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Sep 17, 2024
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The world of finance has changed dramatically in recent years, redefining how companies provide financial services to their clientele. One of the most significant changes is that conventional banking is making room for digital solutions that improve customer experience and expedite financial activities.
This change has mostly been driven by the expansion of fintech, which combines technology and finance to come up with creative ways to deposit, transfer, or exchange money. The fintech sector continues to grow, witnessing the evolution of established products along with the introduction of new trends. Expert networks are involved in the process, serving as catalysts and the drivers of progress. What is their impact on the sector, and how can businesses leverage them to their advantage?
Short fintech statistics
The fintech sector is expected to be valued at over US$340 billion in 2024 and nearly quadruple to US$1,152 billion by 2032, registering an astounding compound annual growth rate (CAGR) of 16.5%.
However, despite the fact that the sector is expanding, fintech investments have decreased dramatically in comparison to the last few years.
For instance, in 2023 the figure was US$113,7 billion which is the lowest performance since 2017 and marked a 42% decrease from the US$196.3 billion reported in 2022. This is because fintech investors are becoming more cautious due to several factors such as crises in the Middle East and Ukraine, rising interest rates, and prolonged inflation in various countries.
Businesses can only expect to attract funding from interested investors if they provide products that are both competitive and in demand. For this reason, it's crucial to follow and be informed of the trends in the fintech industry.
Latest Fintech Trends
1. Embedded Finance
This is currently one of the newest and fastest-growing fintech trends. Embedded finance refers to the inclusion of a financial service within a non-financial enterprise.
This trend is expanding quickly, with the embedded finance market projected to reach US$7.2 trillion by 2030. Payment choices for streaming services (Netflix, Spotify, etc.) and installment buying options on e-commerce websites are two examples of embedded finance.
2. AI-Powered Personal Finance Management
Fintech providers are implementing AI and machine learning to improve fraud detection, client service, credit scoring, and the customization of financial services.
Fintech businesses will use these technologies more and more to improve performance in several areas related to their services, in addition to using them for complex data analytics. This will lead to more streamlined internal processes for fintech companies as well as more efficient and customized financial services for end customers.
3. Central Bank Digital Currencies (CBDCs)
CBDCs are becoming more and more popular around the world. They function as an electronic equivalent of regular currency (issued by a nation's central bank) and are accepted as legitimate forms of payment. They are comparable to cryptocurrencies but the value is set by the central bank and is equal to the nation's fiat currency.
134 nations and currency unions, accounting for 98% of world GDP, are looking into a CBDC (European Central Bank's digital euro, for example). Payments, peer-to-peer transfers, and other monetary operations can all be done using CBDCs.
The number of similar initiatives in the forthcoming years is likely to grow. Fintech businesses should keep an eye on these advances and put innovative solutions into place to speed up global trading.
4. Generative AI and Robotic Process Automation (RPA)
Generative AI (such as ChatGPT) and RPA are also changing the fintech industry. Think of RPA in terms of arms and legs – it can move around, collect data, and transfer it from one point to another. AI, on the other hand, allows us to make sense of the collected data. With their help, organizations can automate the credit scoring procedure, from the initial data gathering to the final decision-making.
In fraud detection, they allow systems to continuously learn from transaction data, adapt to new fraud techniques, and autonomously make decisions to reduce risks.
5. Increased number of fintech apps users
Fintech applications (mobile payment apps, digital wallets, QR code payments) became a daily necessity in 2020–2021 following the pandemic-driven mass embracing of this technology and the last few years have seen this expansion continue. In the future, it is expected that an increasing number of fintech users will install apps that will help them to manage their finances and make more informed financial decisions.
The Role of Expert Networks in Fintech
As fintech progresses, the continual improvement of regulations around the sector means they are becoming more stringent. This trend drives up demand for compliance and risk monitoring solutions. In order to be compliant and take advantage of emerging business prospects, fintech enterprises must stay up-to-date with regulatory modifications. This is where expert networks can help.
Expert networks can act as a link between seasoned professionals from a variety of industries, such as technology, finance, and investing, and fintech companies seeking specific knowledge in a given industry.
Fintech companies looking to innovate and grow can benefit from the strategic insights and regulatory guidance that these specialists can offer. This collaborative approach facilitates the creation of innovative fintech solutions that align with market demands and regulatory standards.
One of the advantages of using expert networks is the rapid end-to-end expert contracting.
Furthermore, the ability to select from multiple expert networks or leverage the services of more than one (a service provided by Expert Network Calls, or ENC), can significantly improve the breadth of critical data. This, in turn, facilitates informed decision-making, mitigates common risks, and accelerates product development.
In order to help fintech companies to quickly adjust to continuous changes in the industry, ENC can help them to analyze consumer behavior and technology trends. Book a demo on the ENC platform.
