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2024 Fintech Foresight: 5 Market Trends to Watch

Henry Gewirtz, Head of Strategic Partnerships and Initiatives, BaaS and Cards, Cross River

January 29, 2024

3 min read

As we begin 2024, the fintech sector is navigating a new reality marked by higher interest rates, inflation, and intensified investor and regulatory scrutiny. This environment challenges fintechs to focus on creating fully compliant products with clear market differentiation, tangible customer value, and viable profitability paths.  

The new year is set to witness continued innovation, with banks increasingly adopting emergent technologies for both short-term enhancements and long-term innovations. In light of this backdrop, below are five fintech trends to look for in 2024.  

Regulatory Technology (RegTech)  RegTech is reshaping the complex world of compliance into a smooth, efficient journey. Although the market still awaits regulatory guidance around the use of AI and distributed ledger technology, both have the potential to help break down regulatory complexities and reduce errors in real-time.   

North America will continue dominating the RegTech sector with its dense network of industry players and high consumer adoption. The US RegTech market is set to surge from $2.5 billion in 2022 to $8.2 billion by 2028. And it doesn't stop there – RegTech goes beyond streamlining compliance; it’s a key player in endorsing ESG standards. This isn't just about meeting requirements; it's about advancing responsibility and efficiency in business.

Hyper-personalized customer experiences  According to Twilio, a customer engagement platform, 62% of consumers expect personalization, and a brand will lose their loyalty without it. Hyer-personalization is resulting in a shift from historical customer data to predictive analytics to facilitate a totally tailored user experience. This will also give rise to targeted cross-selling and upselling, further boosting business growth.   

Buyers are more likely to be repeat customers if fintechs offer personalized services that build deeper trust and credibility. 

Open banking and AI  Picture a world where 'buy-now, pay-later' isn't just a convenient payment option, but a seamless, integrated part of your shopping experience, all thanks to the power of open banking. The number of open banking API calls in 2023 was 102 billion, and a staggering 580 billion API calls are expected by 2027. In 2024, the value of open banking alongside predictive analytics has the potential to drive innovation through advanced data analysis and automation. Predictive analytics may also enable financial institutions to foresee customer behavior and potential risks, allowing businesses to optimize their operations. 

Mobile payments By 2025, it's predicted that retail mobile commerce sales will nearly double from their 2021 levels, reaching around 710 billion U.S. dollars. As more people embrace this digital shift, and turn their phones into shopping platforms, mobile payments will continue to accelerate. In 2022, mobile wallets accounted for roughly half of global e-commerce payment transactions. Mobile wallets are anticipated to become the leading method for online payments by 2024. This shift is primarily fueled by the ease and security that mobile payments provide, facilitating faster and more secure transactions.

Fintech SaaS In 2024, the fintech sector is expected to see a significant transformation, largely fueled by the expanding software as a service (SaaS) industry, which simplifies operations by offering cloud-based applications and enables businesses to concentrate on improving the customer experience. The adoption of SaaS in the fintech sector means exceptional security features and the flexibility and scalability it offers. This has been particularly impactful for digital lending platforms, which have utilized SaaS to leverage cloud technology, benefiting from its ease of use, maintenance, and the ability to scale efficiently. The fintech SaaS market is set to grow from $10.5 billion in 2023 to $676.9 billion by 2028, underscoring the crucial role of SaaS in fintech innovation and expansion.