Contact us
Banking and Fintech 10 Banking and Fintech Software Development Trends in 2024: What to Focus On

10 Banking and Fintech Software Development Trends in 2024: What to Focus On

Updated Apr 16, 2024

14 mins read

Despite the dismal projections at the beginning of the pandemic, the financial sector didn’t hit the new version of the 2007-2008 crisis. Thanks to governmental measures and fintech innovations, the worst seems to be behind.

But what does 2024 hold for us?

Well, in many aspects, the leading fintech trends of the previous year will remain in place. Fintech software development companies will continue to invest in mobile banking, contactless payments, artificial intelligence, and other tech trends. The key change of 2024 is that the adoption of fintech services and the popularity of innovations will rise. The fintech industry reaches the point when customers expect maximum automation and personalization.

In this article, you’ll learn what trends will shape the fintech market in 2024.
But before that, let’s uncover what fintech is and its main use cases.

What is Fintech? Key Areas And Applications

The word ‘fintech’ is used to describe the adoption of technology in the financial, insurance, investment, and banking sectors. Fintech solutions like apps, self-service portals, or online banking platforms substitute traditional banking and face-to-face communication. Instead of going to a bank branch, people can open an application and complete all the actions online.

Besides banking accessibility, fintech innovations make financial services more secure. They provide advanced data encryption opportunities and verification (e.g., fingerprint login). They also enable organizations to collect big data for measuring market trends, evaluating risks, researching the target audience, and more.

So, basically, each time someone bridges technology and finances, it’s fintech.

Overview of the Current Fintech Market

The role of fintech innovations keeps increasing. As of January 2024, Statista reports that the Americas – encompassing North America, South America, Central America, and the Caribbean – stood out as the global leader in fintech presence. The region boasted around 13,100 fintech companies, marking an increase of nearly 1,500 from the previous year. In comparison, the EMEA region (Europe, the Middle East, and Africa) housed 10,969 fintechs, while the Asia Pacific region hosted 5,886. Notably, in 2023, the United States led globally in the number of fintech unicorns, with approximately five times more such companies than the United Kingdom, which held the second position.

Number of fintech startups globally
Number of fintech startups globally (Source: Statista)

BondMonzoN26GoCardless, are just a few of the leading fintech startups that disclosed considerable funding in the last couple of years.

As the number of fintech banks and companies grows, the demand for e-banking also increases. According to Business Insider, this year, it is expected that there will be 196.8 million digital banking users in the US, making up 75.4% of the population. The steady increase in usage allows us to predict that the number of users will also gradually rise in the next few years.

 

Share of US population using digital banking

Digital banking usage statistics in USA
Share of US population using digital banking, (Source: Statista)

Fintech includes things like online banking, digital payments, and cryptocurrency, all blending finance with technology. In the past five years, there’s been a big increase in fintech companies, especially in the Americas. At the same time, more and more people worldwide are using fintech services, like digital payments, which are expected to hit over 3.5 billion users by 2024. But even though there are more fintech companies and users, investment in the sector has slowed down in recent years, with 2023 seeing the fewest investments since 2017.

Based on the number of investors, the most popular categories of US startups are payments and settlements, capital markets, data analytics, accounting and tax, and wealth management.

Top fintech startup categories in the US by the number of bank investors

Top fintech startup categories in the US by the number of bank investors
Top fintech startup categories, (Source: FinancesOnline)

Digital payments are also the largest segment of the fintech market by value. In the Digital Payments market, the number of users is expected to amount to 4,805.00m users by 2028.

Transaction value

(Source: Statista)

These are the dominating trends in finance and banking markets that dictate what types of fintech solutions will be popular tomorrow. They set the direction of work for software vendors and hint what technology can meet the needs of consumers best. Keep reading for a more detailed overview of banking technology trends and solutions.

10 Latest Trends in Banking Technology and Fintech in 2024

Most of these financial technology trends are not limited to fintech. Intuitive mobile applications, artificial intelligence, advanced security measures, robo advisors are shaping the landscape of other industries. But in the fintech sector, they have a unique impact. Let’s check the role of emerging trends in the banking sector below.

#1. Accelerating the transition to mobile banking

64% of mobile banking users research the mobile capabilities of a bank before deciding whether to open an account. 61% are ready to switch banks if unsatisfied with the offered mobile banking experience.

The quality and usability of fintech apps will continue to matter in 2024. This means digital and physical banks must launch fintech apps to serve their customers remotely.

It’s important to ensure that fintech apps include the functionality expected by users. According to a recent survey conducted by Business Insider, users believe that the most valuable features are the ability to put a temporary hold on a card and inform a financial institution about their travel plans. The ability to file a card transaction dispute and log in with a fingerprint is also crucial.

Mobile Banking Features by demand
Mobile Banking Features, (Source: Business Insider)

Therefore, launching an app this year, don’t forget to study your target audience and meet their emerging needs. Otherwise, people will choose a more convenient application and go with another bank.

#1. Accelerating the transition to mobile banking

64% of mobile banking users research the mobile capabilities of a bank before deciding whether to open an account. 61% are ready to switch banks if unsatisfied with the offered mobile banking experience.

The quality and usability of fintech apps will continue to matter in 2024. This means digital and physical banks must launch fintech apps to serve their customers remotely.

It’s important to ensure that fintech apps include the functionality expected by users. According to a recent survey conducted by Business Insider, users believe that the most valuable features are the ability to put a temporary hold on a card and inform a financial institution about their travel plans. The ability to file a card transaction dispute and log in with a fingerprint is also crucial.

Mobile Banking Features by demand
Mobile Banking Features, (Source: Business Insider)

Therefore, launching an app this year, don’t forget to study your target audience and meet their emerging needs. Otherwise, people will choose a more convenient application and go with another bank.

#2. More digital capabilities at branches

Even though the number of mobile fintech users grows, surprisingly enough, satisfaction with retail online banking platforms declines. Customers crave the quality in-branch experience and personalized help that fintech apps hardly ensure. That’s why to retain and engage customers in 2024, banking institutions plan to add more digital capabilities at branches. According to Deloitte’s 2024 banking and capital market outlook, 48% of banks are going to implement live interactions with bank employees at ATMs, and 33% will add AR/VR experiences.

Such trends show that physical branches will have an important place in banking technology. Yet, they will be highly digitalized and require complex software solutions. This increases the need for embedded fintech software development and makes it one of the banking technology trends of this year.

#3. Robo advisors in investment banking

Investment banking is all about offering the right investment options to the right people. Artificial intelligence, predictive analytics, and robotic process automation (RPA) are already doing that.

What started as a fintech innovation led by small fintech firms has turned into a major trend. Justwealth Financial Inc., Saxo Bank, Deutsche Bank, and many other institutions have adopted robotic investment banking technology. In 2021, the assets under management in the robo-advisor sector will grow by 19.5%, reaching $937,109 million.

Robo advisory enables banks to provide a broader range of services with minimum investment. Robotic software is a cheap alternative to traditional advisors. Therefore, such solutions will only gain popularity.

#4. Biometrics in fintech apps

Fingerprint verification and facial recognition are the two primary ways to utilize biometric data in banking. With the launch of iPhone 5 and iPhone X supporting TouchID fingerprint and FACE ID, biometric verification became widely accessible. In 2023, biometrics constituted the most preferred security authentication method to sign-in to online accounts, apps, and smart devices.

This allows fintech banks and software vendors to use biometrics data for advanced verification and security. Such information is difficult to forge and provides customers with ultimate control over their finances and personal information.

Even though there are multiple ways to leverage biometric identification in banking, fingerprint data will be preferred in the following years. It has high accuracy and the cheapest cost compared to other approaches.

Banking biometrics
Banking biometrics, (Source: Thales)

#5. Cryptocurrency surge

Anyone who monitors Bitcoin rates, most likely, wishes they’d bought some several months ago. As the leading cryptocurrency hits $52,000 and gains fans, most fintech companies think about the ways to adopt it. In February 2021, Mastercard announced that they have started working with Wirex and Bitpay to launch crypto cards. Customers can transact using their cryptocurrency balance as easily as with regular money.

That the market behemoths like Mastercard acknowledge cryptocurrency means that fintech companies will also need to adopt it. Therefore, a software vendor that develops a fintech solution in 2024 should incorporate crypto transactions. Although it’s not mandatory now, in the nearest future, cryptocurrency support can become a must-have.

#6. AI in banking

Using artificial intelligence in fintech isn’t limited to customer communications. AI also benefits the processes happening in the back and middle offices, such as risk assessment, anti-fraud, and credit underwriting.

Сost-effectiveness inspires fintech banks and financial organizations to seek AI-powered solutions. Such software optimizes internal processes, improves customer service, and reduces the load on employees. Companies can either reduce the staff or use their human resources more efficiently.

That’s why fintech vendors will continue to focus on artificial intelligence in most of their products. This steady trend is unlikely to change soon.

#7. Generative AI in banking

Capgemini predicts that within three years, using Generative AI could lead to a 9% decrease in costs and a remarkable 9% boost in sales. Just think about the impact this could have on your bank’s performance.

Morgan Stanley has introduced a clever chatbot powered by OpenAI to support its financial advisors. After testing it with 300 advisors, the bank plans to implement it widely. This chatbot is designed to assist Morgan Stanley’s 16,000 advisors by providing access to the bank’s extensive research and data resources. Think of it as a super-smart assistant that uses advanced technology to swiftly offer accurate answers based on the bank’s research, thereby reducing errors. The bank also ensures the accuracy of responses by having humans verify them. Ultimately, this chatbot aims to help advisors deliver top-notch service to their clients.

#5. Cryptocurrency surge

Anyone who monitors Bitcoin rates, most likely, wishes they’d bought some several months ago. As the leading cryptocurrency hits $52,000 and gains fans, most fintech companies think about the ways to adopt it. In February 2021, Mastercard announced that they have started working with Wirex and Bitpay to launch crypto cards. Customers can transact using their cryptocurrency balance as easily as with regular money.That the market behemoths like Mastercard acknowledge cryptocurrency means that fintech companies will also need to adopt it. Therefore, a software vendor that develops a fintech solution in 2024 should incorporate crypto transactions. Although it’s not mandatory now, in the nearest future, cryptocurrency support can become a must-have.

#6. AI in banking

Using artificial intelligence in fintech isn’t limited to customer communications. AI also benefits the processes happening in the back and middle offices, such as risk assessment, anti-fraud, and credit underwriting.

Сost-effectiveness inspires fintech banks and financial organizations to seek AI-powered solutions. Such software optimizes internal processes, improves customer service, and reduces the load on employees. Companies can either reduce the staff or use their human resources more efficiently.

That’s why fintech vendors will continue to focus on artificial intelligence in most of their products. This steady trend is unlikely to change soon.

#7. Generative AI in banking

Capgemini predicts that within three years, using Generative AI could lead to a 9% decrease in costs and a remarkable 9% boost in sales. Just think about the impact this could have on your bank’s performance.

Morgan Stanley has introduced a clever chatbot powered by OpenAI to support its financial advisors. After testing it with 300 advisors, the bank plans to implement it widely. This chatbot is designed to assist Morgan Stanley’s 16,000 advisors by providing access to the bank’s extensive research and data resources. Think of it as a super-smart assistant that uses advanced technology to swiftly offer accurate answers based on the bank’s research, thereby reducing errors. The bank also ensures the accuracy of responses by having humans verify them. Ultimately, this chatbot aims to help advisors deliver top-notch service to their clients.

#8. Banking-as-a-Service (BaaS)

BaaS implies that fintech startups can connect to a bank’s system through APIs. An established bank allows fintechs to launch new services on top of its existing infrastructure.

Everything happens in three steps:

  1. A fintech startup pays a fee to access a BaaS platform.
  2. A financial institution that provides BaaS services opens its API to the startup.
  3. The startup uses the API to build new fintech apps.

It’s a win-win case. Whereas old-school banks upgrade their legacy services, fintechs can introduce their products without purchasing an infrastructure. This speeds up time-to-market and simplifies regulatory compliance.

Banking-as-service (BaaS) and embedded finance workflow
Banking-as-service (BaaS) and embedded finance, (Source)

Hence, if you are a software vendor looking for innovative fintech solutions, consider the BaaS model. Established banks (e.g., Starling Bank, BBVA) and BaaS-focused fintechs (e.g., Solaris Bank, Paypal) readily offer such an opportunity.

 

#9. Blockchain fintech

Blockchain technology is based on a distributed database accessible to multiple users. Each can add a new record but cannot change older data blocks. This gives fintech companies ultimate data transparency and security. Blockchain also improves trade accuracy and helps to manage risks.

Today, the blockchain market grows exponentially. From $3 billion in 2020, it is expected to reach $39.7 billion by 2025. Since banks and financial organizations switch to this technology for better security, fintech providers also leverage blockchain.

#10. Regulatory changes

Regulators’ agendas always shape fintech industry trends. Each time a new regulatory requirement appears, software developers must ensure that their products comply with it.

In 2020, fintech startups enjoyed a pause in drastic regulatory changes. The pandemic brought so much uncertainty that governments took any changes very slowly. This year, when the situation has largely stabilized, we can expect regulatory updates, which may cause challenges to fintech companies. For instance, fintechs that work in the EU are likely to see more activity regarding prudential reform. The current prudential framework is outdated and requires changes.

The regulations related to crypto-assets will also be highlighted. Crypto asset providers will need to meet a regulatory standard similar to that of investment firms. Open finance is another field likely to witness regulatory changes in 2024.

Therefore, fintech vendors and financial services should keep a finger on the pulse of regulatory changes. It is a timeless software development trend.

Final Thoughts

In 2024, fintech insurance, banking, investment, and financing will face many innovations. These market segments will be disrupted by RPA, artificial intelligence, biometric identity verification, blockchain, and other advancements.

To integrate these technologies in e-banking software development, you will need a strong tech background and a reliable vendor by your side.

Therefore, we offer you to use Leobit’s software development services. By hiring our remote software engineering team, you get instant access to qualified developers ready to jump-start your project. They are well-versed in fintech software development and have completed various projects for customers worldwide. A B2B payment solution and online investment portal are just a few products from our portfolio. Contact us, and we’ll gladly consult you deeper on the topic.