Fintech and digital currency predictions

1: As CBDCs and other regulated currencies advance, 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 so far been a carried a more countercultural feel.

Maz Karimian, Strategy Director, Ustwo

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

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

“Digital currencies are the next phase of the digital revolution, and we can expect the fintech landscape to evolve accordingly to meet the increased interest and demand for digital assets. But there is a long way to go, and the introduction of CBDCs will take time and careful planning to sit alongside existing payment solutions.

Julia Demidova, Head of CBDC & Product Strategy, FIS

“We are 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 fuel the market, but may not have the immediate big-bang impact that some in the industry expect.

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

Philippe Bekhazi, Founder and CEO, XBTO Global

2: GenAI will drive productivity in the fintech space

“Looking forward to 2024, it’s clear that Generative AI will make an impact – especially when it comes to corporate reporting and compliance. Next year, we’ll begin to see reporting teams move beyond experimentation to use genAI to increase productivity in meaningful ways, such as drafting rookie disclosures and running data analytics.

“There is also a near-term opportunity to use genAI as a compliance check, focusing on how internal teams are meeting disclosure requirements, and even leveraged to perform audit testing and audit reporting. For these reasons, in relatively short order, genAI will become increasingly critical to drive efficiency and enable insights that lead to better and faster data-driven decisions.

“As the momentum of Generative AI increases, so do the associated risks and it will be critical for organizations to ensure proper governance, controls and human oversight of the emerging technology.”

Steve Soter, VP and COO, Workiva

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

“In 2024, Fintechs will embrace 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 have seen AI being used in fraud detection and prevention in 2023 as it calculates through large amounts of data to prevent fraudulent activity. Where we see the next steps in AI use is in customer interfaces, enabling users to easily and conveniently visualize their data.

“The next step in AI use is to go further and engage prospective customers, to show better ways to interact with financial platforms and fintechs.”

Sadra Hosseini, CEO, and Alex Mackenzie, Managing Director of Rift

4: Embedded finance is on the rise – and AI can help

“2024 will be the year of embedded finance technology. This is the year we will see new technology 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 be moving at breakneck speed, it will increase next year.

“Additionally, various emerging technologies, including artificial intelligence and machine learning, will slowly permeate the embedded finance space. We can expect to see greater adoption of these technologies by corporate embedded finance platforms.

“Tentative steps have already been taken, but the serious consequences of issues arising from the implementation of these kinds of technologies have scared those who integrate them. Both AI and ML are yet to be seen in corporate embedded finance. This is mainly because integration, especially in relation to lending, is all about data collection and how to analyze the extracted information. So those two technologies, when coupled with data science, will be key differentiators in the future.

“Embedded finance platforms will also have to comply with new regulations and laws to ensure that no one can take advantage of the amazing tools being produced.”

Eduardo Martinez Garcia, CEO and Co-Founder, Toqio

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

“In 2024, the fintech M&A landscape is likely to be characterized by an increase in consolidation, especially 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 looking to scale and expand their market reach.

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

Emre Kenci, CEO of Papara,

6: As the market increases, fintechs embrace the long term

“In the next 12 months there will be a major shift towards sustainable growth strategies. With tighter wallets in a cautious market, fintechs and investors are getting serious about making profits for the long term, not just ultra-fast hyper-growth. In an environment where cash is scarcer, greater creativity is required leading 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 will see a major shift in the commercial banking sector. SMEs have had a rough 12 months and more than ever they need tailored support from banks to help them weather the storm.

Banking is a service industry, but often banks forget that part. Relationships, trust and personal support are the cornerstones of successful business banking. As we move into next year, I think we’ll start to see this prioritized as SMEs look for banking partners who really understand their problems. As completely digital products become 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