Fintech today is not only an actively developing industry but a massive phenomenon. It has three main areas: loans, financing and payment systems. Products are getting closer to the people.
What Is the Fintech Industry?
What is financial technology? It is an industry. Fintech contains technologies that help financial services and companies. Mainly in managing the financial aspects of a business.
These include: software, applications, processes and business models.
Fintech is also called an industry where companies use new financial technologies and solutions. Also, mainly – to compete with traditional financial institutions.
Most often by the term fintech one refers to tech startups and companies. They use fintech tools to improve their services.
Before, fintech was solely an internal development of financial institutions. Now it is as close as possible to the consumer of financial services. It underlies all online transactions – from money transfers to utility bills.
Public confidence in traditional banking products was three times lower in 2019 than in 2018. It dropped even lower in 2024.
Despite that, the fintech industry has every chance to increase its audience. For example, by offering more favorable conditions than traditional banks. During the pandemic crisis, fintech has adapted to the new reality better than most other industries. The concept of total-online-access has conquered a new audience. It also significantly expanded the geography of its presence.
That’s why if you still don’t install fintech instruments in your business yet – it is better to start now. All analytics are agreeing on one main thing – fintech is not the future, but the presence of our reality. There are financial software companies that will provide you help with fintech services and the one you can check out is Velvetech
How Fintech Will Develop In 2024
International investment company Digital Horizon studied the fintech industry in 2024. According to this research, 2024 accelerated the fintech transformation processes that began earlier. Also, it highlighted systemic problems that the financial world has not yet learned to solve.
Digital Horizon experts tried to predict how fintech trends will develop further. According to them, 2024 will further push banks away from customers. Embedded finance tools will become widespread. They will allow integrating payments, debit cards, loans into almost any non-financial products. As well as insurance and even investment instruments.
For example, a customer will be able to have a bitcoin loan directly on the website of an online store. Almost instantly and without filling out questionnaires.
Also, people will be able to transfer money through apps that have nothing to do with finance. This approach will increase the profits of banks and fintech. Why? It will allow them to compete with companies who are trying to transfer customers into their banking apps.
Crunchbase identified the most promising fintech startups for 2024. The first is Indonesian e-wallet LinkAja for SMEs. It has 58 million clients and 100 million investments in round B. As well as the Swedish Juni. It is a banking platform for e-commerce, which will launch in 2024.
Top Financial Technology Trends To Follow In 2024
What areas of the fintech industry in 2024 will be the most promising?
Among the main trends, experts note the rapid growth of analytical and scoring products. Especially ones that provide real-time insights. Plus those that are able not only to calculate historical scoring but also predict based on big data.
Besides, traditional financial products are being revised. Insurance is entering the territory of loans. Loans appear where insurance has always dominated. Hybrid models are emerging that combine credit and insurance components.
Let’s explore trends more in detail.
1. Quick access to open banking
Open banking provides access to banking data for partner companies using an API. It allows developers to create fintech applications and services for clients of specific banks.
In Europe, the idea is already developing for several years. Main thanks to the adoption of the PSD2-regulation directive. It obliges banks to prepare an open technical system for integration with its resources.
Thus, a single payment space is emerging in Europe. Customers will be able to choose attractive products and services in different banks. They can manage accounts from different banks in one app. As well as pay for services through it and receive the most personalized offers on financial products.
The result of open banking can be a huge marketplace of services tied to financial information.
2. Mobile wallets and new e-commerce platforms
In the segment of payment systems, two trends are leading today. First is alternative systems for e-commerce. And the second – simplification of the process of data exchange in mobile wallets. The first trend is actively gaining momentum in Asia, from where it is gradually spreading around the world. The idea of using not only specialized platforms for e-commerce but also, for example, messengers was first used in China via WeChat.
First of all, this fintech industry trend is about simplifying the data process and developing P2P payments. People are willing to entrust them to private fintech companies, not banks.
Another new and potentially promising technology is the buy of goods in vending machines through an e-wallet. An ordinary non-cash payment via the terminal no longer surprises anyone. But the ability to read a QR code and pay without extra apps except a mobile bank is still a novelty.
3. Salary On Demand
The world is gradually moving away from the rigid schedule of payments. People have to borrow money to survive until a paycheck or take small loans.
But, it will be much easier if they can make money from their own salary before the day of its official payment. Due to the pandemic, more than 50% want to receive a salary every day. This trend is being implemented by fintech startups around the world.
The western fintech market invented the idea of pay on demand not so long ago – only in 2015. But the pandemic drew more attention to it. Such financial giants as Even began to compete with young startups. For example, Ceridian made the Dayforce Wallet service for 4.5 thousand clients. The company believes that in 3-5 years a flexible system of payment of money will become the most usual option.
4. Loans To Customers At The Point Of Sale
Interest in POS lending is quite stable. While 80% of these transactions today are installment plans. Only because it looks as “safe” as possible. The customer pays only the cost of the goods, without extra interest for banking services. The commission falls on the shoulders of the store.
Of course, some retail outlets still try to outsmart everyone and agree to installments only with conditions. For example, only if the customer also pays for a one-year warranty for the TV. But this system will slowly disappear. More and more financial technologies are getting accessible.
The consumer today has access to installment cards or a direct deal for a specific product in a store. Mastercard is implementing its platform for online transactions. Alongside with some independent startups – for example, HappyLend. Such a platform offers an online lending platform that offline stores can use as well.