“2024 will be a pivotal year for the global fintech sector, as the regulatory landscape becomes more complex and diverse, but also more conducive to innovation and growth,” said Laura Nixon, the Knowledge Director for Fintech at Clifford Chance. 

Fintech is a moderately popular term among the global business community. It is a combination of two words, finance and technology. The combination refers to the use of modern technologies to transform the finance sector and explore more growth opportunities. We can say that fintech is for every business, from a small startup to a well-established corporate giant. 

The fintech industry has shown tremendous advancement in recent years. Emerging technologies like AI, blockchain, machine learning, and cloud computing have made a huge impact. Amid these transformations, entrepreneurs must stay updated with fintech trends to stay ahead of the curve. 

We bring you five emerging fintech trends that are likely to shape the worldwide business landscape in 2024 and beyond. 

So, let’s explore.

1. Embedded Finance

We all are familiar with terms like Software as a Service (SaaS), Infrastructure as a Service (IaaS), etc. These are mostly related to technology companies. 

A new term has evolved in recent years: Embedded finance, or Finance as a Service (FaaS). It involves the integration of financial services into e-commerce, banking, social networking, etc. The idea is to give customers more personalized and convenient financial services tailored to their preferences. 

Take the example of an online marketplace dealing in used vehicles. By integrating FaaS or embedded finance, the marketplace can introduce flexible financing options for their customers considering their economic cycles and interests. 

Embedded finance will grow by 35.5% in the next five to six years. This growth will benefit retail and ecommerce sectors while more smartphone adoption would be the key factor behind this transformation.

2. Improved Efficiency with AI and ML

Legacy technologies are becoming redundant rapidly these days. Next-generation systems powered by AI, ML, and cloud are the future. All sectors are upgrading their infrastructure by incorporating modern solutions. Fintech is no exception. 

Most fintech companies are investing in systems for advanced data analytics and decision-making. AI and machine learning are two ideal options to achieve these goals. Predictive analytics offered by AI-powered software empower fintech businesses to make data-driven decisions based on real-time insights. Fintech companies can accelerate the process of data collection, interpretation, and decision-making by leveraging AI and ML technologies. 

Moreover, the increased adoption of AI and ML in the fintech sector is also fueled by evolving user demands. Today, customers want more than just financial services; they expect companies to be more personalized and efficient than ever. 

The only way fintech can do this is by integrating AI and ML with their existing infrastructure. And many fintech enterprises have already started this process.

3. Digital and Cryptocurrencies

A cashless economy is the new normal. Governments with cash-intensive economies are taking initiatives to switch to digital payments. The Fintech sector is a key player in this transition. 

The majority of transactions in coming years will be digital. As a result, more fintech startups would emerge enabling digital transactions via web apps, cards, or smartphones. Moreover, digital currencies and decentralized finance would promote the acceptance of digital assets among users. The crypto market once regularized on a model of cash, is likely to contribute significantly to the growth of digital transactions. 

Likewise, customers will get flexible and more innovative options when choosing fintech organizations. New collaborations will take place between financial institutions and crypto companies for safe, secure, and fast transactions. 

A great opportunity, therefore, lies ahead for investors in this area.

4. Regulation Technology

If you ask a fintech startup about the biggest headache they faced in the early days, nine out of ten times you will get the same answer. Managing regulatory compliance. 

Is complying with international regulations really that difficult? Yes, it is. Here’s why! 

As the world is moving towards digital finance, there are growing concerns among governments regarding cybersecurity risks. Hence, they are introducing new regulations to address those challenges and make digital transactions safer and more secure. 

Therefore, regulation technology can attract billions of investments in the coming years. Fintech companies can capitalize on this growth opportunity to develop high-tech solutions that could automate compliance while reducing overall costs. The solutions can help entrepreneurs to timely identify and fix potential threats to their financial security.

5. Green Fintech

There is an unannounced but unanimous move to reduce carbon footprint globally. The world’s leading tech companies like Tesla, Microsoft, and Google are taking initiatives to reduce their impact on the environment. Green fintech is an extension of this move. 

Fintech companies are also working for environmental sustainability. One key step taken in this regard is to make carbon reporting easier and more seamless.

Several ESG reporting tools have been introduced recently. These green fintech tools encourage businesses to make impactful changes in the external environment. If this trend continues, the fintech sector could contribute a lot to save the earth. 

Final Thoughts 

Like every sector, fintech is also going through a phase of rapid transformation. Thanks to modern technologies like AI, ML, and blockchain for making operations easier, smooth, and more efficient. We have explored a few trends as a result of this change. 

Fintech companies are likely to adopt embedded finance to deliver personalized experiences to their customers. Similarly, AI and ML integration would improve the performance of systems while digital and cryptocurrencies would play a central role in cashless transactions. This sector offers tremendous growth opportunities to fintech startups. 

Moreover, regulation technology also has a high demand in the fintech sector. Businesses are likely to adopt solutions to streamline compliance at a low cost. Lastly, green fintech would rise further with the arrival of green fintech tools.