The financial technology (fintech) industry has been on a remarkable trajectory, disrupting traditional banking and financial services with innovative solutions. As we enter the latter half of 2024, the fintech landscape continues to evolve rapidly. Changing consumer demands, regulatory shifts and technological advancements drive this transformation.

In this article, we’ll explore five prominent fintech trends set to shape the industry in the coming months.  

Top five fintech trends – Everything you need to know 

Now is an opportune time to assess the current state of the fintech space and anticipate developments for the rest of the year. Stay informed about these top fintech trends to understand how they may impact you. 

1. AI is transforming banking and financial services 

AI, machine learning and large language models (LLMs) will continue transforming banking, financial services and more. In late 2024 and into 2025, we expect this fintech trend to expand beyond creating internal efficiencies. These use cases will start providing more customer-facing services. For example:  

• Financial service firms will continue to experiment with products such as AI-enabled chat agents. These innovations offer users real-time support and insights.  
• Banks and financial institutions will leverage AI to offer personalized financial solutions and streamline loan application processes. AI and machine learning (ML) algorithms will analyze data to assess creditworthiness, identify trends and optimize loan terms.  
• Embedded payment solutions will use AI to personalize user experiences while enhancing security through advanced fraud detection. 
• AI and robotic process engineering (RPA) will allow financial services firms and banks to streamline internal processes. This will make operations more efficient and allow employees to focus more on value-add activities. 

One potential downside is that customer-facing applications require significantly more effort than internal use cases. This is partly because they’re subject to far more regulatory scrutiny. Fintechs will, therefore, likely proceed cautiously in this area.  

2. M&A experiences sustained growth  

Analysts anticipate a growth in M&A activity in late 2024. This increase in fintech M&A activity should be particularly notable in the payments space. As new fintechs emerge, consolidation becomes a natural progression. 

According to PitchBook, “The large number of VC-backed fintech companies that were funded over the last seven years has created thousands of fintechs that need an exit. Most of them will not reach IPO scale and will thus need to be sold.”  

Additionally, M&A growth is likely in the financial services infrastructure and wealth tech segments. Recent deals in these areas already enable fintech organizations to expand their product offerings and enter new markets. 

3. ESG propels new fintech opportunities  

The upcoming climate-related disclosure mandate from the U.S. Securities and Exchange Commission is a pivotal development in business regulatory requirements. Fintech companies must demonstrate awareness of their emissions and actions in climate risk mitigation. Leaders will need to have systems in place — led by or in collaboration with the finance team — to publicly report ESG data.   

These climate change requirements support the emergence of new fintechs focused on ESG-related activities. The activities include carbon tracking and accounting, supply chain tracking, lending for alternative energy and climate change projects, property and energy management, etc. 

ESG-focused fintechs have a unique opportunity to achieve rapid growth and attract investment capital to support those efforts.  

4. Cybersecurity remains a significant threat  

The fintech revolution has dramatically reshaped the financial world. A report released by Boston Consulting Group and QED Investors projects fintech revenues to grow sixfold to $1.5 trillion by 2030. However, this rapid growth has also created more opportunities for cybercriminals to exploit vulnerabilities and steal sensitive financial information.   

PacketLabs reports that financial institutions rank as the second most impacted sector by cybercrime. Meanwhile, the sophistication of AI-based and synthetic identity fraud tools will continue to improve. This will compel fintechs to constantly enhance their cybersecurity measures.  

5. Escalating compliance stakes   

Regulators are intensifying their scrutiny of bank-fintech partnerships — and this pressure will likely escalate further. Fintechs face the challenge of striking a delicate balance between risk management and expansion. Further, they must overcome compliance challenges, including cost constraints, workflow inefficiencies and a need for greater automation.  

How BPM can help  

We work with a broad range of financial service clients. The Firm offers a deep understanding of the key processes, challenges, regulatory compliance and governance. We also address the myriad of complex accounting and reporting issues prevalent in the industry.  

Additionally, we adopt a multidisciplinary approach through its wide range of advisory services. We customize services to meet the diverse needs of our financial services clients. We deliver a spectrum of consulting solutions for businesses operating within the financial services sector. Service areas include technical accounting and audit readiness, bookkeeping, equity plan management, systems implementation and HR consulting.   

If you need help navigating these or any other fintech trends and challenges, contact us.