27 Feb 2024
by Viktoria Ruban, Mykhaylo Hnatyev

Transformation: Top 10 Industry Trends

For decades, the financial industry has operated based on traditional approaches, but today's challenges require new solutions. Payment instruments are becoming integral to our financial life, and companies from different spheres are launching their own financial products.

Fintech companies are actively integrating and collaborating, creating innovative tools for businesses and allowing them to scale quickly. In 2023, fintech continues to drive innovation, empowering small companies, start-ups, and diverse audiences, while reshaping the traditional financial market landscape. Explore the key trends in today's article.

Artificial Intelligence and Machine Learning

Leading companies such as VISA are using AI to analyse geolocation and user accounts, enabling more accurate risk assessment of financial transactions and preventing fraudulent activities. Financial issuers are not left behind either, implementing advanced AI-based authorisation. Intelligent systems analyse transactions and calculate suspicious activities, reducing fraud.

Moreover, strategic systems, also based on AI, analyse trends in fraudulent schemes and develop new methods to detect them.

Buy Now, Pay Later

Buy Now, Pay Later (BNPL) has become one of the most discussed trends in finance and banking today. BNPL's global transaction volume has grown to an impressive $309 billion in 2023. The once exotic service is now mainstream, with major banks and non-financial companies recognising its importance in meeting the demand for convenient financial solutions amid slower income growth. BNPL, popularly known as 'instalments for zoomers', thrives in the digital realm, offering hassle-free transactions without additional financial agreements. Transactions through BNPL may not always impact credit histories, enhancing accessibility. This tool seamlessly integrates into banking apps or payment pages, with success hinging on low to moderate purchase amounts and a seamless digital experience.

Blockchain and Cryptocurrency Evolution

Blockchain technology has rapidly gained popularity and has become firmly entrenched in various fields, including finance, the gaming industry and even the internet. It should be noted that the influence of large corporations on this market remains significant. Despite the decline in blockchain start-ups' M&A deals, this indicates a shift from buying technology to developing their own solutions. To date, companies such as IBM, Oracle, Deloitte, Microsoft, Altoros and Linux Foundation are leading the way in developing enterprise blockchain solutions. 

Decentralised Finance

Decentralised finance (DeFi) is an innovative financial system designed for the digital age. Unlike traditional financial institutions, DeFi gives users control over their assets and access to global financial resources via the internet. This disruptive technology has already attracted billions of dollars in investment. It continues to grow, providing new opportunities for financial innovation and improved accessibility to financial services. DeFi is the future of finance and is changing how we think about the global economy. 

Enhanced Cybersecurity Measures

One of the key areas of focus is the use of biometrics for user authentication. Artificial intelligence and machine learning are being used to recognise unique biometrics, such as fingerprints, face and voice, making the authentication process more accurate and secure.

Leading fintech companies are also actively employing artificial intelligence to analyse user and transaction data. This allows for early detection of suspicious activity and fraudulent transactions, which helps prevent potential security threats.

Digital Payments and Central Bank Digital Currencies 

One significant trend has been the introduction of central bank digital currencies (CBDCs). Government agencies and central banks are developing these digital versions of national currencies to facilitate digital payments and increase financial inclusion. Fintech companies actively work with government agencies to integrate CBDCs into their payment systems and wallets.

In addition, the development of mobile wallets and payment apps makes digital payments accessible to all population segments. Fintech companies are competing to develop intuitive and user-friendly applications that allow you to make purchases, transfer funds and manage your finances using your smartphone. 

Regulatory Technology

This technology development segment focuses on developing innovative solutions that help financial companies comply with regulations and compliance standards.

One of the key areas of RegTech is the automation of monitoring and reporting processes. Financial institutions are actively implementing systems that automatically monitor and analyse financial transactions, identify potential violations and generate reports under regulatory requirements. This reduces the risks of non-compliance and simplifies audit procedures. RegTech includes systems to monitor threats, analyse anomalous activity and prevent security incidents.

Open Banking and APIs 

A key trend in open banking and APIs is expanding third-party developers' financial services, enabling fintechs to enhance solutions and customer experience. APIs improve financial institutions' digital platforms, allowing easy integration of bank accounts and data into various apps for convenient financial management and transfers. With customer consent, open banking and APIs bolster data security and privacy. Additionally, they foster collaboration between banks and fintechs, creating integrated financial ecosystems for a more holistic customer experience

Data Analytics and Predictive Insights

Companies in the fintech sector use data analytics to optimise operations, improve customer experience and identify market trends. This includes analysing transactions, customer preferences, credit risk and many other aspects of financial performance.

Predictive insights gained from data analytics help fintech companies develop personalised financial products and provide more accurate recommendations to customers.

With the help of machine learning and analytics algorithms, fintech companies can quickly identify suspicious activity and prevent fraudulent activities.

Environmental, Social, and Governance Investing

Investors increasingly prioritise environmental, social and  governance (ESG) factors when evaluating companies for long-term sustainability. ESG-conscious investors favour companies emphasising environmental impact reduction, social responsibility and strong governance. Fintech firms are aligning with this trend, offering ESG-focused financial products and platforms. For instance, investment platforms enable clients to invest in portfolios aligned with sustainability and social goals, contributing to a more responsible and sustainable economy.

As we embrace these trends, we must remember that the financial industry's evolution is not just about profits and technologies. It's about empowering individuals, promoting transparency and creating a more responsible and sustainable global economy.

So, whether you're a tech enthusiast, an investor or someone who manages their finances, keep an eye on these trends – they're shaping the future of finance, our financial well-being and the world around us. The financial industry of tomorrow is more than just numbers: it's a force for positive change.

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Andy Thornley

Andy Thornley

Head of Financial Services, techUK

Andy joined techUK in August 2022 as Head of Programme – Financial Services. His role includes leading techUK’s work in building a greater understanding of the 'technological art of the possible' in order to apply it to the reform and evolution of financial systems.

Before joining techUK, Andy worked for a number of other bodies in the financial services sector, including the British Insurance Brokers’ Association, where in addition to owning policy and public affairs, he was also responsible for fostering InsurTech in the sector.

Andy has a degree in Human Biology and holds a Certificate in Insurance (Cert CII) qualification from the Chartered Insurance Institute. Outside of work, Andy is an avid cyclist and races competitively both on the road as well as the velodrome.
[email protected]

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Ella Gago-Brookes

Team Assistant, Markets, techUK

Ella joined techUK in November 2023 as a Markets Team Assistant, supporting the Justice and Emergency Services, Central Government and Financial Services Programmes.  

Before joining the team, she was working at the Magistrates' Courts in legal administration and graduated from the University of Liverpool in 2022.  Ella attained an undergraduate degree in History and Politics, and a master's degree in International Relations and Security Studies, with a particular interest in studying asylum rights and gendered violence.  

In her spare time she enjoys going to the gym, watching true crime documentaries, travelling, and making her best attempts to become a better cook.  

[email protected]

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Viktoria Ruban

Head of Finance Industry, Computools

Mykhaylo Hnatyev

Co-Founder , Computools UK