Fintech market and opportunities for 2024

The fintech industry has been growing rapidly in recent years and is expected to continue to grow in the future. With the increasing adoption of digital payments, mobile banking, and cryptocurrencies, the fintech market is set to become more diverse and competitive.

The Fintech market is expected to be growing in the next few years, estimated at $698.48 billion in 2030, while in 2020, it was $110.57 billion.

Startups and established organizations are keeping up with the pace of change and updating their operations, products and services.

While fintech trends bring many opportunities for organizations, they also present several challenges. Let’s take a closer look at the major trends in the fintech market to watch in 2024.

Leading sectors

Fintech is the sector with the most investment rounds worldwide. It raised $21.5 billion globally in Q2 2022.

In the US, venture investment into fintech companies in 2022 reached $81 billion, according to Crunchbase. As about 90% of people in the USA use fintech services now.

The sector has grown more than 10 times in the last decade from $7 billion in 2013.

Within the fintech sector, payments- and banking-related startups received the most venture funding over the past five years.

Neobanks

The global neobanking market size grew from $79.1 billion in 2022 to $118.51 billion in 2023 at a compound annual growth rate (CAGR) of 49.8%.  The global Neobanking market was valued at USD 42.2 Million in 2021 and it is anticipated to grow up to USD 428.7 Billion by 203, according to Neobanking Market Analysis And Forecast To 2031.

Neobanks are increasingly expanding into new geographical markets, including international markets. This expansion is driven by the increasing demand for digital banking services and the opportunity to offer services to underserved populations.

‍

The major factor for growth for neobanks in 2024:

1. Diversification of services: Neobanks are expanding their services beyond basic banking services, such as savings accounts and debit cards, to include other financial products such as loans, insurance, and investment services. This trend is driven by the need to provide customers with a one-stop-shop for their financial needs and to increase revenue streams.

2. Demand for personalization of services: neobanks are using customer data to personalize their services and provide customers with tailored financial solutions. This trend is driven by the increasing demand for personalized services and the availability of data analytics technology.

3. Partnerships with traditional banks to expand their services and increase their customer base. These partnerships enable neobanks to leverage traditional banks' established infrastructure and regulatory compliance, while traditional banks benefit from neobanks' innovative digital services.

Overall, the neobank industry is rapidly evolving and innovating to provide customers with digital financial services that are convenient, affordable, and personalized.

Open banking

Open banking is a financial services model that enables third-party providers to access financial information from banks and other financial institutions through the use of open APIs (application programming interfaces). The global open banking market size is expected to reach USD 135.17 billion by 2030, growing at a CAGR of 27.2% from 2023 to 2030.

‍

The major factor for growth for openbanking in 2024:

Increased adoption: Open banking is becoming more widely adopted across the globe. In Europe, the PSD2 regulation mandates open banking, and many other countries are also implementing similar regulations. As a result, more financial institutions are embracing open banking, and more third-party providers are developing services that leverage open banking APIs.

New services and use cases: Open banking is creating new opportunities for financial services providers to develop innovative products and services. For example, open banking APIs can be used to create personalized financial advice, facilitate cross-border payments, and enable real-time financial data analysis.

Data privacy and security: With the increased use of open banking APIs, there is a growing concern about data privacy and security. Financial institutions and third-party providers must ensure that customer data is protected and that appropriate security measures are in place to prevent unauthorized access.

Collaboration and partnerships: Financial institutions and third-party providers are increasingly collaborating and forming partnerships to leverage the opportunities presented by open banking. For example, traditional banks may partner with fintech companies to provide innovative services that leverage open banking APIs.

Open banking is creating new opportunities for financial institutions and third-party providers to develop innovative products and services. With the increasing adoption of open banking and the development of new standards, we can expect to see continued growth and innovation in this space in the coming years.Artificial intelligence (AI) and machine learning (ML) in the fintech sectorOne of the areas that is expected to see significant growth is the use of artificial intelligence (AI) and machine learning (ML) in the fintech sector. The AI in Fintech market is expected to register grow at 25.3% in the next 5 years.

Artificial Intelligence in fintech sector can help:

• automate processes
• reduce fraud
• offer suggestions on management strategies
• provide more personalized customer experiences
• and control banking quality.

‍

Additionally, blockchain technology is another area that is expected to grow in the fintech industry, particularly with the increasing adoption of cryptocurrencies and the need for secure and transparent transactions.

Peer-to-peer (P2P) lending

Another area of growth is in the lending sector, particularly in peer-to-peer (P2P) lending. P2P lending allows individuals to borrow and lend money without the need for a traditional financial institution. This sector is expected to see significant growth in the coming years as more people become aware of this alternative lending option.

Peer to Peer (P2P) Lending Market is valued at USD 115.61 Billion in 2021 and is expected to reach USD 802.34 Billion by 2028 with a CAGR of 27.4% over the forecast period.

‍

The major trend for P2P lending in 2024:

Increased regulation: As P2P lending becomes more mainstream, regulators are taking a closer look at the industry. In many countries, P2P lending platforms are subject to regulations that aim to protect borrowers and lenders and ensure fair lending practices.

Use of AI and machine learning: P2P lending platforms are increasingly using AI and machine learning algorithms to assess credit risk and make lending decisions. These technologies can analyze large amounts of data quickly and accurately, resulting in more efficient lending processes and better loan performance.

Expansion into emerging markets: P2P lending platforms are expanding their services into emerging markets, where traditional lending options may be limited. These platforms are providing access to credit for individuals and small businesses that may have previously been underserved by traditional financial institutions.

Increased institutional participation: As P2P lending becomes more established, institutional investors are taking a greater interest in the industry. This trend is driving greater liquidity in the market, which benefits both borrowers and lenders.

Overall, P2P lending is a growing industry that is disrupting traditional lending practices. As P2P lending platforms continue to expand their offerings, adopt new technologies, and expand into new markets, we can expect to see continued growth and innovation in this space.

BNPL (Buy Now Pay Later)

The BNPL is expected to be used in deals worth $576 billion worldwide by 2026, up from $120 billion in 2021. The BNPL boom is something you should pay attention to if you operate in a field that includes payments in any way (whether B2C or B2B).

Buy Now, Pay Later is a type of short-term financing that allows for the future payment of goods or services. This frequently functions without interest, making it a well-liked kind of funding. Customers who use point-of-sale instalment loans make a down payment on an item and then pay the remaining balance later.

The global buy now pay later market size was estimated at US$ 125.09 billion in 2021 and is expected to hit around US$ 3268.26 billion by 2030, poised to grow at 43.8% growth rate.

Here are some current trends in the BNPL industry:

Integration with e-commerce platforms: BNPL providers are increasingly integrating their services with e-commerce platforms, making it easier for consumers to use BNPL for their online purchases. This integration also benefits merchants, as it can increase conversion rates and average order values.

Expansion into new markets: BNPL providers are expanding their services into new markets, including emerging markets where traditional credit options may be limited. This expansion is driven by the increasing demand for flexible payment options and the opportunity to provide services to underserved populations.

Increased competition: As BNPL continues to grow in popularity, more providers are entering the market, resulting in increased competition. This competition is driving innovation and improvements in pricing and features.

Regulatory scrutiny: As BNPL becomes more mainstream, regulators are taking a closer look at the industry. In many countries, BNPL providers are subject to regulations that aim to protect consumers and ensure fair lending practices.

Overall, BNPL is a rapidly growing industry that is disrupting traditional payment and credit options. As BNPL providers expand their offerings, integrate with e-commerce platforms, and expand into new markets, we can expect to see continued growth and innovation in this space. However, with increased competition and regulatory scrutiny, BNPL providers will need to continue to adapt and innovate to stay ahead.

What fintech trends in 2023 mean for organizations?

In conclusion, the fintech industry is set to become more diverse and competitive in 2023 with the adoption of new technologies such as AI, ML, and blockchain. The lending sector, P2P lending, digital banks, and neobanks are expected to see significant growth in the coming years.

The fintech trends expected in 2023 present both opportunities and challenges for organizations across various industries. Here are a few implications for organizations:

Increased competition: The rise of fintech companies is increasing competition in the financial services industry. Traditional financial institutions will need to keep up with the innovation and technology of fintech companies to remain competitive.

Need for innovation: Organizations will need to invest in innovation to keep up with the changing landscape of financial services. Fintech companies are developing new and innovative products and services, and organizations will need to invest in research and development to stay ahead of the curve.

Integration with fintech platforms: As fintech platforms become more popular, organizations will need to integrate with them to remain relevant. This includes integrating payment systems, APIs, and other technologies to provide a seamless customer experience.

Regulatory compliance: As fintech becomes more mainstream, regulators are paying closer attention to the industry. Fintech companies will need to ensure they are compliant with regulatory requirements to avoid penalties and reputational damage.

Data privacy and security: With the increasing use of technology and data in financial services, organizations will need to ensure they have appropriate measures in place to protect customer data and prevent fraud and cyber attacks.

To remain competitive, organizations will need to invest in innovation, integrate with fintech platforms, ensure regulatory compliance, and prioritize data privacy and security. By doing so, they can take advantage of the opportunities presented by fintech and deliver better services to their customers.