NEW YORK—What should credit unions expect fintechs to focus on 2024?
Finextra shared its forecast for the top seven fintech trends next year:
Embedded Finance
According to Finextra, the integration of financial services into non-financial platforms is set to skyrocket. E-commerce sites offering loans, social media platforms introducing payment functionalities, and payment facilitators like PayPal, Stripe, and Square embedding into everyday payment experiences characterize the surge of embedded finance in 2024. However, challenges exist within Software-as-a-Service platforms and marketplaces in terms of integration hurdles, it stated.
“While embedded finance promises to alleviate small to medium-sized businesses' financial management issues, complexities in compliance, security, and regulatory landscapes persist. Strategic partnerships seem to be the best approach, considering the intricacies and costs of developing in-house financial services,” Finextra said. “Looking ahead, generative AI and data analytics are anticipated to drive advancements in embedded finance, leading to personalized financial products and specialized services tailored to specific industries.”
Central Bank Digital Currencies (CBDCs) Momentum
The exploration and potential launch of CBDCs by various nations are poised to transform digital currencies. These government-backed digital currencies aim to boost financial inclusion, lower transaction costs, and potentially revolutionize cross-border payments, Finextra said.
“Interest in CBDCs is surging, with countries like China conducting extensive trials of its digital yuan to reduce reliance on existing super-apps like WeChat and Alipay,” the company’s analysis stated. “Several other countries, including Sweden, South Korea, Bahamas, and the US, are also exploring CBDCs. International organizations like the IMF and BIS are actively studying the implications of CBDCs on financial stability and the global monetary system.”
Decentralized Finance (DeFi) Maturity
“DeFi's evolution continues, offering more sophisticated and secure decentralized applications (dApps). Expect advancements in lending, borrowing, and yield farming, focusing on scalability and regulatory compliance,” Finextra said. “In 2024, DeFi enters a transformative phase marked by maturation and expansion. Lending and borrowing protocols will be refined further, decentralized exchanges are set to introduce innovative features, and decentralized insurance platforms might expand coverage and introduce more customizable insurance products.”
Rise of Super Apps
“Super-apps are becoming increasingly ingrained in consumers' lives, serving multiple needs within one platform. They offer a one-stop portal for various services, with exponential growth expected due to their convenience,” Finextra said. “Platforms like WeChat, Grab, and Alipay have revolutionized the digital landscape by aggregating diverse services. Their continued growth and expansion into various sectors are projected to reach an estimated $887.3 billion by 2033.”
Banking-as-a-Service (BaaS) Challenges
“Collaborations in BaaS, initially involving banks and fintech companies leveraging APIs, face hurdles. Banks struggle with digitalization and API partnerships due to limited expertise, relying on non-financial sector tech companies for assistance,” Finextra said. “As the API adoption expands, fintech firms specializing in APIs witness broader customer bases, while others strive to become integral parts of banking services.”
AI-Powered Personalization in Fintech
“AI and ML have revolutionized fintech, enabling highly personalized financial services. This adaptation allows for personalized investment portfolios, better risk management, and enhanced efficiency. AI also plays a crucial role in fraud detection and prevention,” Finextra said. “Chatbots infused with AI capabilities have become vital in providing real-time assistance and tailored recommendations within fintech applications.”
Open Banking Expansion
“Open banking, propelled by regulatory measures, is evolving globally, benefitting both new entrants and incumbent banks. However, integration challenges exist for legacy systems. Widespread smartphone penetration and enterprise tech advancements catalyze open-banking evolution, allowing digital-first banks to leverage interconnected IT architectures,” Finextra said.
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The biggest, best and freshest news reporting in credit unions remains free! Each morning CUToday.info delivers its daily Fresh Today news update offering the latest headlines and breaking news right to your email, with the easy-to-read headlines format allowing you to click on the stories that interest you most in order to learn more. So stop paying those bank-fee-like subscription prices from other so-called “news” publications!
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Please note that after signing up you may need to go to your Spam/Junk folder and mark the morning headlines email as safe. CUToday.info does not provide its list of readers and emails to outside parties, and we will not be contacting you to sell you an extended warranty or sending you any links so you may cash in on an inheritance you didn’t know was coming.
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