Explore the key fintech trends of 2024, highlighting innovations, challenges, and growth opportunities in the financial technology sector.
As we look back at 2024, it’s clear that the fintech landscape has evolved dramatically. This year has been marked by groundbreaking innovations and trends that have reshaped how we interact with financial services. From the rise of digital banking to advancements in artificial intelligence, these developments have not only enhanced customer experiences but also addressed critical challenges in security and compliance. Let’s dive into the major fintech trends that defined this year and set the stage for the future.
Pay by Bank (A2A payments)
In 2024, Pay by Bank (PBB) has emerged as a strong alternative to card-based payments, according to Philip Benton, principal fintech analyst at Omdia, in a recent article for FinTech Futures.
Previously, PBB, which uses banking infrastructure to handle transactions, faced challenges in achieving widespread consumer adoption due to inconsistent user experiences. However, Benton points out that advancements in APIs and the increasing global acceptance of open banking are helping PBB gain momentum among major merchants, who enjoy lower processing fees compared to traditional card payments.
Prominent companies like JustEat, Woolworths, Ryanair, Walmart, and Lastminute.com have already adopted PBB, especially in e-commerce contexts.
The popularity of PBB is also rising among consumers. Francesco Simoneschi, co-founder and CEO of TrueLayer, notes that in the UK, Pay by Bank transactions have tripled over the last three years, reaching 21 million in 2024.
Additionally, the UK government is backing this transition, as seen in its National Payments Vision released in November, which aims to promote open banking and PBB by urging regulators to enhance their commitment to seamless account-to-account payments.
Simoneschi emphasizes that regulators are increasingly supporting the move towards Pay by Bank.
“This collective shift among merchants, consumers, and regulators highlights the growing demand for improved payment solutions. Pay by Bank is proving to be more than just an alternative to card payments; it’s a transformative approach to lowering payment costs,” he states.
GenAI
Throughout 2024, GenAI has continued to play a pivotal role in the financial services industry, marked by new product launches, increased investment, and broader adoption of the technology.
Globally, banks have been keen to integrate GenAI into their offerings. NatWest launched its AI-powered virtual assistant service Cora+, while Zand Bank formed a partnership last month with Alibaba Cloud and Ant Digital Technologies to “accelerate the applications of generative AI, blockchain and payment technology” in the UAE.
Moreover, Spain’s CaixaBank strengthened its focus on the technology this year, rolling out the second phase of its GenAI project, GalaxIA, aiming to speed up the tech’s deployment across the group.
Investors in 2024 have been paying a lot of attention to start-ups adopting GenAI, which has been evident through the numerous funding rounds completed this year, including Kore.ai’s $150 million round in January.
By Q3 2024, GenAI start-ups had secured over $20 billion in funding
According to a November report by S&P Global, venture capital funding for GenAI companies is on pace to outdo the impressive $22.7 billion secured in 2023. By the end of the third quarter of 2024, GenAI start-ups had reportedly already raised over $20 billion in funding.
With all this cash pouring into GenAI-focused ventures, it’s no surprise that several new companies have launched this year.
Notably, Canada’s yPilot unveiled its “banking-specific, embeddable AI” platform in June, while UK-based fintech Covecta introduced its configurable AI platform in September.
Hyper-personalisation
A significant trend in global banking for 2024 is the move towards hyper-personalisation, fueled by the growing use of AI and machine learning to gain real-time insights that enhance customer experiences.
The industry acknowledges the necessity of customizing services to meet the specific needs of individual customers and their respective regions.
“Modern consumers desire a financial future that aligns with their digital lifestyles, where financial services integrate smoothly into their daily lives and adapt to their changing needs,” says Marcin Glogowski, SVP managing director for Europe and UK CEO at Marqeta.
“In a landscape marked by diminishing consumer loyalty, brands and financial institutions must transcend traditional interactions.”
Glogowski highlights that at Marqeta, they are witnessing a surge in demand for personalised credit options, such as buy now, pay later (BNPL) and rewards.
Looking forward to 2025, he predicts further innovations in BNPL customisation. “We will increasingly see tailored BNPL payment plans being made available in real-time, often within the payment apps and products we use daily,” he notes.
In conclusion
As we head into 2025, fintech is gearing up for further innovations, with Pay by Bank, GenAI, and hyper-personalisation leading the charge in redefining the industry.
Beyond the three trends already mentioned, there was also notably a growing focus on exploring use cases for central bank digital currencies (CBDCs) and digital assets, a rising emphasis on green finance and financial inclusion, and a surge in new regtech and compliance solutions to help firms keep one step ahead of evolving cybersecurity threats and ensure compliance with new regulations.
As technology advances, financial institutions are poised to keep innovating, driving even greater disruption in the years ahead. Fintech will continue to play a pivotal role in our daily lives, and 2025 promises to be just as exciting for the industry.
