Many researchers within the banking and fintech industries exhibit remarkable expertise in tracking trends within the sector. This article discusses the six major fintech trends for the banking sector.
Fremont, CA: Numerous researchers in the banking and fintech sectors demonstrate exceptional skill in monitoring industry trends. While these trends evolve annually, there are times when they appear to remain unchanged. A retrospective glance at recent years reveals that certain anticipated developments have sometimes diminished in significance (notably, blockchain). Conversely, some trends emerge unexpectedly, as exemplified by generative artificial intelligence.
As we enter the latter part of 2024, it is anticipated that numerous fintech writers will begin to compile analyses of the trends observed in 2024, along with forecasts for 2025.
Key Trends Your Bank Should Be Considering Currently
The following trends are currently being deliberated in the boardrooms of banks and credit unions, analyzed by consultants, and receiving significant attention in the digital media of the banking and fintech sectors:
Artificial Intelligence:
Artificial intelligence is often described as transforming the banking sector. However, the truth is that AI has been utilized for a considerable period, and its application is expanding. Generative AI remains in the early stages within the banking industry, and it has not yet "altered everything."
Embedded Finance:
This, in conjunction with the subsequent point, represents a lasting trend expected to persist for the foreseeable future. Integrated financial experiences present a significant challenge and a potential opportunity for financial institutions.
Open Banking:
The increasing consumer demand drives the growth of application programming interfaces (APIs) for sharing financial data among institutions, regardless of open banking regulations in a given market.
Biometric Authentication:
As cyber threats continue to escalate, financial institutions are progressively implementing biometric technologies such as fingerprint and facial recognition to improve security and user authentication. Additionally, customers are increasingly expected to use biometrics, a trend that is only sometimes prevalent.
Alternative Credit Scoring:
Several years before, integrating alternative data into credit scoring was on the horizon. Although initial attempts were unsuccessful, often involving questionable methods such as evaluating social media connections, more robust alternatives are now becoming prevalent. Financial institutions, involving banks and credit unions, are increasingly utilizing alternative data sources like cash flow and utility payment histories to enhance the accuracy of credit evaluations, thus broadening financial access for underbanked communities.
Green Fintech:
There is an increasing emphasis on sustainable investment strategies and environmentally conscious financial solutions that integrate environmental, social, and governance (ESG) considerations into their services.
