I’ve obtained dozens of 2024 fintech traits 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 concerning the matter.
My immediate learn, “What are your predictions for the highest 5 latest and hottest traits in fintech for 2024?” Right here is how the AI responded:
Predicting the precise traits for 2024 is speculative, however listed below are potential rising traits in fintech:
- Embedded Finance: Additional integration of monetary companies into non-financial platforms like e-commerce, SaaS, and marketplaces. This development will supply customers seamless entry to monetary merchandise inside their day by day actions.
- Metaverse Finance: With the rising reputation of the metaverse, fintech may 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 companies. AI will additional analyze huge datasets to supply tailor-made monetary recommendation.
- Local weather and Sustainable Finance: Continued progress in inexperienced finance, affect investing, and ESG-driven monetary merchandise as shoppers and traders prioritize sustainability.
- Regulatory Evolution: Fintechs navigating evolving laws, particularly round information privateness, digital currencies, and open banking. Compliance and adapting to regulatory modifications will stay essential.
As standard, ChatGPT not solely did a fairly good job, but it surely additionally sounds fairly convincing. And whereas there are really no blatant errors within the prediction, it may very well be higher. Right here’s what’s flawed or what’s lacking in every of the 5 predictions.
ChatGPT was spot on. It’s fairly apparent that this will likely be a giant development in 2024. Why? As a result of it’s a giant development proper now. Nevertheless, that is extra of a continuation of a present development somewhat than a brand new development in 2024. Additionally, ChatGPT failed to say the position that regulation will seemingly play in embedded finance subsequent 12 months, particularly within the U.S. That’s as a result of accomplice banks have grow to be extra cautious to accomplice 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.
ChatGPT was flawed. That is one development 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 transferring all of a financial institution’s operations to digital channels. Nevertheless, most shoppers lack curiosity in transferring their lives to the metaverse, and banks have realized that their investments in additional conventional channels usually tend to repay.
That is one other win for ChatGPT. Nevertheless, personalization shouldn’t be the one AI-powered facet of banking and fintech that may surge in 2024. Many organizations are actually turning towards generative AI, which has the potential to provide artistic outputs for producing funding methods, designing monetary merchandise, constructing advertising campaigns, simulating information to foretell market actions, simulating financial eventualities, or stress-testing monetary methods.
Local weather and Sustainable Finance
Whereas I need to consider ChatGPT on this prediction, I wouldn’t checklist it among the many prime 5 traits for 2024. There are two main the reason why sustainable finance will take a backseat (although not disappear) subsequent 12 months. First, the excessive value of capital has each banks and fintechs trying to find new income alternatives. Given this excessive rate of interest setting, companies are extra targeted on direct cost-saving and income progress initiatives corresponding 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 setting.
That is completely among the many prime traits I’ve my eye on for 2024. Once more, it is a continuation of a present development and never a brand new growth, however it should stay on the forefront in fintech subsequent 12 months. ChatGPT cited regulatory modifications throughout information privateness, digital currencies, and open banking. With regard to open banking, the CFPB launched its discover of proposed rulemaking to implement Part 1033 of Dodd-Frank earlier this 12 months and made clear that it’s going to situation 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 shoppers depend on BNPL fee applied sciences as an alternative choice to conventional credit score fashions, regulators in each the U.S. and the U.Okay. have introduced their intent to formalize regulation within the house.
Photograph by Matheus Bertelli