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Navigating the Future of Fintech: What's Next in 2024

Navigating the Future of Fintech: What's Next in 2024

Navigating the Future of Fintech: What's Next in 2024

In the ever-evolving landscape of Fintech, two key trends are emerging as pivotal forces shaping the future of Fintech trajectory: Employee and Customer Experiences. 2024 is poised to usher in transformative changes at the intersection of those trends, while AI emerges as the compass set to redefine the very fabric of financial innovation. 

Fintech companies are not merely in pursuit of professionals with traditional financial acumen; they are seeking a fusion of technical prowess and empathetic design thinking. As we explore the symbiosis of Talent Trends and Design (UX), a new linchpin that ensures success in this evolving landscape in 2024 is a matter of attaining proficiency in Artificial Intelligence (AI) skills.

The Fintech Talent Renaissance in 2024:

As the demand for Fintech professionals continues its upward trajectory, 2024 will mark a pronounced shift in the talent landscape. Fintech companies will increasingly prioritize candidates with multifaceted skills, blending traditional financial acumen with expertise in data science, cybersecurity, and blockchain. Ambitious professionals who can navigate the complexities of both financial innovation and cutting-edge technologies will be in high demand.

At the same time, we'll witness a talent renaissance in Fintech. According to recent  Forbes research, Talent can no longer be defined as ‘the people you hire’ alone. It becomes ‘how somebody feels about joining the organization and ultimately choosing to stay’. Effective talent curation goes beyond hiring, encompassing retention, people investment, growth, engagement, and pipeline development. It is an applied strategy through which investments are guided by the mixture of multidisciplinary experience, and the talent engagement journey, rather than focusing primarily on the numbers of people in the process. The true Talent Quality is becoming the top priority (as another outcome of Fintech's turbulent 2022-2023 years). 

According to S&P Global Market Intelligence data analysis, VC funding of FinTech start-ups dropped globally by 49% in 2023. This dramatic fall is observed to be the result of the related significant drop in Fintech deals and exits during the same period. Fintech venture funding is the canary in the coal mine for the industry. Fintech funding rounds in the first half of 2023 totaled 1,178, representing a traumatic 64% drop from H1 2022. The mid-March failure of Silicon Valley Bank further dampened investor risk appetite as the deal count shifted downward to 522 rounds in Q2 2023 (versus 656 rounds in Q1 2023 and 944 rounds in Q2 2022), making it the slowest quarter on record over the past 2.5 years. Furthermore, mega funding rounds (over $100 million) have been scarce, with only 9 in Q2 2023, down from 23 in Q1 2023 and 55 in Q2 2022.

Source: S&P Global Market Intelligence 2023.

Cultivating a Future-Ready SkillSet in 2024:

For candidates eyeing success in 2024 and beyond cultivating a future-ready skill set is more imperative than ever. The ability to interpret and manipulate big data, proficiency in machine learning algorithms, and a nuanced understanding of AI ethics will be the cornerstones of a competitive skill set.

In 2024, candidates who are capable of leveraging contemporary AI tools (particularly Generative AI) will stand out. “The future belongs to those who not only understand the technology but use AI to craft human-centric designs that resonate on a profound level with users."

Since Innovation is at the heart of the future of Fintech, it has become an essential element of assuring a candidate’s road to success in 2024. Businesses highly value employees who bring fresh concepts and ways of working to the table. According to a survey conducted by Deloitte, 82% of financial services executives deem innovation highly important for their organizations. Creativity plays a pivotal role in identifying groundbreaking solutions to financial challenges and enhancing user experiences. 

The future of Fintech will be built by individuals who can bridge the gap between complex technologies and financial innovation, applying a clear understanding of the Customer Journey throughout. It's not just about understanding numbers or the complexities of today’s financial product mix; it's now about navigating the intricacies of data science, the massive potential power of properly applied AI, and ensuring robust cybersecurity measures consistently.

Human-Centric Design as The Future of Fintech

Designing for Empathy:

The concept of customer experience is facing new challenges in the context of the new technologies, including the technologies that sustain Fintech development. Human-centric design is reshaping the Fintech landscape by prioritizing user experience and empathy over traditional process considerations alone. The future of Fintech will be owned by the companies that are becoming capable of moving beyond traditional transactional relationships, aiming to build emotional connections with highly engaged and brand-admiring users.

Behavioral economics is a useful lens to help understand the future of Fintech because of the strong emotional connections people have to their confidence, and future security, as  measured by money and their financial decision making. Even when clients believe they are acting ‘logically’, at the end of the day we are all human and it is inevitable that our emotions are always a palpable decision influencer.

To assist Fintech institutions in making informed decisions about customer transactions and to enhance their predictive capabilities, these businesses must understand and influence their clients’ moods. Instead of attempting to alter human nature, progressive Fintech businesses will study it and ensure that their designs for digital Fintech solutions incorporate the necessary technologies and user journeys which can positively influence client decisions and steer these valuable users toward the optimal outcomes for all the stakeholders.

A new era of speed and convenience

Consumer expectations have evolved rapidly with businesses in all sectors digitizing their offerings. The younger consumers are, the faster and more convenient services they would want – they expect services to be accessible anytime, anywhere and simply won’t tolerate anything less for themselves. Failing to fully recognize and internalize this reality is a terminal pitfall that must be avoided for long-term Fintech sustainability.

Modern consumers are now accustomed to managing their daily finances primarily through mobile banking apps. Chase Digital Banking Attitudes Study reports that 59% of consumers utilize their mobile banking apps for bill payments. Not surprisingly, the younger generations are pushing this trend forward, with 95% of Gen Z and 91% of millennials embracing mobile banking as their primary banking relationship experience.

The traditional in-person banking experience, defined by friendly bank managers, helpful staff and an attractive bank interior, have quickly become relics of a bygone era that will not return. Today, effective Fintech is defined by the expertly crafted digital journeys and user-centric personalized experiences that the Fintech winners of the future are creating right now.

Seamless onboarding

In any client-account based financial application, the onboarding process provides the ‘first impression’ for the rest of the customer experience. More than half of consumers (68%) abandoned a financial app during the onboarding process in 2021, up from 63% in 2020, according to research from Signicat claims.

Signicat CEO Asger Hattel said, “The key to creating a better onboarding experience is an in-depth knowledge of the market, an understanding of consumer behavior and the ability to offer multiple onboarding methods”.

The Impact of Personalization:

Personalization is a key aspect of human-centric design building the future of Fintech. McKinsey's research reveals that personalized financial advice and recommendations can result in a 20% increase in customer satisfaction. This trend is evident in the success of robo-advisors and AI-driven financial planning apps. The continued engagement of clients with these platforms is a direct result of the effective curation of the ongoing client journey, and not all contenders have fared as well in this regard. We’ll dive into that arena further in a future article.

As we mentioned in our previous article, AI-driven personalization is crucial when it comes to delivering tailored financial solutions. Fintech companies are leveraging artificial intelligence to analyze vast amounts of data and provide personalized offerings to clients to enhance client experiences and identify potential frauds. Competing successfully in the space now makes this level of technical expertise essential.

A growth strategy focused on improving the experience of existing customers can deliver breakthrough growth for incumbent companies – often more than double that of their industry peers who fail to do so.

AI Proficiency as the Linchpin in 2024

McKinsey estimates that artificial intelligence (AI) can generate up to $1 trillion additional value for the global banking industry annually. Banks and other financial institutions are highly motivated to adopt an AI-first mindset that will better prepare them to resist competitive encroachment onto their territory by expanding the technology reach of their firms.

Source: McKinsey: The State of AI in 2023: Generative AI’s Breakout Year

AI isn't just about algorithms; it's about understanding human needs and responding to them. This reality drives the compelling necessity to make design decisions which are informed by empathy, ensuring that every interaction resonates with the user's unique financial narrative. It is essential to ensure that the technology in play actually enhances the human experience, rather than overshadowing it.

AI will be the linchpin in 2024. Fintech professionals who can harness its capabilities will not only meet market demands but will be the architects of industry innovation.

Strategic Technology Partnerships: A Defining Element in 2024

As Fintech companies embark on AI initiatives in 2024, the careful selection of technology partners will be a defining element. McKinsey's research underscores the significance of strategic partnerships, emphasizing that technology partners bring a collaborative approach, marrying technical expertise with an understanding of user-centric design principles.

Companies regularly seek partners with complementary capabilities to gain access to new markets and channels, share intellectual property or infrastructure, or reduce risk. The more complex the business environment becomes – for instance, as new technologies emerge or as innovation cycles get faster – the more such relationships make sense.

AI implementation in 2024 is not just about tools; it's about forging strategic partnerships that align technology with human-centered values. A technology partner who understands this synergy becomes an integral part of the journey to create innovative, user-centric solutions.

Additional Winds of Change in 2024:

The Financial Services industry has witnessed significant, and in some cases disruptive, transformation in 2023, fueled by Fintech innovations and consumer behavior megatrends. As we navigate the future of Fintech in 2024, the amalgamation of Talent trends, Human-centric design, and AI proficiency emerges as the compass guiding the industry's trajectory in this year. 

This year therefore promises not only to redefine the Candidates’ skills in demand but it is also expected to bring additional winds of change in the Fintech landscape for technology providers and partnerships as well. The future of Fintech will be built on the pivotal role of strategic technology partnerships in creative collaborations seeking to realize the full potential of AI. Those who adeptly navigate these dynamics are poised not just to adapt to change but to proactively shape the very future of Fintech. Contact Tech-Azur today to learn more about how we are helping financial institutions to embrace these transformative elements that are set to shape the financial services industry.