2023 was another challenging year for the fintech sector, as was 2022. Higher interest rates, tighter money supply, and other macroeconomic headwinds led to funding challenges, layoffs, spending controls on fintech companies, and even some fintech company closures.
Although the macroeconomic climate will continue to reshape the market in 2024, experts are cautiously optimistic for this year as fintechs across Europe recalibrate their models for 2024.
Here are some of the key trends that fintech experts expect to see in the coming year, both in the UK and across Europe.
No more bank changes
Industry figures show there were more than a million current account transfers in the UK in the first half of last year. UNITED KINGDOM neobanks as Monzo And Starling are generally very good at account switching.
Another star player recently has been the British challenger bank, Kroowhich has attracted 150,000 customers in the 12 months since it launched its eye-catching current account, paying unusually high interest, now at 4.35 per cent. Its CEO Andrea De Gottardo thinks we will see more changes in 2024.
He says:
“In 2024, we can expect to see a shift in consumer behavior, as people become more aware of the financial institutions they choose to do business with.
Emerging trends suggest that customers are more attentive to what they actually get from their bank and are choosing to switch banks in search of better deals.
BNPL is becoming more and more common
The rise of BNPL has been one of the key trends in financial services in recent years, with the likes of Klarna, Scalapay, Alma, Afterpay, Divido and Clearpay key taking over. BNPL names across Europe.
Its rise will continue in 2024, says Rich Bayer, UK Country Manager at Clearpay.
Bayer said 2023 marked the year BNPL established itself as the “everyday way to pay” for UK shoppers.
He highlighted data showing that almost a third of UK consumers used BNPL in the 12 months ending August 2023 and that baby boomers were the fastest growing group of users of this payment method. faster this year, commenting:
“As consumers of all ages seek seamless shopping experiences that offer the same flexibility online and in-store, we expect more retailers to turn to innovative technologies to meet customer demand.
Last year, payment terminals began offering integrated BNPL, giving customers more choice in how they pay on the street. Since then, we have seen several major brands announce their decision to offer BNPL in-store. We expect the in-store BNPL trend to continue in 2024.”
Profitability remains key
The word profitability has been on the minds of many fintech CEOs recently, as startups opt for profits over growth. In a difficult economic environment, experts say fintechs will still have the responsibility of being in the black in 2024.
Scott Simpkin, Head of UK Campaign Team, Crowdfunding Platform Seeders said:
“Many companies will continue to prioritize a fast path to profitability as various pressures, including high interest rates, weigh on their ability to grow at all costs. »
Pat Patel, executive director of Elevandi, a non-profit organization established by the Monetary Authority of Singapore, said:
“The market environment is unlikely to improve significantly in 2024, but organizations have refocused and are better equipped to deal with volatility.
The recent trend of startups focusing on “first principles” will continue, with profitability being the number one priority over growth.
AI use cases are on the rise
AI has been leveraged in financial services for years, but the arrival of high-profile generative AI has elevated the technology’s potential to stratospheric levels in the world of finance. De Gottardo says:
“In 2024, we can expect to see AI playing a much larger role in fintech, and one of the major facets of this AI-driven evolution is the customer support revolution, putting focus on providing 24-hour support.
The challenge is finding the right balance to ensure these technologies are integrated safely. »
Patel says:
“As AI continues its hype cycle, we will likely see strong use cases develop in financial services, especially as many banks experiment and become familiar with advancements across the industry . I predict more opportunities for the application of AI in the areas of fraud detection, risk management and cybersecurity. »
Crypto Spring
The possibility of US regulators approving a Bitcoin ETF has generated much excitement in the crypto industry, with the approval likely to trigger a key shift in institutional engagement with crypto, marking a major boost for the industry.
The crypto market certainly seems to be seeing an uptick lately, following Crypto Winter. Simpkin is optimistic about the UK market in 2024.
He says:
“As Crypto Winter thaws, we will see Crypto Spring emerge, particularly on this side of the Atlantic where regulation is poised to allow Web 3 companies to thrive.”
Increase in hybrid work
Talent is still an important topic in fintech, as in all sectors.
The rise of hybrid working from Covid has marked a key shift in working practices – and fintech leaders continue to scrutinize how best to organize their workforce.
Ian Bradbury, CTO, financial services at Fujitsu, says startups need to ensure they offer varied working practices to ensure staff stay with them. Bradbury says:
“Fujitsu predicts a rise in hybrid working models to ensure the retention of those who have recently joined the financial sector, as well as continuing education programs and an acceleration of diversity, equity and inclusion initiatives .
To tap the growing talent pool, financial institutions must make these adaptations quickly.
Main image: Austin Distel.