The landscape of financial technology is undergoing a profound transformation, and as we stand on the cusp of 2024, it’s evident that the coming year will usher in a new era of innovation and adaptation. Here are the Top 10 Fintech Predictions for 2024 that will reshape the industry and redefine the way we perceive finance.
1. The End of BaaS as We Know It:
Banking as a Service (BaaS) has long been a conduit between traditional banks and technology-driven Fintechs. However, the perennial finger-pointing game surrounding compliance, risk, and technological challenges has necessitated a change. The prediction for 2024 envisions the absorption of BaaS into traditional banks or a massive consolidation within the BaaS landscape, birthing a dominant player.
2. Fintech as a Feature, Not an Asset Class:
The advent of big tech players like X, Apple, Tesla, Microsoft, and Meta into payments and credit signals a shift. In 2024, Fintech is predicted to become a feature rather than a standalone entity. Companies like Stripe, Plaid, and Block may fade into the background, evolving into infrastructure plays as they integrate seamlessly into broader ecosystems.
3. Embedded Financing and Payments Take Center Stage:
The battleground between banks and Fintechs is evolving, with embedded financing emerging as the new frontier. Buy Now Pay Later (BNPL) companies, such as Affirm, have filled a void, but the prediction for 2024 is that banks will extend themselves into this space. Direct financing and payment options within platforms like Apple, X, Meta, and Tesla will become the norm.
4. Compliance Whack-a-Mole in a Multi-Polar World:
The fractures in global economics and supply chain partnerships in 2023 set the stage for a financial cold war. The prediction for 2024 anticipates a scenario where compliance becomes a game of whack-a-mole. The emergence of a multi-polar world order could lead to catastrophic scenarios involving money laundering, terrorism financing, and taxation loopholes.
5. A.I. Ubiquity and its Implications:
The words of Michael Shermer, “Any sufficiently advanced technology is indistinguishable from magic,” ring true as artificial intelligence becomes pervasive. In 2024, AI adoption will reach unprecedented levels, influencing everything from complex investment decisions to global warfare. The societal divide between those with access to advanced AI and those without may give rise to new classes of individuals.
6. Digital Twinning and Robotics:
Consent to be digitally cloned may become a reality for many individuals. The contentious issues surrounding the use of personal data in the writer and actor strike of 2023 echo in fintech, with credit profiles and financial behaviors creating digital replicas. The rise of robotic technology, exemplified by products like Tesla’s Optimus, may redefine the nature of work and income.
7. Decline in World Population:
Contrary to previous narratives, the prediction for 2024 foresees a decline in the world population. Factors such as inflation, war, and technological advancements contribute to this decline. The consequence is a dark vortex where fewer individuals are needed, leading to dwindling tax revenues, decreased consumer spending, and less data generation for AI databases.
8. Fintech Consolidation:
As the Fintech landscape matures, 2024 is expected to witness a surge in acquisitions and consolidations. The era of “growth at all costs” will fade away, and differentiation among fintech players will become crucial. The marketplace, saturated with numerous players, will undergo a transformation, leaving only the strongest and most innovative standing.
9. Internationalization of Fintech:
The focus on emerging markets in Africa, Southeast Asia, South America, and the Middle East will intensify in 2024. Banking, credit, payments, and international remittances will dominate headlines as new players emerge to dominate these markets. This shift has the potential to bring financial transparency and economic growth to billions of people.
10. Fintech Wild Cards (Elon, China):
The wildcard predictions for 2024 include the potential impact of Elon Musk’s vision for a singular app, X, to facilitate all money transactions. The introduction of PayX or XPay could reshape how financial transactions occur, influencing political and social spending. Additionally, China’s control-centric approach to technology, digital currency, and surveillance may create a divergent ecosystem, casting a shadow over global financial transparency.
As we anticipate the unfolding of these predictions in 2024, it is evident that the Fintech landscape will continue to evolve, presenting both challenges and opportunities for industry stakeholders and consumers alike. Embracing these changes with adaptability and foresight will be key to navigating the dynamic future of financial technology.
Timothy Li is a serial tech entrepreneur. He spent the past 20 years in financial technology, focusing on banking and Fintech products while building mission-critical platforms for Intel Corporation and JPMorgan Chase. He currently serves on multiple Fintech advisory boards worldwide. Tim is also a professor at the University of Southern California, Viterbi School of Engineering, where he enjoys helping hundreds of students build their high-tech startups. Follow on LinkedIn.