FinTech industry has been continuously evolving to reshape the financial environment and in 2024 new trends emerged in FinTech changing the way individuals, companies and institutions use the financial services. Boosting efficiency, improving customer experience and increasing transparency in the financial world are the ultimate purpose of the emerging FinTech trends that include but are not limited to integration of artificial intelligence (AI), embedded finance and blockchain innovation.

1. Artificial Intelligence (AI) and Machine Learning (ML) Integration

Artificial intelligence, generative AI and machine learning have become essential technologies in FinTech with an expanding impact and use areas in 2024. The most prominent advantage of AI-based solutions is that they can scan through and analyze big amounts of data in real time and support financial institutions to improve their customer experience services and streamline the processes. AI and ML technologies offer personalization in customer experience, more effective fraud detection and better risk assessments.

Together with the increasing number and complexity of cyberattacks on the financial services, the role and benefit of AI and ML in the activities of fraud detection have become more critical than ever before. The predictive nature of AI and ML algorithms has very high success rates in pointing out the irregular user activities and preventing fraudulent transaction priorly. Additionally, these technologies are now capable of solving more complex customer demands such as management of financial portfolios and recommendation on financial decisions with the improved AI chatbots and virtual assistants.

2. Embedded Finance for A Seamless Customer Experience

Embedded finance is the act of integrating financial services into non-financial platforms and it enables non-banking businesses to provide financial services within their own apps to their customers including payments, loans and insurances. Embedded finance has been broadening its popularity in the FinTech industry in 2024 as it helps businesses improve their services by minimizing the frictions and offering a seamless customer experience.

One fundamental feature of embedded finance is its capacity of transforming the businesses by offering a new revenue stream. It is likely that the embedded finance will be an essential feature of digital ecosystems in the near future as it enables diversification of income sources for companies while improving their customer loyalty via personalized, in-app experiences.

3. Decentralized Finance (DeFi) and Blockchain Technology

Decentralized finance (DeFi) and blockchain technologies are challenging the traditional structure of financial systems. While improving the blockchain systems by removing the intermediaries from transactions, DeFi provides users with higher control over their assets, minimizes costs, increases the velocity of transactions and also leverages transparency.

DeFi is also active in other fields such as insurance, lending and investment management in addition to cryptocurrency. The critical point that the institutions need to give special attention to is the regulatory frameworks as compliance requirements might change with the involvement of this new trend.

On the other side, blockchain technology has been expanding beyond DeFi. The possibilities of offering secure and irrevocable transactions that the blockchain technology holds make it more appealing to the areas such as smart contracts, digital identity verification and supply chain finance. FinTech companies continuously adopt blockchain technology in 2024 as it helps promote operational efficiency and decrease fraud.

4. Sustainability Trend in Financial Industry

As the Environmental, Social, and Governance (ESG) criteria has become more important recently, the concept of sustainability gained popularity and a central place in the strategies of financial institutions. Both consumers and investors are specifically looking of sustainable financial products that highlights and follows environmental purposes, social equality and ethics in governance. It was inevitable for the FinTech industry to adapt itself to this new trend by offering ESG-focused solutions.

To support customers and businesses to remain compliant with ESG criteria, FinTech platforms are now able to offer services that are equipped with advanced analytical tools that can track and report on the ESG functioning of related assets.

In addition to the businesses and individuals, financial institutions also need to make sure that they are committed to the sustainability trend. To support their commitment and demonstrate that they comply with the ESG standards, banks and other financial institutions may require transparent reporting tools empowered by AI and data analytics. In the long term, sustainability trend in finance is expected to impact the society in a broader sense by creating a shift in the investment approaches.

5. Data Analytics and Hyper-Personalization

Hyper-personalization is a term that has the potential to revolutionize the way financial services are understood and delivered in 2024. By operating big amounts of personal data and using advanced analytic techniques, FinTech industry is capable of offering highly personalized financial products starting from tailored loan offers and real-time investment suggestions to make sure that the customers experience the most customized service that are relatable to their requirements. Hyper-personalization also improves customer retention by increasing relevancy and engagement in financial services.

6. Growth of Digital Banking Ecosystem

Digital banks (or neobanks), in comparison to traditional banks, bring a more streamlined user experience with a reduced cost to the table as they operate completely online. As users prefer online solutions more and more, tech-savvy customers who prioritize pace, convenience and customization in their financial transactions are more likely to use neobanks.

The most prominent competitive feature of digital banks is their ability to adapt FinTech innovations into their system more easily which in turn enables them to provide better financial service with minimum costs. In order to be able to broaden their digital presence and remain competitive in the industry, traditional banks are looking for making partnerships with FinTechs and neobanks while making sure that they remain compliant with the regulations and protect their brand image.

Transformation of FinTech in 2024

The landscape of FinTech is shaped by several, rapid developments in AI, blockchain, ESG, personalization and data analytics all of which aim improving efficiency, customer experience, and transparency. As new technologies and trends emerge, it is important for the financial institutions to adapt to the changes to be competitive; however, it is also vital that the institutions must remain agile, customer-centric and compliance-conscious. FinTech trends of 2024 promises a broader digital and financial transformation both in terms of institutions and users as they tend to change the traditional understanding and behaviour. It is possible to say that the transformative changes in the FinTech industry will evolve the financial industry by increasing accessibility, equality and efficiency in financial services.

Necati Yavaş, Sales & Business Development Director