I’ve acquired dozens of 2024 fintech developments prediction pitches in my electronic mail inbox over the previous month. And whereas lots of them are insightful, I needed to see what our AI overlord ChatGPT needed to say in regards to the matter.
My immediate learn, “What are your predictions for the highest 5 latest and hottest developments in fintech for 2024?” Right here is how the AI responded:
Predicting the precise developments for 2024 is speculative, however listed below are potential rising developments in fintech:
Embedded Finance: Additional integration of economic providers into non-financial platforms like e-commerce, SaaS, and marketplaces. This pattern will provide customers seamless entry to monetary merchandise inside their day by day actions.
Metaverse Finance: With the rising reputation of the metaverse, fintech would possibly discover digital currencies, digital belongings, and decentralized finance (DeFi) options tailor-made for this house.
AI-Powered Personalization: Enhanced AI-driven instruments for hyper-personalized monetary suggestions, wealth administration, and banking providers. AI will additional analyze huge datasets to supply tailor-made monetary recommendation.
Local weather and Sustainable Finance: Continued progress in inexperienced finance, impression investing, and ESG-driven monetary merchandise as customers and buyers prioritize sustainability.
Regulatory Evolution: Fintechs navigating evolving rules, particularly round knowledge privateness, digital currencies, and open banking. Compliance and adapting to regulatory modifications will stay essential.
As regular, ChatGPT not solely did a reasonably good job, however it additionally sounds fairly convincing. And whereas there are really no blatant errors within the prediction, it could possibly be higher. Right here’s what’s incorrect or what’s lacking in every of the 5 predictions.
Embedded finance
ChatGPT was spot on. It’s fairly apparent that this will probably be a giant pattern in 2024. Why? As a result of it’s a giant pattern proper now. Nonetheless, that is extra of a continuation of a present pattern relatively than a brand new pattern in 2024. Additionally, ChatGPT failed to say the function that regulation will doubtless play in embedded finance subsequent yr, particularly within the U.S. That’s as a result of associate banks have turn into extra cautious to associate with fintechs after the FDIC issued a consent order to Cross River Financial institution, saying that it was concerned in unsound banking practices. The place there may be alternative, there may be legal responsibility.
Metaverse finance
ChatGPT was incorrect. That is one pattern that may be thrown away with all of these 2023 desk planners on the market. The metaverse provided a enjoyable distraction throughout the pandemic, when the trade was obsessive about shifting all of a financial institution’s operations to digital channels. Nonetheless, most customers lack curiosity in shifting their lives to the metaverse, and banks have realized that their investments in additional conventional channels usually tend to repay.
AI-powered personalization
That is one other win for ChatGPT. Nonetheless, personalization shouldn’t be the one AI-powered facet of banking and fintech that can surge in 2024. Many organizations are actually turning towards generative AI, which has the potential to supply inventive outputs for producing funding methods, designing monetary merchandise, constructing advertising and marketing campaigns, simulating knowledge to foretell market actions, simulating financial eventualities, or stress-testing monetary techniques.
Local weather and Sustainable Finance
Whereas I need to consider ChatGPT on this prediction, I wouldn’t checklist it among the many high 5 developments for 2024. There are two main explanation why sustainable finance will take a backseat (although not disappear) subsequent yr. First, the excessive value of capital has each banks and fintechs looking for new income alternatives. Given this excessive rate of interest surroundings, companies are extra centered on direct cost-saving and income progress initiatives equivalent to AI. Second, in lots of geographies, regulation has not caught up with sustainability initiatives. This lack of regulation and trade requirements makes it troublesome for organizations to pose definitive claims about what they’re doing for the surroundings.
Regulatory evolution
That is completely among the many high developments I’ve my eye on for 2024. Once more, it is a continuation of a present pattern and never a brand new growth, however it’s going to stay on the forefront in fintech subsequent yr. ChatGPT cited regulatory modifications throughout knowledge privateness, digital currencies, and open banking. With reference to open banking, the CFPB launched its discover of proposed rulemaking to implement Part 1033 of Dodd-Frank earlier this yr and made clear that it’s going to concern the ultimate regulation within the fall of 2024.
One piece that ChatGPT left off its checklist of anticipated regulatory modifications is the formalization of guidelines round purchase now, pay later (BNPL) firms. As customers depend on BNPL fee applied sciences as a substitute for conventional credit score fashions, regulators in each the U.S. and the U.Okay. have introduced their intent to formalize regulation within the house.
Picture by Matheus Bertelli
