Six trends shaping the ever-evolving payment and fintech landscape

With technology evolving at lightning speed, many global leaders are forced to be on their toes and rethink their strategies—be it their payment infrastructure or end-to-end customer experience. But how do you know which trend is relevant to you?

Here, we will focus on six trends expected to make a big splash in the future and reshape the financial industry landscape. They are:

• Embedded financial services
• Enhanced security measures
• Buy now, pay later
• Artificial intelligence (AI) technologies
• Local payment experience
• Blockchain technology

Businesses need to learn how each trend impacts them and ways to integrate them into their strategies to thrive and stand out in the competition.

You can read the trends that interest you the most by clicking on them or going through each one to raise your game in the year ahead.

Trend 1 | Embedded finance

The surge in digital payments is enabling integration of financial services and products into various platforms, offering a more seamless and convenient customer experience. Today, consumers prefer end-to-end purchase experience along with customised payout journeys, without leaving their favourite platform.

We have seen ‘Banking-as-a-Service’ grow in recent times, and we expect this growth to only continue. It is expected that the market for Embedded Finance will cross a value of US$ 291.3 billion by 2033.¹

We expect this growth to come from specific use cases, as opposed to buzz. Whether it’s the Walmart MoneyCard, or Etsy Payments – real use cases will be prioritised over experiments.

Next is Open Finance. With Open Finance revolutionising how we manage and access financial services, there are expectations of unprecedented levels of interconnection in 2024. Open finance involves using open Application Programming Interfaces (APIs), enabling collaboration between third-party developers and financial institutions.

Whilst it has become paramount in 2024, regulations regarding it remain complicated in certain countries. It is also expected that the next evolution beyond open banking and open finance is open data. Much broader in scope, it involves connecting account data from other sectors (such as energy/utility/telecommunications). In a few countries, this can mean connecting data related to personal health and even government records. It could be interesting to see how banks and fintech leverage this data to offer more personalised and all-encompassing solutions to their clients.

Trend takeaway

Businesses that can leverage digital transactions by offering integrated financial products, be it wallets, payment gateways, lending solutions, FX or cash management, will be able to provide more accessible and convenient solutions to their audiences. This will help them amplify customer loyalty and unlock additional revenue streams.

Trend 2 | Enhanced security measures

With greater adoption of digital commerce, the threats of fraud, identity thefts and other similar activities are also elevating. E-commerce losses due to online fraud are expected to surpass $48 billion globally in 2023². Merchant losses due to payment fraud are expected to reach $362 billion between 2023 and 2028³.

Going forward, we expect global leaders to address the rising fraud and data privacy concerns, especially in the backdrop of AI technology integration. With technology advancing, we only anticipate more conversations and initiatives to address cyber risks and ensure more transparency, trust and accountability in the financial landscape.

Moving from fraud to another security dimension, consumers are calling for enhanced security measures to protect themselves and their information from fraudsters. The global average cost of a data breach in 2023 was approx. USD 4.45 million, an increase of 15% over three years.

With the increasing frequency of cyber threats, payment providers are defending themselves by investing more in advanced security measures and new tools using multiple data points to circumvent fraud. This includes the widespread adoption of technologies such as advanced encryption, biometric security, robust multi-factor authentication and artificial intelligence to detect and prevent fraudulent activities.

Trend takeaway

Businesses, be it SMEs or big corporations or institutions, that will invest in technology such as AI and security protocols will fortify their operations and build trust with the customer

without exposing themselves or the customer.

Trend 3 | Buy now, pay later (BNPL)

COVID-19 fuelled the demand, with customers appreciating flexible payment options amid the challenging economic scenario. Despite a few headwinds, such as regulatory scrutiny and interest rate pressure, BNPL still continues to enjoy consumer attention.

The global buy now pay later market is projected to reach $122.19 billion by 2030 from $30.38 billion in 2023, a CAGR of 22.5%5.

Trend takeaway

Businesses that take note of this changing preference and offer flexible financing solutions are likely to see sustained growth.

Trend 4 | Artificial intelligence technologies

AI technologies have advanced rapidly over the last few years, offering more promise than before. AI technologies can help personalise solutions based on behaviour, forecast sales, unlock smart insights, mitigate fraud, improve customer service operations and more. You name it, and AI can help you get there.

Along with the typical use cases, financial companies are looking beyond traditional services to offer tailored investment advice and tools to customers, allowing convergence between finance and other industries such as wellness. For example, banks are allowing customers

to access and enhance their financial, emotional and physical well-being with a single dashboard.

Almost every business wants to jump on the bandwagon, but the question here is – which application of AI will make the most sense in the future? We expect these three use cases where AI can have colossal influence:

• AI-powered biometrics for simplified, speedy and secured checkout
• AI-driven technologies for fraud detection based on patterns
• API integration powered by AI for streamlining and automation without any friction

Trend takeaway

AI tools are being used by businesses of all sizes. Businesses that are solicitous when applying them to key business areas can reduce costs, boost productivity and transform customer experience.

Trend 5 | Localised and cashless payment experience

Businesses are changing, catalysing the need for seamless and frictionless experience when operating globally. And one component that stands out is the way they make transactions.

There is a growing demand for localised payment experiences. More and more fintechs are defying the traditional notion of one-size-fits-all payment experiences in a diverse global tapestry and coming up with a unique solution for each customer. How? Fintechs are building local networks worldwide to deliver local, frictionless experiences, even when sending money beyond borders. With this, businesses are allowing customers to check out using a payment method that best suits them.

With localised payment experiences, another trend ushering in a transformative era in fintech is mobile payments. The total value of digital wallet transactions is expected to surge from $9 trillion in 2023 to surpass $16 trillion in 2028, recording an impressive growth of 77%. This shift reflects consumers’ evolving preferences for convenience, accessibility and personalisation.

Trend takeaway

Businesses that adapt to this digital revolution and ensure they remain agile and responsive to deliver real-time, localised and convenient international payments will be able to scale and earn loyalty.

Trend 6 | Blockchain technology

While the future outlook of the cryptocurrency market remains at a critical juncture, the application of blockchain technology in finance has taken the world by storm. Financial institutions are pivoting pilot programmes on a global scale to enhance their tech infrastructure, be it for cross-border payments or lending.

There is also an apparent focus on CBDC (Central Bank Digital Currencies) and blockchain interoperability in many countries. For example, the European Central Bank is exploring introducing a digital euro, with more progress to materialise sometime in 2024.

Coming back to cryptocurrencies, with waning confidence and a bleak future shadowing the crypto market, the role of the regulator and wealth management firms will be crucial to bolstering investors’ confidence.

Trend takeaway

Blockchain technology has the potential to unlock new financial solutions. Companies that leverage this will scale faster, reduce transaction costs, effectively manage risk and lead innovation on a global stage.

Sources:

1. Future Market Insights

2. Juniper Research

3. Juniper Research

4. IBM Report

5. Fortune Business Insights

6. Juniper Research

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