The fintech sector has experienced moments of rapid expansion and hardship, but new trends are starting to emerge that will shape the sector's future for years to come. The intention behind these trends is to offer helpful insights to fintech developers and service providers. They are based on analysis and information from several fintech-related sources.
These are ten fintech trends that organizations should take into account while creating their budgets or introducing new offerings.
Top Fintech Trends in 2024
1. Consumers will use more Fintech apps than Ever
Fintech applications become a daily necessity in 2020–2021, following the pandemic-driven mass adoption of the technology. Recent years have seen an increase in this growth, with 55% of users saying that fintech apps have helped them get through difficult financial times. As a result, more fintech users are installing financial decision-making apps and managing their money.
Consumer banking expectations are being shaped by this growing dependency; more people expect to be able to quickly link their bank accounts to the fintech apps they use daily. The typical fintech user today uses three to four apps, and this trend is likely to continue as more and more people utilize fintech apps.
2. Fintech increasingly provides Financial Stability during Uncertain times
People turned to fintech apps during the 2022 economic decrease as a way to deal with economic uncertainty and financial volatility. Economic considerations, according to 56% of respondents, increase their reliance on digital financial instruments for money management.
Customers will continue to be worried about their financial situation in the future, and they will use fintech apps more frequently to help them manage their money better. This will strengthen fintech's position as a champion of sound financial practices in periods of uncertainty.
3. Emerging Payment Technologies will become as normalized as Credit Card
Newer forms of payment are quickly becoming accepted. It is projected that in 2025, peer-to-peer (P2P) bank account payments will be made by around 178 million mobile phone users in the US. More options for consumers making real-time bank-to-bank payments have been made available with the launch of FedNow, a real-time payment rail from the Federal Reserve.
The real-time payment market is predicted to develop at a compound annual growth rate (CAGR) of 33% by 2032, per Plaid's Fintech Spotlight study.
4. Credit Score Alternatives will revolutionize consumer credit
An estimated 49 million Americans do not have access to loans and, in certain situations, housing and work because they do not have a typical credit score. This includes young people, recent immigrants, and those with inadequate financial accounts. Also, according to 63% of Americans, credit ratings are insufficient for completely understanding their financial situation.
To create a more comprehensive picture of a borrower's financial situation, new credit scoring algorithms employ data sources other than credit scores, such as utility bills, paychecks, and cash flow data.
Lenders may rapidly connect to data sources that give this alternative data with the help of API-based fintech solutions, facilitating quicker and better-informed loan choices. This increases the number of clients they serve and facilitates better financial access for millions of Americans.
5. Bank Payment Usage will continue to grow
In the US, pay-by-bank is becoming more popular. In 2023, Pine facilitated over two billion bank transactions, which is twice as much as the previous year. Even when credit and debit cards are an option, two-thirds of consumers (67%) are open to paying using their bank (openness improves to 72% for fintech users and 74% for Millennials).
Also, there are more and more rails for quick bank payments. It is expected that between 2023 and 2030, the value of transactions completed by instant payment rails—like FedNow and RTP (Real-Time Payments)—will increase by 289%. Given that FedNow now has over 400 partner financial institutions, its implementation in 2023 is expected to continue boosting growth for immediate payment systems.
6. Mint shutdown drives innovation in personal financial management.
The market gap created by the end of production of the well-known budgeting software Mint is expected to prompt other fintech apps to develop to fill it. This could involve using more recent apps or switching from PFE (personal financial enablement) apps to PFM (personal financial management) apps, which provide a greater range of services including online mortgage loans, robo-advising for investments, and other financial services.
7. Financial identity fraud attempts will grow, but identity verification solutions are stepping up to fight it
The biggest issue for both customers and fraud executives is synthetic identity fraud, which is committed by merging fake and genuine identifying information. Financial services companies will need to put up a strong effort to keep ahead of synthetic identities as artificial intelligence gets better and better.
To overcome these efforts, however, strong technologies are emerging. Using selfie verification and more than 16,000 identification data sources, Plaid identification Verification, for instance, utilizes a complex network to rapidly verify identity.
Organizations can exchange details regarding identities linked to fraudulent activity using Pine Beacon, an anti-fraud network. Scammers and identity verification systems will continue to fight for years to come, especially with the rise of deep fakes.
8. Loan volumes begin to trickle back up
An increasing number of people will probably take out loans to pay off debt and make regular purchases as a result of rising credit card debt and the return of student loans. Borrowers are probably going to go back out there looking for loans as interest rates level out. Purchase-now-pay-later loans and personal loans will probably recover the fastest.
9. AI will revolutionize the way consumers manage money
The use of artificial intelligence is growing; according to a McKinsey poll, 55% of participants said their company has implemented AI. Though fewer people are using it now than when we questioned them, expectations are high—60% of respondents believe AI will completely transform the financial sector in the next five years.
Customers are excited about how AI can help them manage their budgets, obtain better rates, and reduce their bill spending. Fintech businesses search seeking methods to use AI to deliver faster services and expand their services.
10. Consumers lean into traditional investing as crypto interest cools
While 42% of Americans say they aim to use mutual funds and high-yield savings accounts, over half of all consumers say they are actively trading stocks or plan to do so in the upcoming year. Although many consumers think real estate investing is out of their understanding, interest in it is also growing.
Although interest in cryptocurrencies is waning, 6 out of 10 consumers claim they do not think they are a wise investment in the current state of the economy. Because of its low entry barrier and the creation of increasingly secure crypto onramps, cryptocurrency continues to have a competitive advantage even when investor optimism has cooled.
Conclusion
Consumers are the true driver behind all of the fintech trends that are defining the sector. Fintech has reached this point in its development due to its concentration on providing customers with services they have never received before. These patterns show how customer tastes are changing and how fintech may adapt to suit those needs.
Being adaptable to suit changing customer needs and staying updated on consumer-driven trends is the best approach for fintech companies to remain relevant and provide space for expansion.
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