5 predictions for fintech in 2024

These days, it’s not uncommon to use Venmo to split the dinner bill or Apple Pay to buy a coffee, but that wasn’t always the case.

Ten years ago, most of us took money out of our wallets or handed over our credit cards to make a purchase, without taking out our phones to pay at the register.

“When Google Pay and Apple Pay were just getting started, it took them a long time to take off,” said Mohit KansalSenior Vice President of Global Payments and Payer Services at Flywire, a global payments software and enablement company based in Boston. “But it really paid off.”

Today, the payments industry is under pressure to take digital payment methods and a host of other innovations to the next level.

As of recent 2024 MIT Sloan Fintech Conferencewhere Kansal, MBA ’14, was the keynote speakerhe said the financial technology sector is both challenging (think increased regulatory scrutiny) and exciting (endless innovation).

Here are Kansal’s main forecasts for fintech in 2024.

Expect more control and regulation

Fintechs are not unlike large financial institutions, in that they also have to comply with complex regulations. And it becomes even more complicated for fintechs that operate in multiple jurisdictions: they must comply with the rules of each country where they operate.

“Fintechs won’t succeed if they don’t pay attention to regulation and figure out how to make it work in their favor and turn it into a strategic advantage,” Kansal said.

Given these trends, job prospects are promising for candidates with dual business and regulatory experience, he noted.

But rather than suggesting that companies hire “a compliance person who is too strict,” Kansal said organizations need the type of person “who can strike the right balance between how to resist compliance.” regulations and doing things in a way that ensures the success of the business. »

Security and compliance will remain a challenge

Ensuring secure and compliant transactions is crucial for companies like Flywire, which manages large and complex payment transactions in industries such as international education, healthcare, travel and business-to-business commerce.

All businesses need to protect their customers’ personal information, such as addresses and passwords, and the stakes are raised for fintechs, which often store valuable financial information, such as credit card or bank account details. , and move high-value, high-stakes values. payments worldwide.

To succeed in fintech and earn your customers’ trust, you must have the highest levels of data security and privacy certifications, adhere to global laws and regulations, and ensure your organization is compliant with the regulations for specific subsectors. you serve, said Kansal.

This is part of a security context which has seen data breaches increase in 2023in part due to poor cloud configurations, new types of ransomware attacks, and increased exploitation of vendor systems.

“Security and compliance are important issues for any business, anywhere,” Kansal said. “The downside of a breach is very significant, and it’s becoming increasingly difficult to figure out how to prevent these breaches. »

Cross-border payments will get attention

Kansal highlighted that the digitalization of payments is becoming increasingly common internationally. In India and Singapore, for example, “even regulators are innovating in the payments sector, which I think makes it extremely exciting because everyone is on board to move forward.” ‘before,’ he said.

In fact, Flywire is partnership with India’s largest public sector bank, State Bank of India, to digitize cross-border payments from India to higher education institutions around the world, providing Indian students with a fully digital payments experience.

“I see so much innovation in payments all over the world: in the United States, in Latin America, in Europe, in Asia, all over the world,” Kansal said.

“There was a time when innovation only existed and was done by small companies, small technology companies that were trying new things (and) really didn’t have much to lose,” he said. -he declared. “Now you see the banks innovating and the larger financial services companies innovating. »

Fintechs will look to extend consumer success to other functions

“A lot of the digitalization happening today is in consumer and e-commerce payments, but less so in invoice payments,” Kansal said.

In many cases, business owners are still accustomed to receiving paper checks in the mail from their customers. Sometimes this is because businesses don’t feel safe making online payments, and when you add in cross-border complexity, “it gets really, really complex,” Kansal said.

Having the right type of invoicing software can help streamline complex situations like selling a product in Europe, invoicing in euros, receiving money in dollars, and making sure the exchange rate is correct.

“This problem cannot be solved by money movements alone,” Kansal said. “Software and payments combined make magic happen. »

Artificial intelligence is full of promise

Like most other industries, Kansal expects artificial intelligence to improve the efficiency of fintech, and in many cases this is already happening behind the scenes.

“Flywire already has many applications of AI,” Kansal said. “For example, our personalization engine leverages our data and applies artificial intelligence and machine learning to match our customers’ customer payment preferences with the right payment options. »

Additionally, the company uses machine learning and AI as part of its fraud risk detection engine.

For all its progress, fintech remains a young and developing discipline, Kansal said. “In fintech, we have yet to see a revolutionary change that has had a significant impact, but if you look at the promise of the technology, something is going to happen,” he said. “I think it will change the world for the better.”