Tech Trends Driving the Future of Fintech
Staying on top of the latest Finance Technology Trends is difficult! With so many Fintech Innovations to keep track of, it is vital to be aware of these shifts and their potential impact. We’ve been examining the leading Fintech technology trends set to fuel innovation in 2024. Here, we explore the fundamental factors shaping the future of finance.
Finance Technology Trends in 2024
1. Blockchain Integration in Financial Services
Recent collaboration between BlackRock and JPMorgan is signals a seismic shift in financial services. Blockchain integration, exemplified by BlackRock’s endorsement of cryptocurrencies and the adoption of JPMorgan’s blockchain-based collateral settlement system, is poised to transform the finance sector in 2024.
Tokenization of Traditional Assets
Blockchain technology, as demonstrated by BlackRock’s use, has enabled the tokenization of shares in money market funds, showcasing the potential for blockchain to transform traditional assets and make the transfer of various investments more efficient and cost-effective.
Efficiency and Cost Reduction
Blockchain’s facilitation of asset tokenization on a public ledger allows financial institutions to streamline their processes, reducing complexity and costs associated with traditional methods.
Market Landscape Changes
The integration of blockchain poses challenges to traditional financial systems, with implications for enterprise resource planning (ERP). Cloud-based ERP adoption is emphasized as a means for companies to stay ahead of the evolving landscape.
Government Adoption of Blockchain
Governments are expected to increasingly embrace blockchain technology for more effective business operations, which can have a ripple effect on the financial services sector, encouraging further innovation and compliance measures.
Green Blockchain Initiatives
Efforts are underway to make blockchain technology more environmentally friendly, aligning with broader sustainability goals and reflecting a responsible approach to tech integration in finance. Blockchains are often criticized due to the colossal energy demands. Throughout 2024, we will see big efforts to make blockchain technology greener.
Governments will embrace blockchain technology
Blockchain technology can allow governments to conduct their business more effectively. As they continue to recognize the potential of blockchain technology regarding efficiency and public trust, governments will take advantage of its many benefits.
Blockchains are often criticized due to the colossal energy demands. Throughout 2024, we will see big efforts to make blockchain technology greener.
2. AI (Artificial intelligence) and ML (Machine learning)
Implementing Artificial Intelligence will become an increasingly vital business function in 2024, with hyper-automation leading the way. Essentially, this means that any repetitive task without the need for human supervision should be built into an automated process. Within a finance context, the following AI and ML trends are set to emerge:
- Conversational AI enhances client engagement: With an estimated 3,150% growth rate in terms of successful chatbot interactions, it’s clear that chatbots will continue to impact how business communication is conducted. Conversational AI will transform chatbots into extremely useful tools to help consumers.
- Influence of the metaverse (Web 3.0): The metaverse is still ambiguous, but there are some things that FinTech firms should look out for. Within the Metaverse, Crypto, NFTs, and digital tokens are growing exponentially.
3. Enterprise resource planning (ERP): Finance applications and micro services will challenge traditional ERP
ERP will be put to the test by finance applications and micro services. Big vendors like Oracle and SAP need to be nimble to avoid becoming roadkill on the highway of change. ERP vendors have already adopted digital technologies like automation, blockchain, and cognitive tools into their products—but that won’t stop competitors from competing. As new players enter the ERP space with specialized applications and micro services that sit on top of—and integrate with—ERP platforms, anticipate a change in the landscape. Adopting Cloud-based ERP will help companies stay ahead.
Finance is entering a golden age of technology. As cloud becomes the norm for ERP, finance applications and microservices will proliferate. You’ll be able to drastically reduce the complexity and cost of technology, without sacrificing functionality.
Deloitte – Finance 2025
4. Increased Investment in Cyber-Security And Fraud Detection
In response to evolving security threats and shifts in consumer behavior, finance professionals are poised to elevate their technology expenditures for IT security in 2024. Gartner reports a notable 70% of finance buyers express intentions to increase their software spending compared to the previous year, with a particular focus on cybersecurity and data protection, customer relationship management, and IT management software.
Top investment priorities extend to accounting and finance software (34%), marketing solutions (26%), and business intelligence software (25%), reflecting a strategic allocation of resources to address diverse needs and enhance operational capabilities.
5. Platform as a service
Platform as a service (PaaS): Organizations that use PaaS vendors can stay focused on designing and building new capabilities and features into their products, ultimately delivering those products to their clients faster. The platform-as-a-service (PaaS) market is predicted to grow by $ 37.36 bn during 2021-2025.
6. Buy Now, Pay Later (BNPL) growth
According to research and interviews conducted as a part of the 2022 Commerce and Payments Trends Report, 2022 was predicted to be the year that BNPL became a mainstream payment method. BNPL is experiencing exponential growth: according to Juniper Research, BNPL payments are expected to account for nearly a quarter of all global e-commerce transactions by 2026, up from just 9% in 2021. It’s a payment type that attracts all audiences, particularly Gen Z and millennials.
7. Workforce skill change – focus on the future skills needed
2024 will see a continual focus on future finance skills needed – with particular emphasis placed on technical skills and roles such as data scientists, business analysts, and storytellers. Important future-orientated qualities include a strong customer service orientation, flexibility, and good collaboration skills—in addition to the technical capabilities needed for specific jobs.
8. Automated operations and finance will focus on Business Intelligence (BI) and service.
The potential of BI (business intelligence) technology is Data on Demand, which helps organizations to identify value drivers alongside growth opportunities and monitor financial/non-financial KPIs. In 2022, BI solutions will make real-time data handling fast and to the point. Growth optimization will occur across multiple dimensions of the financial organization. Financial organizations will have solid proof for future go-to-market strategies and better overall financial services.
9. Digital and mobile banking the new normal
The future of finance is digital and mobile-centric. Increased consumer demand for digital banking services has given rise to numerous technological advancements within financial institutions—with artificial intelligence (AI) at the core of these digital transformations. The rise of banking-as-a-service (BaaS) also increases digital services, as more legacy banks open up their application programming interfaces (APIs) for fintech and third-party app development. Digital and mobile banking will continue to grow in popularity, with activities ranging from budget queries to report production. Eventually, smart agents will learn what kinds of business information an individual needs and deliver that information proactively. Over time, data in spreadsheets will be replaced by visually rich information that is accessible and easy to use.
Capturing the full value of digital transformation requires hard work to align and integrate data. In 2024, automation will make it easier to get the work done, but data problems will still be hard and tedious. Commas, abbreviations, data-entry fields, nomenclature, and hundreds of similar factors will slow down progress. This will require heavy lifting from COFs to fulfill complex requests.
The primary drivers of this regret stem from cost-related issues, with 37% citing a total investment higher than anticipated and 24% struggling to demonstrate a return on investment. Additionally, 34% of businesses found that the software had more advanced features than necessary, and 30% faced challenges in learning how to use the software or onboarding their teams.
Regret is also fueled by a difficult and slow implementation process (33%) and incompatibility with existing systems (30%).
Sourcing the Right FinTech, Beyond Reviews
In Gartner’s recent insights, the spotlight is on the extensive timelines companies dedicate to sourcing new technology, often leveraging reviews to inform their decisions. However, a critical observation emerges. A notable 54% express regret over their recent software purchases. This prompts a crucial discussion about the potential risks associated with placing excessive reliance on reviews in the software selection process.
While reviews serve as valuable indicators, they should not be the sole determinant in the tech procurement journey. The disconnect between the time spent on reviews and the subsequent regret emphasizes the necessity of a thorough, customized evaluation. A strategic approach that accounts for the unique aspects of each business is key to ensuring that tech investments contribute to, rather than hinder, long-term success.
The Future of Financial Services
Financial services providers must make sure the organization is ready to implement the technology before investing further time and money in a fintech procurement strategy. Olive helps companies source the right finance technology and creates a short list of suitable vendors based in the needs of your organization. Collaborative conversations with key stakeholders are key to success.
Achieving success in sourcing the right Fintech solutions demands a dynamic and collaborative approach from companies. To circumvent biases and ensure the selection of technology that genuinely propels digital transformation, a continuous and agile collaboration with key stakeholders is paramount. This involves actively engaging with decision-makers and end-users throughout the evaluation process to align technology solutions with the company’s strategic objectives.
Effective technology procurement goes beyond individual tools; it necessitates a holistic strategy where all technologies seamlessly contribute to the big picture of organizational goals. Managing this intricate landscape requires vigilance and coordination to prevent silos and ensure a harmonious integration of technologies.
Olive streamlines this intricate process by providing a centralized software sourcing platform for collaboration among key stakeholders and vendors. This agile solution accelerates the traditional Request for Proposal (RFP) process, allowing companies to discover and procure the right solutions efficiently. By fostering collaboration and reducing time constraints, Olive empowers companies to make informed decisions that align with the future of finance.