Driven by emerging technologies, regulatory shifts, and evolving consumer expectations, the fintech landscape is poised for significant transformations this year. In this article, IT Logs brings you insights from several industry players and experts, providing a glimpse into the key trends and what is about to follow for fintech in 2024.
Gen AI in business processes
According to Nikhil Vadgama, blockchain expert and co-founder of the DLT Science Foundation, for fintech players the opportunity in 2024 is utilising GenAI in business processes.
“The challenge I see here is how far GenAI can actually live up to its hype. Traditional banks will experience further institutionalization of crypto. Their opportunity is also the fact that, as traditional players, they have been doing things in the background. 2024 will start bringing things to the foreground, particularly as the regulatory environment starts being more conducive (example: the fruition of crypto regulation in the UK). On the other hand, the implementation of GenAI in business processes may be a challenge for traditional financial institutions,” Vadgama tells IT Logs.
GenAI is already being used internally – now, it’s about whether this comes to consumer-facing environments, not only B2B, but also in B2C.
“The idea of having a chatbot at the front of a bank is not new, but it failed (see the case of Clieo Money). There are also dangers, such as the DPD chatbot case (re: the challenge of controlling biases). Another thing to definitely keep in mind when thinking about the landscape of fintech services and AI in 2024 is dealing with AI regulation,” Vadgama points out.
Digital trends and Central Bank Digital Currency (CBDC)
Alex Karichensky, CEO at global consulting and custom software development Digicode Europe, sheds light on digital trends and the advent of Central Bank Digital Currency (CBDC).
According to Karichensky digital trends across all traditional banking organizations will continue to rise throughout 2024. Another change coming in the next few years is CBDC.
“There are many ongoing pilot projects worldwide aimed to get the first results within the next two years. There is an active discussion between policymakers, central banks, and market players on how CBDC should be implemented, affecting consumers, banks, and businesses. It is putting pressure on traditional players in the banking industry, making them rethink their role in the future,” Karichensky explains.
Information security has always been a challenge in the financial world. In periods of political instability, there certainly be an increase in cases of cybercrimes, leading to the theft of sensitive information and financial losses.
“The fast development of quantum computing and growing public access to quantum computers could be used to break encryption algorithms and organize sophisticated cyberattacks. Therefore, the financial industry must be prepared for such threats and implement measures to eliminate these risks in the coming years,” he tells IT Logs.
Open banking initiatives and collaboration between banks and fintechs
For Dmytro Zarakhovych, co-founder and managing Partner of IGAMA.tech, a software development company that provides solutions for financial institutions, in 2024 the focus will be firmly put on open banking initiatives and collaboration between fintech and traditional banks.
“In 2024, the niche can expect the rise of open banking initiatives contributing into the collaboration between fintech companies and traditional banks. By leveraging secure APIs to share financial data, fintech players can develop innovative products tailored to the specific needs of consumers. This collaboration between the agility of fintech and the established customer base and regulatory expertise of traditional banks can lead to enhanced financial services for customers.” Zarakhovych says.
However, amidst the promising prospects, a new set of challenges emerges, as fintech players must navigate the regulatory landscapes while advancing their technological solutions. Adhering to regulatory compliance will be essential to ensure consumer protection, maintain financial system integrity, and encourage responsible data usage. For traditional banks, the key challenge lies in embracing technological advancements to stay competitive.
“Consumers can expect personalized financial services, improved access to credit, expedited transactions, and advanced financial planning tools. However, as financial technology advances, they should be vigilant about data privacy and security. Stricter guidelines are expected to safeguard consumer interests and ensure responsible data usage by fintech companies,” Zarakhovych tells IT Logs.
AI revolutionizing the crypto industry
Mike Romanenko, co-founder of global fintech ecosystem and crypto exchange ecosystem Kyrrex has high hopes for the transformative impact of AI in the crypto industry.
AI has already revolutionized various industries by enhancing data analysis, predictive modeling, and algorithmic trading strategies in the crypto industry. Neural networks powered by AI have proven to be highly effective in processing and analyzing large datasets, enabling traders to identify patterns and correlations that may not be apparent to the human eye.
“Neural networks are also applied in algorithmic trading strategies, enabling traders to develop complex trading algorithms that respond to market fluctuations in real-time, ensuring faster and more precise executions. The ability of neural networks to recognize patterns in vast amounts of historical data aids in predictive analysis, allowing traders to anticipate trends and adjust their strategies accordingly,” Romanenko explains.
Of course, there are still challenges and limitations coming in hand – for instance, AI algorithms memorizing historical data instead of identifying general patterns can lead to poor performance in live trading environments.
“Currently, the relative lack of regulation in the industry raises concerns about market manipulations with AI trading bots. Besides, market conditions and significant news events can impact AI algorithms, requiring ongoing monitoring and human oversight to keep track of AI-based strategies. Despite the challenges, we expect AI advancements to have a transformative impact on fintech services this year in data analysis, predictive modeling, and algorithmic trading.” Romanenko concludes.
