The fintech market is undergoing a rapid shift, with the rise of new technologies, such as Open Finance, generative AI and A2A (Account-to-Account) payments having a major impact on business models, according to Juniper Research.
This is combined with unprecedented competition to be ‘top of wallet’ for customers, making the market more competitive and uncertain than ever.
Economic pressures, an accelerating shift from cards, and the need for differentiation are key drivers that will lead to change and growth in the market, with the status quo no longer being an acceptable strategy.
The fintech markets is moving into a phase where innovation for innovation’s sake is no longer a viable strategy. Given the economic pressures, and the intense competition in almost all markets, fintech vendors must ensure that their solutions offer genuine progress on key pain points, rather than offering speculative gains.
Fintech and payments trends in 2024
1. A2A payments to challenge cards in eCommerce and for funding wallets – A2A (Account-to-Account) payments will hit the mainstream, becoming an increasingly common challenger to card payments across eCommerce use cases.
2. CBDC use cases to emerge in practice – Specific CBDC (Central Bank Digital Currency) use cases will emerge in the market; enabling CBDCs to enter the next phase of growth.
3. Generative AI in banking to transform spending insights – Generative AI will find strong adoption and use cases within banking; enabling banks to offer a more personalised experience.
4. Digital identity adoption to be catalysed by digital wallet integration – The impact of eIDAS2 and other market developments will inextricably link digital wallets and digital identity.
5. AML tools to better leverage AI as alternative payments complicate compliance – As alternative payments become increasingly popular, AML (Anti-money Laundering) tools will evolve rapidly to ensure compliance is maintained.
6. Sustainable fintech solutions to emerge, as ESG compliance tops agenda – Fintechs will comprehensively address their ESG (Environmental, Social and Governance) requirements, supported by new initiatives from service providers.
7. FedNow to fail to match instant payments success, but value-added services will flourish – FedNow will not see the same growth trajectory as systems such as UPI and Pix, but will lead to important innovations.
8. Mobile financial services to accelerate transition to banking tech services – Mobile financial services will transition to more advanced banking services to reduce reliance on P2P transactions.
9. Biometric in-store payments to surge, as checkout innovation rises – Biometrics have the potential to revolutionise checkout experiences; catalysed by new innovation in the market.
10. B2B BNPL to provide critical financing for SMEs – BNPL (Buy Now Pay Later) has the potential to fill a major gap in the market, ensuring that SMEs have the access to financing that they need.
Juniper Research’s VP of Fintech Market Research, Nick Maynard, commented: “The fintech and payments market is undergoing fundamental changes, with new payment methods and different business models threatening to completely uproot existing operations. Stakeholders must fundamentally reassess the viability of their offerings, and build ambitious roadmaps for future developments, or they will be left behind by more agile competitors.”