From constant innovation to a quantum leap

711

By Roy AstonOperational Director, Paysafe

AEvery year around this time, the fintech (financial technology) world polishes its crystal ball, looks down, and attempts to describe the next big revolution that will define the next 12 months. The temptation is to go far in one direction or the other: play it safe or go wild and venture into the extraordinary. Banks on Mars by August!

While we can promise there won’t be any Martian ATMs in this article, here are what we think will be the biggest trends in banking and financial technology over the next year and beyond. beyond.

An evolution, not a revolution

The biggest trends in 2024 may not involve explosive newcomers (more on that later) but will likely be continuing evolutions of touted trends in 2023 that may not have reached their potential.

First of all, integrated payments. Fintech companies will continue to develop new integrated payment solutions, not only by evolving payment gateways or solutions such as digital wallets, but by driving greater levels of integration of payment services into service platforms traditionally non-financial. The benefits of in-app payments have long been touted – combining financial products with features like loyalty programs to deliver greater value to consumers – and this will become even more pronounced in 2024.

Another area that will continue to grow in 2024 will be decentralized finance. This time last year, decentralized finance, particularly NFTs (non-fungible tokens), was viewed with enthusiasm, and big improvements are expected in 2023. And while adoption has been significant in this area, headwinds were also encountered, such as increased regulation. In 2024, it will be no surprise to see businesses familiarize themselves with new regulatory requirements and continue to take advantage of this rich promise.

And it would be negligent to leave aside open banking system. Although this is not a new trend, it is gaining real momentum. This will be exciting as more APIs (application programming interfaces) become available and companies develop new solutions in 2024. We just saw Apple Pay roll out its open banking solution, for example, and organizations will continue to do more in this area. to improve customer experience and reduce friction in the payment ecosystem.

And while these trends will continue to grow and shape the banking and fintech industry over the next year, there is still a sizable elephant in the room: artificial intelligence (AI).

AI will create efficiencies – and risks – for fintechs.

While most predictions are based on industry knowledge and perhaps some guesswork, sometimes a tool, trend, or technology comes along that no one could have ever predicted.

By 2022, AI was on the radar of every industry (and had been used in payments for many years), but the arrival of ChatGPT suddenly pushed a thriving trend into full bloom. It’s not just ChatGPT’s ability to help a child’s homework that has made it so monumental. It was about taking AI – a tool once too expensive or too complex for anyone other than data scientists – and making it accessible to everyone.

In 2024, we will continue to see fintech organizations using new ChatGPT (big language) models to boost productivity, whether in code generation, corporate document writing or more. Cost savings could help restore profitability to business services, for example by adopting increasingly sophisticated chatbots to provide consumers with more personalized experiences.

In payments, AI can help streamline the payment flow or quickly establish and present the most accessible or useful payment option for a particular consumer. With this in mind, I expect the payment experience to become almost invisible for many consumers in 2024.

Increased collaboration between financial companies in 2024

AI will also make security an even greater priority for banking and fintech organizations in 2024. After all, increasingly advanced technology is now being put in the hands of many more people. Those who posed potential cyber risks but lacked the expertise to hack a business now have immediate access to tools that can bypass early biometrics.

And while AI can help security teams combat these intrusions, such as using natural language processing (NLP) to feed models with different data sets to counter malicious actors, there is still much room for improvement. to do. This is why we anticipate greater collaboration among financial firms in 2024, as they work together to improve cyber risk mitigation.

This is a healthy step for the industry, provided companies can share data legally and for a positive purpose. The collaboration could help the industry reduce risks and advance anti-fraud, anti-money laundering (AML) and cybersecurity measures.

If a financial organization obtains information about a cybergroup, for example, it could be shared with other companies to protect against the movement of illicit money. But to see these benefits, we need to evolve our thinking around data governance. This is a challenge that the industry will face in 2024.

Providing better access to everyone, everywhere

Although technological changes will determine trends in 2024, evolving consumer demands will arguably be the biggest factor shaping the banking and fintech industry in the year to come.

It is well understood that consumer demands have changed. As mobile devices bring consumers the world at their fingertips, banks and financial organizations must respond to immediate demands and provide instant gratification. This will see banks and financial institutions continue to strive to provide services with the lowest barriers to entry.

In addition, financial organizations will have to respond to consumer demands for greater accessibility. How can we enable cross-border remittances and payments for underbanked populations, for example? How can we make digital payments and financial services accessible to everyone?

This means offering more choice as well as reliability, security and availability. This is why we could see traditional payment methods such as debit and credit cards cease to be the norm and witness the growth of alternative payment methods that cater to everyone, everywhere, like l eCash and digital wallets.

Finally, in 2024 and beyond, it will become increasingly difficult for banks and fintech companies to ignore the social and environmental demands of consumers, who are increasingly better informed about how companies support ESG (environmental, social and governance) programs and will put pressure on the services they use to drive meaningful change.

As a result, banks and fintechs will need to stop just talking about change and act on it, taking meaningful action to help tackle the climate crisis.

A leap forward

While it’s useful to look ahead to the next 12 months, it’s also important to look further ahead and think about what could define the fintech sector over the next few years. This is where quantum computing comes in.

The ability to perform calculations exponentially faster than ever before is a truly exciting (and slightly scary) possibility. From its use to crack encryption codes to its use by malicious actors to disrupt ecosystems that have been stable for years, quantum computing could be the next big change in the fintech landscape.

Combined with other burgeoning technologies, such as AI and robotics, quantum computing offers a glimpse of a future that could be more exciting than we can imagine. (Don’t mention Skynet.)