Fintech, or financial technology, is the use of innovative software and services to improve and transform the way we manage, access, and use money. Fintech has been disrupting and reshaping the finance industry for years, offering new solutions for payments, banking, lending, investing, and more. But what are the fintech trends that will define the future of finance in 2024 and beyond?

In this article, we will explore 5 fintech trends that you need to know about, and how fintech trends will impact your personal and business finances.

What are advantages of Fintech?

Fintech brings lots of benefits for people and businesses:

– It makes financial products and services easier to reach, especially in places where banking is limited, using the internet and mobile phones.

– Transactions happen quickly and smoothly anytime, day or night, without needing to go to a bank or handle paperwork.

– There are many different financial services available, like payments, banking, loans, investing, insurance, cryptocurrency, and more.

– It helps to lower fees and charges from traditional financial companies, making prices fairer and clearer.

– Fintech uses data and smart technology to make financial products fit each person’s needs and choices better.

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What are disadvantages of Fintech?

However, fintech also has some downsides:

– Security risks: Fintech firms use digital tech for financial services, making them vulnerable to cyber attacks, data theft, and fraud. They also deal with legal and regulatory issues across different areas.

– Accessibility issues: Fintech firms mainly operate online, lacking physical branches and face-to-face customer support. This can be tough for users who prefer in-person interactions or have limited internet access.

– Dependence on digital tech: Fintech relies on internet and digital tools, which can fail due to technical problems or natural disasters, causing disruptions and losses.

– Global imbalance: Fintech can widen the gap between developed and developing countries, as the latter may lack the resources to adopt fintech. It can also affect national currencies and financial systems.

– Operational risks: Fintech companies face challenges like scalability, software quality, and competition. They must continuously upgrade their technology to meet consumer demands and compete with other firms.

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5 Fintech Trends You Need to Know About in 2024

Embedded Finance

Embedded finance is the integration of financial services into non-financial products and platforms. For example, you can buy insurance, get a loan, or pay with your digital wallet while shopping online, without leaving the website or app. Embedded finance enables seamless and convenient transactions, and creates new revenue streams and customer loyalty for businesses. Gartner says that by 2024, embedded finance will make $1.5 trillion and take up 38% of the world’s online shopping market. Some examples of embedded finance are:

  • Shopify, an e-commerce platform that offers payment processing, lending, and banking services to its merchants.
  • Uber, a ride-hailing app that provides insurance, debit cards, and digital wallets to its drivers and riders.
  • Amazon, an online marketplace that offers credit cards, loans, insurance, and savings accounts to its customers and sellers.
Open Banking APIs

Open banking means sharing financial information and services with other companies using special interfaces called APIs. It gives you the power to share your financial data with fintech apps, aggregators, or other banks, and access a wider range of products and services. For example, you can use an app to compare and switch between different bank accounts, or use a platform to manage your finances across multiple accounts. Open banking also enables faster and cheaper payments, as you can transfer money directly from your bank account to another party, without intermediaries. PwC says open banking will have 1.2 billion users by 2024 and make $9 billion in money. Some examples of open banking are:

  • Plaid, a platform that connects fintech apps to bank accounts, enabling services such as budgeting, investing, and lending.
  • Revolut, a digital bank that offers multi-currency accounts, instant payments, and access to third-party products such as insurance and crypto.
  • TransferWise, a money transfer service that uses open banking APIs to enable low-cost and fast cross-border payments.
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AI-Powered Personal Finance Advisors

Artificial intelligence (AI) means using machines and algorithms to do things that usually need human intelligence, like learning, thinking, and making decisions. AI has been widely adopted in the finance industry, for purposes such as fraud detection, risk management, and customer service. But AI can also help you manage your personal finances, by providing personalized and automated advice, insights, and recommendations. For example, you can use an AI-powered personal finance advisor to:

  • Track your income, expenses, and savings, and create a realistic and achievable budget.
  • Analyze your spending habits, and suggest ways to reduce your costs and optimize your cash flow.
  • Monitor your credit score, and offer tips to improve it and avoid debt.
  • Plan your financial goals, such as saving for retirement, buying a house, or starting a business, and recommend the best strategies and products to achieve them.
  • Invest your money, and provide guidance on asset allocation, portfolio diversification, and market trends.

Some examples of AI-powered personal finance advisors are:

  • Cleo, an app that connects to your bank account and uses natural language processing to answer your financial questions and give you feedback.
  • Wealthfront, a robo-advisor that uses machine learning to create and manage your investment portfolio, and offer financial planning tools.
  • Credit Karma, a platform that uses AI to provide you with your credit score, credit report, and personalized offers for loans, cards, and savings.
Stablecoins

Stablecoins are a type of cryptocurrency that are pegged to a stable asset, such as a fiat currency, a commodity, or a basket of assets.  aim to combine the benefits of cryptocurrencies, such as speed, security, and transparency, with the stability and reliability of traditional currencies. They have many uses, like:

  • Sending and receiving money across borders, without intermediaries, fees, or delays.
  • Storing value, especially in countries with high inflation or currency volatility.
  • Trading and investing in crypto markets, without exposure to price fluctuations.
  • Enabling decentralized finance (DeFi) applications, such as lending, borrowing, and exchanging.

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Statista reported that stablecoins were worth $35 billion in 2020. They’re predicted to keep growing in the future. Some examples of stablecoins are:

  • Tether (USDT), a stablecoin that is backed by the US dollar, and is the most widely used and traded stablecoin in the world.
  • Dai (DAI), a stablecoin that is backed by a basket of cryptocurrencies, and is governed by a decentralized autonomous organization (DAO).
  • Libra (LBR), a stablecoin that is backed by a basket of fiat currencies and government securities, and is developed by a consortium led by Facebook.
Blockchain Integration

Blockchain is a type of technology that keeps track of transactions securely. It’s transparent and can’t be changed once recorded. Blockchain has been the underlying technology of cryptocurrencies, but it can also be applied to other domains and industries, such as:

  • Supply chain management, where blockchain can track and trace the origin, quality, and movement of goods, and reduce fraud, waste, and errors.
  • Identity management, where blockchain can store and verify personal data, and enable self-sovereign identity and digital credentials.
  • Healthcare, where blockchain can store and share medical records, and improve data security, privacy, and interoperability.
  • Voting, where blockchain can enable online and remote voting, and ensure accuracy, integrity, and auditability.

MarketsandMarkets predicts that the worldwide blockchain market will increase from $3 billion in 2020 to $39.7 billion by 2025. This growth is projected to happen at a rate of 67.3% every year. Some examples of blockchain integration are:

  • IBM Blockchain, a platform that offers blockchain solutions for various industries, such as food, trade, and finance.
  • Microsoft Azure Blockchain, a cloud-based service that enables users to build, manage, and deploy blockchain applications and networks.
  • Mastercard Blockchain, a network that enables cross-border payments, trade finance, and identity verification.

Conclusion

Fintech trends are changing the way we handle money, and creating new opportunities and challenges for consumers and businesses alike. In 2024, we can expect to see more embedded finance, open banking APIs, AI-powered personal finance advisors, stablecoins, and blockchain integration in the finance industry. These trends will offer more convenience, choice, and control over our finances, but also require more awareness, education, and regulation.

If you want to stay ahead of the fintech curve, and take advantage of the latest innovations and solutions, you can contact ONextDigital, a leading software development company that offers web development, mobile app development, UX/UI design, white label software, and CRM & auto marketing automation solutions. We can help you create a custom and high-quality software product, using the best practices and technologies for fintech. Contact us today and get a free consultation and quote if you want to know more about Fintech trends and grow your business.