In 2024, big changes are coming for the fintech industry.
These are being planned to revolutionise how people deal with these services.
Fintech is a growing field driven by technology and what customers want.
It includes adding financial services to other products and using blockchain for decentralized finance.
These trends will change banking to make it easier to use, fairer, and faster.
Here are some trends in 2024 that are making banking better now and for the future.
1. Embedded finance
Embedded finance refers to a business model through which financial services are offered in a symbiotic manner with other platforms or applications.
This will enable you to make and receive payments, and even complete a loan application process right from other applications you regularly use.
For example, think of making purchases on an online store by clicking the ‘buy now’ button on a social media platform, or getting loans through an e-commerce application.
This integration not only improves convenience but also opens up the ability to provide consumers with new services through channels that are not usually related to banks.
Why it matters
The integration of finance into consumer activities is transforming the ways through which consumers engage with financial services.
They streamline payments, improve the experience, and encourage consumers who don’t have relationships with formal banking systems.
2. Open banking
Open banking is when banks share financial data with other companies using special connections called APIs.
This data sharing can enable the various Fintech firms to design unique products.
Like applications for managing allowances, helping in savings and also the approval of loans depending on the history of the customers across the different financial institutions.
This provided consumers the opportunity to share their financial data and supported competition between financial organizations as well as the emergence of new financial products and services.
Why it matters
It is argued that open banking enhances consumers’ rights because it grants them more access and control over their data.
It promotes the advancement of the financial technology industry by allowing the development of innovative financial products and solutions to suit the needs and desires of the clients.
3. Neobanks
Neobanks are these financial institutions that only have an online presence and do not have a physical establishment.
Some of the services they provide include branded savings accounts, payment platforms, and lending services provided via mobile applications and web applications.
Some of the most popular features of the neobanks include the simplified and clean design of the applications, no hidden fees, and round-up savings and instant spending analysis.
The above banks target informed consumers who value the use of the Internet and mobile applications as well as reasonable rates on their financial products.
Why it matters
Neobanks are startups that operate outside the conventional banking system to provide more efficient and flexible banking services for customers.
They use technology to cut their operating expenses and improve consumer satisfaction.
As well as achieve financial solutions for populations that are disregarded by traditional banking institutions.
4. Regulatory technology (RegTech)
RegTech uses technology to follow rules in banking.
It is a system that helps with things like reporting rules, watching transactions for fraud, and keeping data safe. It’s gotten better in the last few years.
It enables financial institutions to cut compliance expenses, manage risks that stem from failures to meet regulatory requirements and perform better.
When regulatory requirements are emerging and evolving, such as in the case of international jurisdictions, RegTech offers firms a way to remain compliant with these standards.
Why it matters
RegTech can be effective in strengthening and enriching the process of regulatory compliance as it eliminates delays and inaccuracies associated with manual work.
It helps the financial institutions to cope with the changing regulation regime, and manage operational risks.
And optimise the use of its resources hence establishing confidence and transparency in financial services.
5. Decentralized Finance (DeFi)
DeFi uses blockchain to make finance without big banks.
On DeFi websites, people can borrow, lend, trade, and do other money things.
Since they are decentralized and accessible worldwide and have lower fees than conventional financial services.
DeFi helps people who can’t use traditional finance to join the economy.
It also creates new financial tools and ways for people to work together financially.
Why it matters
DeFi is the new generation of financial systems, which are open and free to anybody.
They make financial services available for everyone, decrease the reliance on conventional hubs, and present novel methodologies to streamline, cheapen and expedite global money exchange.
Fintech Trends Shaping 2024
In 2024, five top fintech trends will keep changing banking, Embedded Finance, Open Banking, Neobanks, RegTech, and DeFi.
They claim to improve consumer experience, drive financial inclusion, and transform the way people and companies interact and use funds in the modern world.
Adopting these trends will not only define the future of fintech.
But also foster the development of a more connected and technology-centred financial services industry globally.
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