Juniper Research Releases its Top 10 Fintech & Payments Trends for 2024
Juniper Research Releases its Top 10 Fintech & Payments Trends for 2024, Amidst Unprecedented Technological Shifts
In mid-November Juniper Research unveiled the 10 trends that are set to radically impact the fintech and payments landscape in 2024, included within its latest whitepaper.
The whitepaper found that the fintech market is undergoing a rapid shift, with the rise of new technologies, such as Open Finance, generative AI and A2A (Account-to-Account) payments having a major impact on business models. This is combined with unprecedented competition to be ‘top of wallet’ for customers, making the market more competitive and uncertain than ever.
Top 10 Fintech & Payments Trends 2024
The trends are as follows:
A2A Payments to Challenge Cards in eCommerce and for Funding Wallets
CBDC Use Cases to Emerge in Practice
Generative AI in Banking to Transform Spending Insights
Digital Identity Adoption to Be Catalysed by Digital Wallet Integration
AML Tools to Better Leverage AI as Alternative Payments Complicate Compliance
Sustainable Fintech Solutions to Emerge, as ESG Compliance Tops Agenda
FedNow to Fail to Match Instant Payments Success, but VAS to Flourish
Mobile Financial Services to Accelerate Transition to Banking Tech Services
Biometric In-store Payments to Surge, as Checkout Innovation Rises
B2B BNPL to Provide Critical Financing for SMEs
Juniper Research's VP of Fintech Market Research, Nick Maynard, commented: “The fintech and payments market is undergoing fundamental changes, with new payment methods and different business models threatening to completely uproot existing operations. Stakeholders must fundamentally reassess the viability of their offerings, and build ambitious roadmaps for future developments, or they will be left behind by more agile competitors.”
1. A2A Payments to Challenge Cards in eCommerce and for Funding Wallets
There are a number of reasons to predict that A2A payments will emerge as a major trend in 2024:
The Rise of Open Banking
Instant Payment Scheme Growth
Resistance to the Role of Card Networks
2. CBDC Use Cases to Emerge in Practice
2024 will be the year where this strong growth begins to be seen in the market, as it begins to articulate the use cases that will drive CBDCs forwards. These use cases will primarily be:
Cross-border Payments
B2B Payments
Financial Inclusion
3. Generative AI in Banking to Transform Spending Insights
Given the scale of generative AI’s capabilities, it is important to understand why there is so much potential, specifically in the banking sector.
Banking has a huge amount of data available to it. As banking has a wealth of data, including transaction behaviour, account balances, spend categories etc, this opens up the possibility for generative AI to create useful content that can help to improve the customer relationship.
Banking has a major challenge: competition. Traditional banks face stiff challenges from digital-only banking brands, such N26, Monzo and Revolut. One thing that these digital-only brands tend to do much better than traditional banks is to provide a more compelling user experience, with more insights available to the end user as to their spending habits and the like.
As such, any solution which can enable fast improvements to be made to the banking user experience will be highly advantageous to banking brands. This also taps into a major challenge that banks have faced over many years – offering effective personalisation.
4. Digital Identity Adoption to Be Catalysed by Digital Wallet Integration
The move towards a wallet-based solution is already being seen in some ways. Apple’s integration of digital driving licences within its Wallet app has already been seen in the US, and we expect other digital wallet services to follow a similar trajectory.
Within emerging markets, we expect mobile money apps to become an important way of storing identity credentials, as developing economies follow India’s example and develop national identity systems in order to catalyse greater economic growth.
It is expected that digital identity vendors will focus on creating digital wallet-based solutions that are still flexible enough to meet national requirements as they emerge, leading to a significant acceleration in digital identity roll-outs in 2024 and beyond.
5. AML Tools to Better Leverage AI as Alternative Payments Complicate Compliance
AML vendors will focus on developing more advanced AIpowered systems in 2024, in order to keep pace with the rate of change inthe payments mix. The growth will be central to regtech hitting its growth potential over the next few years.
6. Sustainable Fintech Solutions to Emerge, as ESG Compliance Tops Agenda
We are seeing more initiatives from technology vendors aimed at addressing these ESG (Environmental, Social and Governance) issues. Also we expect in 2024 to hear much more widely about sustainability initiatives within fintech, with technology providers seeking to
develop solutions that can be deployed at scale. The growth of Open Banking will support this; enabling greater analysis of data for elements such as sustainability.
7. FedNow to Fail to Match Instant Payments Success, but VAS to Flourish
What we do expect to see in 2024 is a lot of exploration of value-added services (VAS) that can be built on top of FedNow. By taking a market-led approach, the Federal Reserve has essentially created a toolbox for financial institutions to then create their own business models on top of this.
8. Mobile Financial Services to Accelerate Transition to Banking Tech Services
There is an important opportunity for MFS providers, given the weakness of traditional banks within many emerging markets. Since the MFS providers have wide agent networks, they have a scale and reach that cannot be matched via bank branch networks, giving them the ability to provide services that are local in nature.
As such, we believe that in 2024, we will see many MFS providers shifting their focus to more advanced services, leveraging the data they hold as MNOs (Mobile Network Operators) to offer more tailored services, using data analytics to make up for a lack of traditional credit scoring coverage.
This will see MFS providers announcing partnerships with banks, leveraging their capabilities to offer additional services, rather than directly competing with them, allowing MFS to enter a whole new stage of growth.
9. Biometric In-store Payments to Surge, as Checkout Innovation Rises
Biometrics make a huge amount of sense for in-store payments for a number of reasons. They can enhance the security level of the payment, reducing issues around fraud. Biometrics can also provide an excellent user experience – by reducing the user journey to merely picking up an item and scanning their palm, this removes several stages of the traditional checkout process, significantly lowering friction.
Indeed, this reduced friction approach to the checkout process is a necessary step for ‘just walk out’ checkout technologies, which are of great interest to retailers as they can reduce resourcing costs and increase efficiency.
However, biometric in-store payments do have challenges to overcome. The largest challenge is around privacy concerns. While biometrics are convenient for retailers, users can see these as a form of surveillance, potentially restricting user enthusiasm. The other major barrier is cost – deploying biometrics systems in every store for a large retailer will be a
major financial commitment, and is unlikely to deliver a return on investment in the short-to-medium term.
10. B2B BNPL to Provide Critical Financing for SMEs
The SME finance market is underdeveloped, leaving open a significant market opportunity. In 2024, we increasingly expect BNPL (Buy Now Pay Later) to step into this gap and provide flexible credit options to smaller businesses.
In 2024, we expect to see a significant expansion of B2B BNPL offerings targeting the SME market in particular, and a significant uptake of such solutions in the market, as SMEs look to better manage their own cashflow.
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