– By Nirav Choksi
In a span of two decades, FinTech has emerged as one of the fastest-growing segments in the financial services world. With groundbreaking innovations, FinTechs have shaped an entire generation. Each disruptive FinTech model has turned out to be seemingly more game-changing than the last.
With differentiated, innovative, customer-centric value propositions, and collaborative business models—it’s safe to say that FinTechs have profoundly transformed the face of financial services.
The runaway success of the ‘everything-on-demand’ business model will drive continued growth, especially for mobile-first FinTech applications. Embedding simple, fast, and efficient financial solutions on the users’ platform of choice—FinTechs have now become a hub of customer-centric innovation.
In line with global trends, the FinTech ecosystem has witnessed tremendous technological advancements and is projected to grow sixfold from $245 billion to $1.5 trillion by 2030. The Asia-Pacific region is expected to outpace the US and climb up the ranks to become the world’s leading FinTech market
FinTech in 2024 and beyond: Top 5 tech trends to watch out for
FinTech solutions have come a long way from enabling online payments and peer-to-peer lending models to robust “all-in-one” platforms and embedded finance solutions. The following technology
1. BaaS will unlock new opportunities
Banking as a Service (BaaS) and embedded finance will continue paving the way for disintermediation and new channels of growth. This will further help FinTechs cement existing relationships and secure new partnerships in the financial services industry. Companies outside of the financial space, such as E-commerce platforms are now adopting API-based business models to benefit from embedded finance. In turn, consumers and businesses can secure an instant loan at the point of checkout on these platforms. With more companies adopting API-based models, FinTechs can expand their user base as distributors and increase profitability through specialisation in niche market segments.
2. The unstoppable AI advancement
AI’s recent contribution to the world of financial services implies that it could continue to be a big disruptor in the coming months. FinTechs will be keen on adding AI-fueled finance advisors that offer highly personalised and predictive insights for users. We will see extensive AI integrations across FinTech applications in key areas such as creditworthiness assessment, risk evaluation, and robo-advisory services. From strengthening fraud detection to elevating customer service across multiple fronts, AI’s role in FinTech is set to expand further in the foreseeable future.
3. Taking the multi-cloud approach
An absolute necessity, cloud technology has become pivotal to the core operations of the financial services industry. In the months to come, migrating technological infrastructure to platforms where FinTech and their ecosystem partners can align on speed and innovation will be crucial. To offer the best experience to customers, FinTechs need to strategise with multiple cloud providers and system integrators.
4. Leveraging the power of quantum computing
Given how cyber crimes are only becoming more sophisticated, quantum algorithms can be implemented to discover abnormalities and detect fraud in massive volumes of financial data in real-time. FinTechs globally will increasingly leverage the power of quantum computing to make financial transactions hacker-resistant and improve risk management models.
5. The rise of alternative lending technology
FinTechs have made significant progress in bridging the financial inclusion gap. They are using innovative technologies to facilitate better assessment of creditworthiness and make affordable financial services accessible to underserved populations. With the advent of open banking and APIs, FinTech lenders can access alternative sources of data from third-party providers and digital profiles to make a more informed and accurate assessment of the borrowers’ ability to repay debts. As a result, we will see a rise in digital lending marketplaces, and the Buy Now, Pay Later (BNPL) model will penetrate further among customers and become a more customisable option for instant, bite-sized loans.
FinTech evolution: The key to unlocking sustainable success
The risk of losing relevance is ever-present for FinTech companies that don’t evolve. Given the economic pressures and the stiffening competition in the financial services industry—innovation for innovation’s sake may no longer be a viable strategy for FinTechs. Offering sustainable solutions that address key pain points will be crucial for FinTechs to keep pace and avoid the risk of falling by the wayside.
FinTechs have demonstrated exponential growth, remaining resilient through the recent dips in global venture capital funding. It’s important that FinTechs consider the present downturn as a momentary adjustment and a healthy correction rather than a long-term shift. To step into a new era of value creation, FinTechs need to focus on running their business more efficiently, innovating for the future, and investing in transformative technologies.
(Nirav Choksi is the co-founder & CEO at CredAble.)
(Disclaimer: Views expressed are personal and do not reflect the official position or policy of Financial Express Online. Reproducing this content without permission is prohibited.)
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