The fintech and financial services industry has seen extraordinary growth and transformation over the past few years, reshaping how financial technology companies engage with their customers and conduct business.
As we progress further into 2024, a number of significant trends are emerging in the fintech media landscape. From embedded payments to evolving regulations, marketers in the fintech and finserv space need to remain aware of these trends and develop distinct perspectives to secure impactful media coverage in this fast-evolving industry.
1. Embedded Payments
Think about how you use your Uber app, where paying for your ride involves nothing more than a simple tap. While the process may seem simple from a user’s perspective, a lot is happening on the back end. Embedded payments provide a seamless and fast way for both businesses and customers to pay for a product or service.
Embedded payments have exploded in the last few years, particularly in the B2B fintech space. Independent software vendors (ISVs) and other technology vendors have discovered the value of having payments live within their platform, rather than creating unnecessary friction by sending their customers to a third-party site.
In DevPro Journal, Peter Galvin, chief growth officer at NMI, said, “… integrating payments throughout is vital for ISVs to ensure a seamless brand, UX, and payment process when users are interfacing with their software platform.” This strategy enhances user experience and opens a new revenue stream for fintech software vendors by allowing them to monetize their payment solutions in collaboration with merchant partners.
Another aspect accelerating embedded payments is the increased prevalence of data-sharing and open application protocol interfaces (APIs). With APIs, businesses and financial institutions can now effortlessly cater to customers and introduce new services with just a click, eliminating the need to build their own proprietary infrastructure.
2. CFPB Regulations
Rohit Chopra, director of the Consumer Financial Protection Bureau (CFPB), has introduced several new regulations on the docket for 2024. From cutting credit card late fees to giving consumers more control over their financial data to supervising Big Tech’s entrance into payments, there’s a lot coming down the pipeline in H2 2024.
These regulations will have major implications for businesses and institutions, especially when it comes to data. Fintech organizations will need to remain vigilant, keeping abreast of new regulations and understanding the requirements these regulations impose on them and their partners.
Following an executive order from President Biden earlier this year, Chopra has clearly expressed his intention to propose rules that would restrict the activities of data brokers. In doing so, he has emphasized the need for greater protections to safeguard individuals and national security from harmful data practices.
As these regulations evolve, they will significantly impact how fintech and financial services companies generate revenue, structure their operations, and deliver their services. Fintech organizations will require clear guidance on ensuring proper compliance and making necessary adjustments.
3. Financial Inclusion
Financial inclusion remains a critical issue, particularly for populations historically marginalized or overlooked by traditional financial systems. Contributing factors in the exclusion of these groups include geographic barriers, insufficient documentation, high costs and discriminatory practices.
According to Forbes, there are roughly 6 million unbanked individuals in the U.S. The lack of access to traditional financial institutions not only perpetuates cycles of poverty but also stifles innovation. Emerging markets around the world are poised to drive significant advancements in business and technology, but they face impediments to equitable financial services. To address this, countries, like Nigeria, are prioritizing financial inclusion goals.
Innovations in financial technology have made significant progress in dismantling the barriers hindering financial inclusion. Mobile wallets, real-time payments, cross-border payments, neobanks and virtual currencies stand out as some of the most noteworthy developments in the space. Businesses that leverage these innovations have the potential to make serious progress on inclusion, unlocking new opportunities and tapping into global talent pools amid an increasingly competitive landscape.
4. The Fintech AI Gold Rush
Like many industries, fintech and banking have adopted advanced AI technologies and machine learning to drive advancements in data analysis, automation and personalization. As the industry continues to address regulatory, privacy and security concerns, more fintechs are incorporating AI into their product offerings.
Whether they are already integrating AI into their platforms or planning for future adoption, banks and fintechs are making massive investments in AI-driven tech. A 2020 McKinsey report estimated that AI technologies have the potential to generate up to $1 trillion in value for global banks. These innovations promise not only to enhance customer experiences but also to significantly improve financial outcomes by automating a range of tasks, from risk management and fraud detection to customer service and investment management.
5. Real-time Payments & FedNow
The Federal Reserve’s launch of the FedNow service last summer marked a significant development in real-time payments in the US, facilitating immediate transaction processing.
By the end of 2023, 300+ financial institutions (FIs) were using the FedNow service, with more expected to join throughout 2024. However, while many FIs are willing to accept real-time payments, many are wary of sending them. Despite low real-time payment fraud rates (for the Clearing House’s RTP network it’s 0.1%), FIs remain concerned that real-time payments allow little opportunity to identify suspicious or fraudulent transactions, causing hesitancy in adopting real-time payment solutions or signing up for FedNow.
Even so, real-time payments have the potential to dramatically reshape the business landscape and economy, offering benefits beyond just speed. For instance, businesses stand to gain improved access to capital and cash flow because they no longer need to wait for fund processing. Not to mention, real-time payments are transmitted with more data formatted to a global messaging standard, resulting in more efficient processing for businesses.
As mentioned earlier, real-time payments also play a hand in promoting financial inclusion. Beyond the B2B perspective, real-time payments could make it easier and faster for people to pay bills, access their paychecks, and even support supply chain and healthcare financing to create more seamless payment processes.
As a fintech organization, staying on top of the industry’s emerging trends is non-negotiable, and we’re here to help. Get in touch to learn more about how Walker Sands can help your fintech organization stand out from the crowd and stay ahead of the curve.
