The Next Frontier: Emerging Financial Technologies Shaping 2024 And Beyond

As yet another year approaches, we begin the annual ritual of reflecting on the past 365 days and looking ahead to the next. This time around, it’s clear that 2024 will see the strengthening of trends that gained prominence in the previous year – think Artificial Intelligence (AI), Machine Learning (ML), real-time cross-border payments and more.

Let’s take a look at what direction each of these is expected to take in 2024:

AI And ML March On

The transformative impact of AI has been evident in its role in fraud prevention, personalisation and risk assessment. These use cases are set to become more refined in 2024.

For instance, personalised user experiences will be taken to the next level with chatbots and personal assistants powered by generative AI. These will offer round-the-clock customer service along with tailored financial guidance. In addition, robo-advisory services can provide personalised investment advice.

AI and ML together will enable more accurate risk assessment in lending and razor-sharp fraud detection. The expanding use of the former, in particular, will also result in evolving ethical considerations and increasingly comprehensive regulatory frameworks to ensure transparency and data security.

A Smoother Road For Cross-Border Payments?

The global spend on B2B cross-border payments is expected to exceed $40 Tn by the end of 2024. A major chunk of this growth is projected to stem from ecommerce merchants selling goods internationally via local services.

However, cross-border payments are yet to hit their stride –  businesses continue to face challenges when setting up bank accounts in international markets. Also, they are in search of integrations that will help combine those accounts into their internal accounting systems.

The hope is that 2024 will be the year these issues find a resolution — research has shown that nearly two-thirds of financial institutions are either ‘very’ or ‘extremely’ willing to invest in new technology to solve cross-border pain points.

Banking As A Service Takes A New Form

Banking as a Service (BaaS) was touted as a novel model that would act as a channel between traditional banks and new-age fintechs. It was considered the be-all and end-all of bank-fintech collaboration, and for a while, it was smooth sailing.

Unfortunately, 2023 saw some bumps in the road, relating to compliance and technological challenges. Most of these troubled partnerships involved banks and fintechs that didn’t have a direct relationship, instead operating via a BaaS provider acting as a middleman.

In the coming year, this model will likely be replaced by one where banks are in the lead position in terms of compliance and risk, and spotlight fintechs with sustainable business models.

Cybersecurity Retains Centre Stage

The G20 Digital Economy Ministers’ meeting in August ‘23 reached the consensus that cybersecurity is an international issue that requires collaboration between economies. Unsurprisingly, the issue took precedence on an international stage, given the continued surge in digital payments and the increasing use of AI in finance.

The industry will likely see a rise in attacks that leverage AI and ML – think generative AI to mimic means of communication such as emails and phone calls, identity theft, and the like. This should result in a solid global effort to strengthen cybersecurity, bringing together public and private players.

2024 promises to be a dynamic year for fintech, where new technologies and innovations could transform business models, products, and services. We can expect to see new AI-driven use cases, refinement of anti-fraud and money laundering mechanisms and faster, more efficient payment systems, to name a few.