It’s a time of reflection and anticipation at The Fintech Times throughout December, as we look back at developments and trends over the last 12 months and forward to the year ahead.
We’re excited to share the thoughts of fintech CEOs and industry leaders from across the globe to 2023’s key takeaways and what we should expect to be top of the agenda in 2024.
Today we bring together leading female voices from across the fintech industry to share their insights into innovation, diversity and the future of finance.
Fintech is finally maturing
Kimberley Waldron, co-owner of fintech PR specialist SkyParlour, thinks the past year has really emphasised the increasing maturity of the fintech sector.
“The era of the ‘overnight unicorn’ is over, with businesses now being forced to prioritise long-term strategies over short-term gains. Thankfully, businesses with sustainable growth models are now thriving by focusing on financial products that deliver real-world benefits. Ultimately, it feels like a step in the right direction after a few difficult years.
“This shift has been caused in part by more discerning investors and consumers. As we enter 2024, individuals are increasingly interested in solutions that address specific societal and environmental challenges and less enamoured by products that feel like innovation for innovation’s sake. This is encouraging a new wave of purpose-driven innovation to the fore, which is likely to have a massive impact on the fintech sector in the next year.
“The companies that lead this charge will not only provide innovative services but also demonstrate a clear understanding of the regulatory landscape to ensure compliance and build trust. In the next year, the integration of robust ESG strategies into business models across fintech will likely become standard practice, as the market increasingly favours companies with responsible and transparent operations.
A positive role to play
Despite a challenging 2023, the UK fintech sector is primed to take advantage of all the opportunities which 2024 has to offer, says Janine Hirt, CEO of Innovate Finance.
“This year saw the sector stepping in with new solutions to help consumers and businesses during the cost of living crisis. The sector is expected to continue building on this momentum while retaining its position as a global leader.
“In particular, as outlined in our FinTech Manifesto, we think there are three key areas to focus on which will enable UK fintechs continue to play a positive role across the UK:
- Build the world’s first smart data economy – continuing to develop open banking will enable the UK to retain a global leadership role in this area.
- Tackle the rise of fraud – making the UK the most secure place in the world for consumers and businesses to use digital finance will require stakeholders to come together to tackle fraud at its source.
- Create a regulatory environment which enables the UK to be a world leader in adopting new technology.
“Emerging technologies such as AI and machine learning will also continue to present opportunities for innovation in fintech, and we hope that these will open new avenues for developing better financial services for all, putting businesses and consumers first.”
Data tells a story
For Theodora Lau, the founder of Unconventional Ventures, 2024 should be about highlighting the financial services industry’s role in addressing environmental concerns, serving diverse communities, and ensuring transparency and explainability in AI applications.
“Looking forward to 2024, I think the key theme is ‘think differently with data’. Put simply, what is keeping us up at night? And what role does financial services industry play in this changing world?
“From how much we spend and where we spend, to the impact of our dollars on the planet, data tells a story. In an era where consumers are becoming more environmentally conscious, financial institutions have an increasingly important role to play. In this coming year, I believe we will see more willing to step up and align themselves with what the customers value — and help the world transition to a fairer and more sustainable one.
“As banking services grow increasingly digital, how can we best serve the needs of a diverse community and truly make a difference? I believe we will see more FIs looking beyond the obvious — and find new ways (bankable moments) to service more people. And employers will play a more active role in helping their employees with their financial wellbeing.
“As the AI hype continues, financial institutions will continue to look for new use cases to apply AI. Defining what data is needed, and how it is collected, stored, and used, will be crucial. I believe we will see more focus on transparency and explainability when it comes to AI, as we continue to adapt to the changing risk landscape where tech and fin are more tightly intertwined than ever.”
2023 decline and 2024 revival
In 2023, the UK fintech sector experienced a significant decline in investment, with flows dropping by 57 per cent from the previous year to £4.6billion in the first half of the year, notes Chelsea Boothroyd, head of strategic partnerships and fintech lead at Nexus (University of Leeds).
“This decline has created an uncertain environment, impacting investor confidence and driving consolidation efforts across sectors. Notably, the venture capital model has seen a shift away from speculative ventures,
potentially influencing the UK’s innovation-led growth ambitions.
“Additionally, 2023 marked the mainstream integration of artificial intelligence (AI) in financial services. The industry focused on leveraging AI and intelligent automation, particularly in sectors like insurance and wealth management, recognising their potential to enhance efficiency and customer experiences.
“We anticipate growing emphasis on developing business technology, to both capitalise on ongoing AI discussions and customise applications per specific business needs.”
Boothroyd also suggests that the fintech market will experience a funding revival in 2024.
“This rebound is predicated on the global economy’s recovery from the Covid-19 pandemic, fostering sustained growth and restoring investor confidence. Fintech’s resilience, disruptive potential and constant evolution make it an attractive investment sector. Decentralised finance (DeFi) will continue to gain traction, offering trustless financial systems through decentralised lending, borrowing, and trading.
“The trend of embedded payments and finance, integrating financial services into non-financial platforms, will continue to expand through partnerships between fintech and non-fintech companies. The emergence of greening finance as a distinct sector in 2024, supported by initiatives like COP28, will generate a fintech ecosystem facilitating environmentally responsible investment options.”
Meeting market needs
Nicky Senyard, CEO and founder of Fintel Connect, which specialises in performance marketing technology for the financial industry, talks about ‘big changes’ for the fintech landscape this year.
“We had economic concerns, low funding, and regulatory challenges pushing the industry to move away from speculative ideas to sustainable business models,” she says. “The lesson learned in 2023 is that it became clear to fintech companies that to achieve long-term growth, they need to deliver the right solution to customers.
“As we move ahead to 2024, the industry will continue to be innovative but with a stronger focus on meeting market needs. There are also regulatory challenges that will make fintech companies seek a balance between innovation and compliance.
“Next year, we will likely see how the fintech industry focuses on building strategic partnerships to grow in a cost-effective way. They’ll also make sure their products and services are compliant since the role of regulations will become more important in fintech as the industry grows.
“When it comes to BaaS banks and fintech partnerships, we can expect these relationships to deepen in the future, which will result in new products and solutions that will change the financial industry as we know it.”
