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By Richard Rosenberg, group chief product and technology officer, Spendesk
It’s been a topsy-turvy year for fintech. In 2023 we’ve seen huge growth in the Buy Now, Pay Later (BNPL) space as consumers seek to navigate through the economic crisis, the collapse of FTX causing ripples in the crypto economy, while new instant payment service FedNow has gone live in the US.
There’s been plenty of movement in the area of regulations too, with the Financial Services and Markets Act 2023 coming into effect in the UK, meaning there’s been no shortage of things for the industry to talk about.
So as we move into 2024, there’s much for fintech players large and small to ponder. Here are three of the big issues the C-Suite will be discussing in the boardroom over the next year.
Placing the focus on data engineers
In any tech-focused business, the data engineer is incredibly important, and this fact is likely to come into even sharper focus in 2024. Business leaders should be increasingly attentive to ensuring they have the right people in these roles over the year ahead, and that they have sufficient resources in place to support them.
There are two reasons for this and they both concern the insights that can be gleaned from effective data analysis. Firstly, having access to accurate internal metrics is critical for understanding what decisions the organisation needs to make in order to successfully operate.
Without this fundamental appreciation of what is crucial to the health of the business and how it is measured, C-suite executives will struggle to understand where their problems lie and how much they are impacting the department or overall organisation. If there’s no data to guide them, they may focus on the wrong thing because of a strong opinion of an individual or customer, or – even worse – ignore a key issue that needs immediate attention.
Secondly, data is often at the very heart of the product or service a business provides, so it becomes a key differentiator. If an organisation can present data in different and useful ways to its customers, then it can really add value; this will help position the business as a market leader and trusted partner.
Conversations around AI will move forward
In 2024, we expect to see conversations about Artificial Intelligence (AI) move forward away from all the hype; instead centring on governance and security. AI and machine learning are already being used extensively in fintech and banking for a number of different processes. These include the identification of fraud – including the insidious APP fraud threats we’ve seen coming to the fore in recent years – as well as improving customer support, helping developers to write code more efficiently, and even product innovation.
However, recent headlines around AI, and in particular about the explosion of generative AI content, have brought the issues of misuse and safety into public focus. The recent AI Safety Summit hosted by the government reflects how concerned leaders around the world are about AI. Within financial institutions and fintech organisations we must keep a watching brief to prevent this technology being used to defraud consumers, but also investigate ways in which it can be used to enhance the customer experience.
Overall, though, I believe that we will see a more measured approach to the role of AI in businesses across all sectors in 2024. Rather than making vast numbers of jobs redundant, I foresee AI being used as an assistant for human operatives in many different job functions; helping them to make better decisions, quickly access insights and make sense of large datasets.
Fintech muscling in on the payment space
When it comes to payments, fintech organisations and banks will be continuing their quest to provide greater security and convenience to customers over the coming year. There are a number of aspects to this, including connecting to the right payment networks, offering international services in multiple currencies, and ensuring infrastructure is both scalable and resilient enough to support real-time transactions in high volumes.
As McKinsey has pointed out, payments are becoming “increasingly disconnected from traditional accounts and other fixed repositories of value”. Customers don’t necessarily rely on traditional banks for payment services any more, with fintech organisations increasingly providing these facilities.
And with fintechs becoming more like traditional banks, traditional banks are looking to become more like fintechs. The gap between fintech and banks is always closing as the incumbents look to utilise the latest technologies to offer their customers a more secure and convenient service.
The challenge the banks have is the speed at which they can innovate and take new products to market. This is where, very often, the smaller and more nimble fintech organisations have the advantage. However, we’re seeing increased co-operation between banks and fintechs through partnerships and acquisitions that enable established financial institutions to be more like an agile startup.
Takeaway: Data-driven decisions will lie at the heart of successful strategies in 2024
With the economy predicted to be tough over the first six months of 2024, business leaders within fintech organisations and financial institutions will be under pressure to make the right decisions. While boardroom conversations around key topics like AI and payments will be driven to a certain extent by market forces, it is of paramount importance that the C-suite have access to the right data at the right time to make the right decisions.
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