Amid rising inflation and interest rates, and the growing number of cyber threats, businesses are constantly evolving in order to be resilient. This month, The Fintech Times is highlighting how businesses are showing this resilience against a myriad of factors – some within, and some beyond, their control.

To conclude our monthly theme surrounding business resilience, The Fintech Times turns its attention to the future. Today, we ask fintech experts what operational trends they are anticipating in 2024 and beyond.

Nurturing workforces

Thomas Dolan is the president and co-founder of fintech application provider 28Stone. Here, he explains what he expects to come to the forefront in the near future: “Fintechs and all companies are going to be under cost pressure, particularly heading into 2024 and beyond.

“A drive to greater automation will be prevalent as markets continue to modernise and seek efficiencies, as well as accuracy for complex regulatory reporting. There will also be pressure to adopt new and popular technologies such as generative AI and to continually explore the latest ideas, even if they may not necessarily be a perfect fit.

“To overcome these challenges will require careful thought and a solid strategic approach. It’s going to be important to first truly understand the real needs of customers and consumers and to make sure that companies are staffed and trained appropriately. AI and other technologies can go a long way to keeping costs down and staff motivated but they should be applied with the right mindset. More important than even technology is the right workforce, in the right place and doing the right job.

“Staff movements will continue to be an ongoing challenge and companies need to ensure that they are putting in place the right processes and nurturing their workforce to keep operationally resilient and flexible to meet the next challenges.”

Investing “in the health, safety and wellbeing of our people”

Ben Dorks is the CEO of Ideagen, the software solution provider for regulated industries. Dorks explains that he also expects investment in AI to take precedence: “It has been a hugely turbulent year for the financial sector and we don’t see that slowing.“We recently spoke to more than 500 CEOs working in regulated industries and some common themes emerged: a growing battle for talent, concerns around productivity and how emerging technologies and ESG standards would impact operations.

“For the financial sector, investment priorities appear to be in risk management and the use of AI. Inadequate governance, management practices and audit failures are often the cause of failures. Having the appropriate systems and software in place to ensure compliance will be important in 2024.

“How ISSB standards are adopted into non-financial disclosures will also be one to watch. The ambition was to ensure ESG reporting had a level of standardisation globally, but the door has been left open for geographic variations and this will need to be managed.

“And we can expect the call for AI regulation to gather pace. Fintechs can get ahead of the curve by putting processes in place to ensure their AI policy is scrutinised through a lens of both ethics and bias.

“The fact that more than half the CEOs we spoke to said mental health absence was a risk to their resilience and nearly a quarter said staff shortages, cannot be ignored. We need to consider if the two are linked and invest in the health, safety and wellbeing of our people.”

AI, ML and embedded finance advancement

Reinis Simanovskis, co-founder and CTO of white-labelled lending service provider Finfra, commented: “As fintechs venture into 2024 and beyond, several operational trends are anticipated to shape the industry’s landscape.

“Artificial Intelligence and Machine Learning will drive automation and personalised customer experiences, revolutionising support through AI-driven chatbots and virtual assistants. Embracing open banking and API integration will foster collaboration between banks and Fintechs, providing seamless data sharing and expanded service offerings.

‌”Embedded finance will definitely continue to change the face of the industry so that we could see further integration and evolution of such financial services in non-financial sectors. Businesses outside the financial sector will increasingly integrate financial services into their existing customer experiences.

“For example, retail platforms will provide lending services at checkout, and working capital for their merchants, or social media platforms might offer in-app purchases and peer-to-peer payments.

‌”Navigating these trends will be crucial for Fintech companies to thrive and remain competitive in the ever-evolving financial technology landscape.”

“The need for safer, more reliable banking alternatives”

Uldis Teraudkalns, CEO of payment provider Nexpay, said: “As we look ahead to 2024 and beyond, a significant trend is the need for safer, more reliable banking alternatives.

“With recurring failures and escalating costs, conventional banks’ ability to serve digital businesses efficiently is being questioned. Therefore, fintechs are pivoting towards a stripped-back model that prioritises transactional operations, eliminating the risk-laden frills that conventional banks offer.

“This model, dubbed as ‘transactional banking,’ is anticipated to proliferate in the near future. It allows fintechs to offer their clients cost-effective and secure services, focusing on fundamental banking needs: receiving and making payments. Such fintechs avoid risky activities and offer peace of mind to their customers, knowing their deposits are securely in a central bank.

“Moreover, as regulation continues to evolve, fintechs will need to streamline their operations to offset escalating compliance costs, including Anti-Money Laundering (AML), Know Your Customer (KYC), and counter-terrorism financing precautions. This necessitates the development of innovative technology and lean processes to deliver services efficiently and cost-effectively.

“These trends reflect an industry-wide shift towards safety, cost-effectiveness, and simplicity, enabling fintechs to offer value-driven, risk-averse services tailored for the digital economy.”