2024 Informed: Fintech and digital currency predictions

1: As CBDCs and other regulated currencies progress, use cases will emerge

“Significant progress is expected in the development and implementation of Central Bank Digital Currencies (CBDCs). Governments around the world are beginning to view digital currencies less as threats and more as opportunities, heralding a major shift for a space that has, to date, carried a more countercultural feel.”

Maz Karimian, strategy director, Ustwo

“In 2024, we’ll continue to see central banks across the globe experiment and test a variety of CBDC applications across retail, wholesale, and cross-border transactions. We will also see more central banks delving into the technology, functionality, and use cases, including offline payments.

“There are ongoing conversations within the industry surrounding the interoperability of CBDCs and other regulated types of money, including tokenized deposits and regulated stablecoins. With the European Union’s MiCA regulation set to take off in mid-2024, it will bring stablecoins under regulatory oversight and treat them as regulated liabilities.

“Digital currencies are the next phase of the digital revolution, and we can expect the fintech landscape to develop accordingly to meet the increased interest and demand in digital assets. But there’s a long road ahead, and the launch of CBDCs will require time and careful planning to sit alongside existing payment solutions.”

Julia Demidova, head of CBDC & Product Strategy, FIS

“We’re going to see an accelerated convergence between digital assets and traditional finance. Namely, the likely approval of multiple spot Bitcoin Exchange traded funds (EFTs) will galvanise the market but may not have the immediate big bang impact that some in the industry are expecting.

“If approved, we will see a gradual mindset change as more traditional asset allocators start to include digital assets in their portfolio and build it more naturally into their investment philosophy. Crucial steps, such as the EFTs, are being made towards greater institutional adoption of digital assets and ultimately the maturation of the crypto industry.”

Philippe Bekhazi, founder and CEO, XBTO Global

2: GenAI will yield productivity in the fintech space

“Looking forward to 2024, it’s clear Generative AI is going to make an impact – especially when it comes to corporate reporting and compliance. Next year, we’ll begin to see reporting teams moving beyond experimentation to using genAI to boost productivity in meaningful ways, such as drafting starter disclosures and performing data analyses.

“There’s also a near-term opportunity to leverage genAI as a compliance check, focusing on how internal teams meet disclosure requirements, and even leveraged to perform audit tests and audit reporting. For these reasons, in relatively short-order, genAI will become increasing critical in boosting efficiency and enabling insights that lead to better and faster data-driven decisions.

“As the momentum of Generative AI increases, so do the attendant risks and it will be paramount for organisations to ensure proper governance, controls, and human oversight of the nascent technology.”

Steve Soter, VP and industry principal, Workiva 

3: Open banking and AI will be widely used to combat fraud

“In 2024, Fintechs will adopt open banking [the secure sharing of data between banks and third parties via APIs] much more, not for payments but mainly to verify users and reduce fraud – something we started to see a shift towards in 2023.

“We’ve seen AI employed in fraud detection and avoidance in 2023 as it calculates through massive amounts of data to prevent fraudulent activity. Where we see the next steps in AI use are in customer interfaces, allowing users to visualise their data easily and conveniently.

“The next step in AI use is going further and engaging prospective customers, to show better ways of interacting with financial platforms and fintechs.”

Sadra Hosseini, CEO, and Alex Mackenzie, MD, Rift

4: Embedded finance ramps up — and AI may help

“2024 will be the year of embedded finance technology. It’s the year we’ll see new tech and regulations change what we know about how the sector operates.

“Since embedded finance refers to the digital process of integrating financial services into non-financial products and services, and everything digital seems to move at breakneck speed, it will ramp up next year.

“In addition, several emerging technologies, including artificial intelligence and machine learning, will slowly make their way into the embedded finance space. We can expect to see increased adoption of these technologies by corporate embedded finance platforms.

“Tentative steps have already been made, but the serious consequences of issues arising from implementing these sorts of technologies have made those integrating them trepidatious. Both AI and ML are yet to be seen in corporate embedded finance. That’s mainly because integration, especially regarding lending, will be all about data collection and how to analyse the information extracted. Those two technologies, when linked to data science, will therefore be key differentiators in the future.

“Embedded finance platforms will also need to comply with new regulations and laws to ensure that nobody can take advantage of the great tools that are being produced.”

Eduardo Martinez Garcia, CEO & co-founder, Toqio

5: The fintech M&A landscape will include more cross-border deals

“In 2024, the fintech M&A landscape is likely to be characterised by a surge in consolidation, particularly in mature markets such as North America and Europe. This trend will be driven by the need for traditional financial institutions to integrate innovative fintech solutions to remain competitive, and by fintech startups seeking to scale up and expand their market reach.

“Emerging markets, especially in Asia and Africa, will also witness significant activity, fuelled by the rapid adoption of mobile banking and digital payment solutions. Cross-border M&As are expected to rise, as fintech firms strive to overcome regulatory barriers and tap into new customer bases.”

Emre Kenci, CEO of Papara,

6: As market tightens, fintechs embrace the long-term

“In the next 12 months, there will be a major shift towards sustainable growth strategies. With tighter purse strings in a cautious market, fintechs and investors are getting serious about making profits for the long term, not just ultra-fast hypergrowth. In an environment where cash is scarcer, greater creativity is required which leads to new innovations.

“2024 is the year of acting smart, staying lean, and thinking long term. Success for fintechs will be less about the flash and more about the fundamentals — real performance will be king.”

Rodolphe Ardant, CEO and founder at Spendesk

7: SME customers will become more selective

“In 2024, we’ll see a huge shift in the business banking sector. SMEs have had a rough 12 months and more than ever they’re in need of tailored support from banks to help them weather the storm.

Banking is a service industry, but often banks forget that part. Relationships, trust, and personalised support are the cornerstones of successful business banking. As we move into next year, I think we’ll start to see this prioritised as SMEs search for banking partners that truly understand their problems. As entirely digital products are becoming the new norm, human touch and empathy will define the new era of business banking, empowering entrepreneurs and SMEs to thrive.

Yanki Onen CEO and co-Founder, Wamo