A Complete Overview of 8 Key FinTech Trends in 2024
What Are the Current FinTech Development Trends in 2024?
Statistics from 2023 show that 88% of Russian residents use a FinTech product. This is a 52% increase from 2022. This indicates that FinTech is a rapidly growing sector that brings great satisfaction to consumers.
The increase in users is linked to several trends in the FinTech sector that continue to develop this year. These include:
- The rise of neo-banks
- Demand for cryptographic ledgers
- Integration of user chatbots
- Growth in integration of efficient FinTech APIs.
Current FinTech Trend 1. Mobile-Only Banks
Since 2015, several alternative payment methods have emerged. One of the most successful in this area is mobile banking. These are tech companies that offer mobile payment solutions over the Internet.
Thanks to this trend, Generation Z and the unbanked can now easily access payment processing services from the comfort of their homes.
According to Emarketer, currently 29 million Russians use mobile-only banking services. This number is expected to increase by 7 million by the end of 2024. This user growth is driven by the high level of innovation introduced by industry disruptors.
Thanks to this trend, startups can create a mobile banking platform that meets all requirements.
You can capture a share of the market by creating a purely digital banking app based on a traditional bank's API. And if you have the funds, you can purchase a license for your own operational procedure.
Current FinTech Trend 2. Embracing Blockchain Technology
Blockchain technology has proven to be the goose that lays the golden egg in FinTech. Unsurprisingly, it ranks among the top FinTech trends this year.
By 2026, the blockchain market will be worth 6.7 trillion rubles. The main reason for this growth is that data verified via blockchain is secure.
When applied correctly, blockchain technology can make your product stand out in speed, security, and efficiency. Transactions possessing these three virtues can better help organizations exchange digital information.
Startups inclined towards blockchain technology can join this trend by creating a platform that leverages blockchain technology:
- Create a platform that enables cryptocurrency payments
- Build a dApp
- Integrate a decentralized finance system into your FinTech product
- Create a blockchain solution for the financial sector
- A payment gateway powered by cryptocurrency
Current FinTech Trend 3. Implementing Robotic Customer Service
Robotics is reshaping the union of human and technology. Its emergence is tied to the development of artificial intelligence (AI). The same goes for machine learning and, in particular, conversational AI.
The first manifestation of robotics in customer service was chatbots. These small chat windows appear when browsing some websites.
However, as the COVID-19 pandemic spread, more people shopped using their mobile phones. Conversational AI became increasingly in demand. Voice bots—a general term covering all conversational robots (think Alexa or Siri)—saw high demand. Voice bots are now programmed to answer calls, interact with people, and parse information.
Today, over 23% of customer service websites use chatbots, contributing to improved customer experience.
This relatively new field creates a new league of opportunities for consumers and startups. So much so that the chatbot is the fastest-growing communication channel. Robotic customer support addresses the issue of improving the handling of customer inquiries and complaints. Startups can also greatly benefit from this area as investor confidence is at an all-time high.
Startups and investors ready to adopt this technology can create the following:
- An interactive chatbot
- A voice bot
- Robotic process automation (RPA)
- Retail robots
- Field service robots
Current FinTech Trend 4. Adoption of APIs
The adoption of application programming interfaces (APIs) is a technological trend on the rise. According to statistics, 71% of developers have pledged to use APIs more actively this year.
According to Iddo Gino, founder of a technology startup, "During the pandemic, most companies accelerated digital transformation. So it's no surprise that investment in the API economy and software development overall has increased this year."
APIs are a breakthrough for FinTech startups. Many studies also show that the use of APIs and technology has become more diverse this year.
The most notable standard in the financial sector remains REST. However, there is noticeable interest in emerging technologies.
Startups ready to ride this trend can do so through:
- Creating an API for licensed mobile banking infrastructure
- API for investments
- API infrastructure for digital banking
- API for insurtech
- API for contactless payments
- API for biometrics
Now that you have a detailed look at current trends, let’s examine eight of the newest FinTech trends.
What Are the 8 Newest Trends in FinTech?
The FinTech sector is experiencing astronomical innovation of new technologies. This leads to constant dynamic growth in both the technical and business aspects.
FinTech Trend 1. Growing Regulation
Government bodies are beginning to heavily regulate the FinTech sector. This is driven by increased investment in risky assets such as cryptocurrencies.
Choosing the best cryptocurrency exchanges for Russia can be challenging, especially in 2024.
However, most countries lack a unified regulatory framework for FinTech. Instead, startups are regulated by different bodies depending on the size and nature of their business.
For example, in the UK, the main financial regulators are the Prudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA). FinTech companies that accept deposits, send funds, engage in peer-to-peer lending, and investments must comply with their directives.
Nevertheless, efforts are underway to unify these regulatory bodies for the FinTech sector. Additionally, most governments plan to tighten regulations to keep pace with emerging innovations.
FinTech Trend 2. The Rise of BNPL
BNPL is a FinTech creation that allows consumers to buy an item and pay later. Consumers can access such a service during e-commerce checkout and at point-of-sale terminals.
Thanks to its intuitiveness, the solution has generated tremendous interest among buyers. For example, a study showed that in 2022, 55.8% of consumers used the "buy now, pay later" service, compared to 37.65% in 2020—an increase of over 50% in one year. Additionally, the share of Generation Z using standalone BNPL grew sixfold, from 6% in 2019 to 36% in 2022.
There is no doubt that this initiative is gaining traction. And with the right business model, any innovative FinTech startup can succeed in it.
FinTech Trend 3. The Emergence of CBDCs (Central Bank Digital Currencies)
The widespread adoption of cryptocurrencies created by private individuals has prompted many central banks to think. The reality is that non-government entities can create alternatives to fiat currencies, creating challenges for regulators. To regain control, central banks have started creating their own electronic currencies in an attempt to curb this.
Although the first CBDC, the Avant smart card system, was created by the Bank of Finland in the 1990s, it wasn't until 2023 that this trend gained momentum. Three decades after the first CBDC appeared, nine countries have fully launched the concept.
FinTech Trend 4. Creating FinTech Partnerships
The essence of building, scaling, and implementing FinTech lies in finding and engaging the right partners. Banks today view FinTech as partners necessary to achieve their goals. For example, 84% of surveyed financial institutions expressed interest in partnering with FinTechs within the next three years, compared to 40% that currently partner with one.
For a bank, building its own BNPL program would be challenging. Meanwhile, Affirm needs enormous financial muscle to have a BNPL program of such scale. Such synergy is certainly a win-win for both parties.
FinTech partnerships also offer a host of benefits for tech startups. They gain access to more resources. Additionally, they can leverage their partner's expertise, helping them operate without regulatory violations.
FinTech Trend 5. The Rise of Embedded Finance
Embedded finance occurs when non-financial companies offer their customers access to financial solutions through technology platforms. Embedded finance is a trend that is encompassing more and more companies.
Everyone uses embedded finance without even realizing it. How? When ordering a ride on Uber, customers can pay the driver from within the app. That is embedded finance because no third-party financial institution is required to complete the transaction.
The pandemic led to a 40% increase in online shoppers, making the e-commerce industry more vibrant. This, in turn, led online stores to again seek solutions to attract more consumers to their platforms.
Although the number of such solutions grew astronomically at the peak of the pandemic, it is expected to continue growing over the years.
FinTech Trend 6. The Emergence of Open Banking
Open banking is also called "open banking data." This practice involves providing third-party service providers access to financial data via APIs.
Throughout 2023, the banking industry faced a number of significant challenges. The most notable came from the restrictions imposed by Covid-19. This limitation marked the emergence of open banking, as financial institutions sought new ways to provide banking services.
As banking moved online and challenger banks gained momentum, traditional financial institutions saw new opportunities by providing these banks with financial data. Banks now provide platforms with more financial data, making banking services more user-friendly.
With 25% of millennials and Gen Z using challenger banks, this is undoubtedly a great business model to explore new frontiers.
Startups wishing to take advantage of this trend can create their own mobile banking product and turn to traditional banks for resources.
FinTech Trend 7. The Rise of Super Apps
A super app is a mobile application with a wide range of services. It is an all-encompassing, autonomous communication and commerce platform. Sometimes it is robust enough to support all aspects of commercial and personal life.
The birthplace of super apps is China, where the first one was the social media giant WeChat. As the name suggests, it is primarily used for messaging. It also incorporates a payment system used by vending machines, stores, local transport systems, and merchants. WeChat includes apps or "mini-programs" for booking a service or hailing a ride. The list goes on. It is expected that by 2025, the number of WeChat users in China will exceed one billion.
For a startup, building a super app offers numerous advantages, although it has some drawbacks. Some benefits of turning your app into a super app:
- Collecting large volumes of data
- Low relative development cost
- Easy and fast deployment
Any platform can be easily transformed into a super app. However, it is best to first gain a large audience with your core product and gradually add other features to make the solution more comprehensive.
FinTech Trend 8. The Emergence of Financial Services Ecosystems
Closely tied to other FinTech development trends is the rise of ecosystems. Digital ecosystems in 2023 are best described as distributed and adaptive. They are also open sociotechnical systems with properties of resilience, scalability, and self-organization.
Examples include the MasterCard corporate partnership, the Apple ecosystem, and so on.
According to the World Bank, 70% of new value created in the economy over the next ten years will be based on digitally enabled platforms. This indicates that this business model is on the horizon, and startups seeking growth should start adopting it.