3 Fintech Trends That Will Dominate 2024 - Interviews With CatalystPay Experts And Partners
As we step into 2024, the fintech landscape is on the brink of transformative changes, driven by emerging trends and technological innovations, so you could see why we were so excited to talk to our in-house experts and to our partners about it.
What resulted is the comprehensive overview of what the future holds for the financial technology and payments sector.
This article is an exploration of the expected shifts that will redefine business strategies, merchant operations, and the overall financial services ecosystem. Learn our predictions for advancements and how they are reshaping our industry.
3 Trends That Will Dominate Fintech In 2024
Diversification Of Financial Services & Embedded Finance
Regulatory Technology (RegTech)
Artificial Intelligence
Stefan Zisov, COO at CatalystPay:
‘An important development in the fintech industry is the use of AI and ML. The current valuation of AI in the financial technology market is $42.83 billion, with projections showing a growth rate of 2.91% from 2023 to 2028.
Further, AI and ML have already revolutionized algorithmic trading within the fintech industry. Smart algorithms allow instantaneous decision-making, automated processes, and responsiveness to ever-changing market circumstances.
Not least, AI-powered chatbots provide 24/7 accessibility in finance customer support.’
Dan Watson, Chief Compliance Officer at CatalystPay:
‘There is a recognition of an increasingly fragmented landscape and global understanding that international cooperation to create global standards for AI is required, in particular for the Financial Services sector.
Heightened regulatory attention is expected, especially in scenarios involving the use of advanced and intricate AI-driven technologies across various partners. This is due to the complexities of the global regulatory landscape. The emphasis will be on how these firms handle risks linked to several emerging trends that amplify operational risks. These trends include the integration of AI, the automation of processes, the occurrence of operational outages, increasing competition, and the shift towards platform-based banking models.'
Diversification Of Financial Services & Embedded Finance
Kevin Hart, CEO of CatalystPay:
‘Open banking initiatives and APIs will continue to expand and facilitate the sharing of financial data between banks and third-party providers, enabling the creation of innovative financial products and services.
Neo banks & Bank Challengers will continue to gain popularity, offering customers a seamless, user-friendly, and cost-effective banking experience.
Electronic payments will continue to gain popularity in 2024, driven by the convenience and speed they offer. Mobile wallets like Apple Pay and Google Pay will continue to become more widely accepted, and merchants will increasingly adopt electronic payments as their preferred method of payment.’
Georgijus Kocegarovas, Managing Partner at PSP Lab:
‘There will be an expansion and diversification of offerings by online-only payment service providers (PSPs). These entities are set to broaden their services, exploring areas like cryptocurrencies, investment management, and other advanced financial tools under one roof.
The expanded offerings from PSPs will intensify competition, offering consumers a wider array of choices. However, this diversification is likely to shift away from freemium models, moving towards value-based pricing strategies, influenced by the dwindling supply of venture capital investment.’
Hristian Nedyalkov, CPO of CatalystPay:
'Infrastructure fintech companies are increasingly finding innovative ways to combine essential financial technologies. This integration creates synergies that benefit businesses significantly. By leveraging interconnected financial tools, companies can optimize their operations, reduce costs, and enhance customer experiences. This trend is a response to the growing need for comprehensive, streamlined financial solutions that can handle multiple aspects of business finance seamlessly.
Tailored Embedded Services for Various Verticals: Embedded financial services are becoming more specialized and are designed to cater to different industry verticals. While there is some overlap among these verticals, the trend is moving towards offering services that can span multiple areas, rather than focusing on a single niche. This approach allows for greater flexibility and scalability, enabling businesses to adopt financial services that are closely aligned with their specific needs and growth trajectories.'
Kamran Hedjri, Group CEO of PXP Financial:
‘The trend we’re most excited about is interoperability, which will emerge as a revolutionary concept for the payments experience and allow disparate payment systems and platforms to collaborate seamlessly. Far from being a passing trend for the year ahead, interoperability will define the next five years.
This year, I envisage fintech leaders actively exploring multifaceted applications of interoperability, from digital currency options to blockchain integration. For fintech startups eyeing this transformative wave, prioritizing innovation, customer-centricity, and effective communication will be key.’
Regulatory Technology (RegTech)
Stefan Zisov, COO at CatalystPay:
‘The financial technology sector can benefit from Regtech’s use of data analytics, reporting systems, risk management resources, and compliance monitoring to better adhere to regulations. In 2020, the world market for regtech was worth about $6.3 billion. By 2026, it will be worth about $21.7 billion.
Using sophisticated algorithms and data analytics, RegTech streamlines operations and minimizes the risk of breaches by automating complicated regulatory duties for FinTech.
RegTech streamlines KYC (know your customer) procedures in customer onboarding by using powerful data analytics and AI. Automating processes like due diligence, risk assessment, and identity verification helps businesses stay in line with regulations.’
Georgijus Kocegarovas, Managing Partner at PSP Lab:
‘There will be a significant increase in regulatory scrutiny. FinTech companies will have to navigate a stricter compliance landscape, with a heightened emphasis on transparency and adherence to regulatory requirements.
This growing focus on regulation is anticipated to spur innovation in RegTech, particularly through the use of artificial intelligence and machine learning. These technological advancements are expected to be instrumental in streamlining compliance processes and bolstering the effectiveness of financial crime prevention strategies.’
Dan Watson, Chief Compliance Officer at CatalystPay:
'In June 2023, the EU published a set of new legislative proposal for a 3rd Payment Services Directive (PSD3) and a Payment Services Regulation (PSR). It foresees changes to the framework of the European payments landscape and is likely to have a material impact on the sector, both from a legal and an operational perspective.
- PSD3 is an updated version of PSD2 and provides rules on the efficiency and security of electronic/digital payments and financial services in the EU. It aims to improve competition and innovation in the financial industry;
- PSD3 sets out more extensive Strong Customer Authentication (SCA) regulations and stricter rules on access to payment systems and account information;
- PSD3 aims to protect consumers’ rights and personal information while improving competition in the payments industry;
- The new proposals also include a new Payment Services Regulation (PSR) to improve consumer protection. This will be directly applicable to EU member states;
- Timeline: There is yet to be a clear timeline for implementing PSD3 and PSR. The finalized versions might be accessible by late 2024. The member states usually receive an 18-month transition period, suggesting that PSD3 and PSR could take effect around 2026.'
If interested how new rules and regulations will impact payments check "2024 Regulatory Outlook: Key Initiatives Impacting Payments Industry" by Daniel Watson.
How is CatalystPay planning to adapt and innovate its services in response to the key fintech trends projected for 2024?
Kevin Hart, CEO at CatalystPay:
‘For API adoption in open banking, in 2024 we will be introducing more API based products which will allow businesses to further customize how they manage their payments.
We will introduce our own payment product to compete with neo-banks.
We will continue to facilitate efficient, reliable and scalable solutions to process electronic transactions, providing the broadest possible payment methods for businesses to accept sales from customers worldwide.’
Hristian Nedyalkov, CPO of CatalystPay:
‘In response to these trends, CatalystPay is actively engaging with its customer base to understand their evolving needs in terms of growth and operational efficiency. The company is aligning its product development with these trends, planning to unveil new products that support the dual focus on integrated financial technologies and specialized embedded services.’
Conclusion
One of our commitments at CatalystPay is to stay ahead of the major changes in our industry - by forecasting and by devoting resources to understanding the nature of innovative tech and its impact on the broader fintech sector.
As we embrace these exciting developments, our focus is on empowering businesses and merchants to harness the full potential of these innovations for robust growth and predictable development.
If you’re looking for a payment service partner or you just want to elaborate on any of these topics, we’d love to chat.