As we stand on the cusp of a new year, the financial technology (fintech) landscape continues to evolve at a rapid pace, driven by technological advancements, changing consumer expectations, and global economic shifts. The year 2023 brought several fintech giants closer to earning profitability while some firms like ZestMoney decided to shutdown because of unsuccessful attempts to revive the business under new management and regulatory uncertainty.
How will the year 2024 be for the fintech industry? Here are the key trends that are set to define the fintech frontier in the coming year.
AI and Machine Learning Evolution
Artificial Intelligence (AI) and machine learning will continue to play a pivotal role in shaping FinTech solutions. From enhanced fraud detection and risk management to personalized financial advice, AI-driven applications will become more sophisticated. The integration of AI into customer service, investment strategies, and regulatory compliance will further optimize and streamline financial processes.
UPI and the global acceptance
The Unified Payments Interface (UPI) can be seen as the most important pillar of fintech. The Indian government has made it evident that it aims to globalize UPI. NPCI has utilized the success of UPI in India to introduce it to regions including Southeast Asia, the Middle East, and the UK. In 2023, UPI also underwent enhancements and introduced new features, including conversational payments, NFC-based offline payments, UPI Tap & Pay, and the addition of a credit line on UPI.
Digital lending and regulatory focus
Digital lending will remain a key focus for both the Reserve Bank of India (RBI) and the government. Recent directives targeted at digital platforms advertising fraudulent loan apps indicate a crackdown that may affect legitimate apps as well. Stricter guidelines announced by the RBI in November 2023, especially in the realm of unsecured lending, are expected to lead to higher lending rates for retail loans, according to a report by Inc42.
Jio Financial Services and other fintech giants
Jio Financial Services is giving a tough competition to fintech majors. The company has launched personal loan services for salaried and self-employed individuals and also has Jio Payments Bank to improve its payments vertical and capitalise on UPI.
Enhanced Cybersecurity Measures
With the increasing digitization of financial services comes a heightened need for robust cybersecurity. In 2024, fintech firms will need to enhance their cybersecurity measures, including biometric authentication, encryption technologies, and decentralized identity solutions, to safeguard user data and maintain the trust of consumers in an era of growing cyber threats.
The year 2024 holds immense promise for the fintech industry as it continues to redefine the way people engage with financial services.