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UK fintech industry predictions for 2024

Fintech 2024
Image credit: Joyseulay / Shutterstock

It has been a challenging 2023 for fintech. Funding is down and a series of headwinds in the form of soaring inflation and stagnant global markets have made it a testing environment.

This year has, in many ways, lived up to the muted expectations that came at the end of 2022. But there is a sense of optimism from fintech that early signs of recovery will lead to brighter fortunes in 2024.

UKTN spoke to figures in the UK fintech community to get a sense of what the industry expects to see in 2024.

The year of AI implementation 

No technology dominated people’s attention this year more than AI, but according to Kroo Bank CEO Andrea de Gottardo, the true “year of AI”, at least for fintech, is just on the horizon.

“2024 will be the year of AI, hopefully in a good sense,” de Gottardo told UKTN. This year there was a lot of buzz around AI as a general technology, with each sector beginning to examine how it might support their specific needs.

Fintech is no exception, and while early exploration is already underway, for de Gottardo, 2024 will be the year – for better and for worse – that implementation of AI across the sector takes off.

“It’s all about how we implement those technologies that will make the difference between doing something amazing for the customers, or really screwing things up or anywhere in between.”

The Kroo boss added that transparency from financial institutions to their customers will be vital to ensuring AI is used responsibly in finance.

Pro-consumer fintechs will thrive

According to Hugh Coughlan, CTO, data and applied intelligence at Fujitsu UK, new legislation affecting the financial sector will be imperative in defining the industry next year.

The Consumer Duty Act in particular will “take centre stage” claimed Coughlan. Consumer Duty, implemented in the second half of 2023, is a bid from financial regulators to raise the standards of behaviour from companies towards customers.

Coughlan said that next year will be a real test for fintechs in their ability to adhere to the new standards to gain an advantage.

“Those that fail to adequately protect customers will risk falling behind more compliant competitors,” he said.

“Financial institutions must prioritise customer well-being and ensure fair treatment for all, clear communication and ethical practices.”

For Coughlan, a “customer-centric” approach that prioritises establishing trust through “responsible conduct” will be all the more necessary given the greater scrutiny.

“As regulators tighten their grip, institutions that uphold consumer rights will thrive.”

Acquisition slowdown

One of the most notable trends of 2023 and 2022 was scaling back growth strategies in favour of ensuring sustainable cash flow.

Many are wondering if the M&A floodgates will open again in 2024 as companies seek discounted deals. But for Alexis Rog, CEO of B2B fintech startup Sikoia, that may be a bit optimistic.

“In 2024, don’t expect a surge of startup acquisitions,” Rog said. “The perception that there is an opportunity to acquire talent and disruptive tech for struggling startups at attractive valuations won’t hold true.”

Rog said the “costs involved” will still be “too high for acquirers”, which will outweigh the potential benefits.

“Established players won’t easily absorb startups due to integration challenges, competing priorities, and a risk-off stance.”

Fintechs will embrace biometric

Security is paramount in fintech. Cybercriminals are always seeking ways to break into an increasingly mobile-first financial world.

For many fintechs and digital banks, biometric security such as fingerprints or facial recognition are an important safeguard. Nigel Green, CEO of deVere Group, predicts 2024 will bring greater adoption of such methods.

“Fintech firms will increasingly invest in robust security measures, with a particular emphasis on biometric authentication methods such as fingerprint and facial recognition,” said Green.

“Biometrics provide an additional layer of security, enhancing user authentication and protecting sensitive financial information. By incorporating advanced biometric technologies, fintech companies aim to bolster the trust of consumers and mitigate the risks associated with identity theft and cyberattacks, ensuring the integrity of digital financial transactions.”

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