financial data with third parties in a structured and protected manner.<\/p>\n Still, it won\u2019t be easy for US initiatives to fill in the gap while the EU and the UK are heavily exploring the top guidelines we discussed above. PSD2, SCA, and the GDPR may be daunting, but they aim to increase market-wide security standards and promote secure data exchanges between all participants.<\/p>\n We also want to highlight Australia\u2019s regulations and FinTech trends. In Australia, the New Payments Platform (NPP)<\/a> is leading the charge in real-time A2A payments. Additionally, by mid-2024, the government plans to start reviewing the Strategic Plan for Australia\u2019s payments system<\/a>, focusing on upgrading payment infrastructure and boosting competition and innovation, particularly in payment initiation.<\/p>\n Ultimately, this is a question for you and your customers to answer.<\/p>\n![\"FinTech](\"https:\/\/d17ocfn2f5o4rl.cloudfront.net\/wp-content\/uploads\/2022\/03\/info-2-Update-visuals-for-FinTech-Trends.png\")
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\n\t\t\t![\"MicrosoftTeams-image](\"https:\/\/intellias.com\/wp-content\/uploads\/2023\/07\/MicrosoftTeams-image-107.png\")
<\/div>\n\t\t\t\n\t\t\t\t\n\t\t\t\t\tNEW AGE IN BANKING WHITEPAPER<\/div>\n\t\t\t\t\tHow banks can switch to more profitable operating models<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t Download now <\/span>\n\t\t\t<\/div>\n\t\t<\/a><\/div>\nIntellias take on financial services industry trends<\/h2>\n
![\"2024](\"https:\/\/intellias.com\/wp-content\/uploads\/2024\/04\/2024-body-im.png\")
\n Download infographics<\/a>\n\t\t <\/section>\nThe \u201clet\u2019s do money better\u201d trend \u2014 financial literacy<\/h2>\n
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\n \n \n <\/div>\n <\/div>\n <\/div>\n Read more<\/span>\n\t\t <\/a><\/div>\nAutonomous finance \u2014 \u201cDoing money better\u201d on autopilot<\/h2>\n
\n \n ![\"FinTech](\"https:\/\/d17ocfn2f5o4rl.cloudfront.net\/wp-content\/uploads\/2022\/03\/info-3-Update-visuals-for-FinTech-Trends-1.png\")
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Intellias\u2019 tips for personal finance products:<\/h2>\n
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Voice and virtual cards: A rising payment method duo<\/h2>\n
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Open banking: Almost there<\/h2>\n
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Regulation trends in financial services<\/h2>\n
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<\/p>\n\n \n Intellias regulatory insights:<\/h2>\n
What\u2019s next for FinTech?<\/h2>\n