Trends in Digital Finance in 2024

By Ivo Gueorguiev, co-founder of e-money institution Paynetics

Consumer and business demand for digital financial services has transformed the industry. Traditional products and services are being delivered quicker and better than ever before. This relentless wave of innovation has reshaped finance systems and empowered individuals and enterprises worldwide.

Even though the cost of living crisis and rising inflation have impacted online sales, according to the ONS, the allure of digital payments and services remains as potent as ever. The challenge now is how to continue to offer a convenient and tailored user experience whilst reducing costs and maintaining a high level of safety, security and compliance.

The industry stands at the cusp of yet another transformative year in 2024. Digital finance is poised to ride the waves of new technologies and emerging trends that will continue to transform the future of finance.

Delivering above and beyond ‘going to the bank’

All breaks are off when it comes to mobile payments. The total number of unique contactless mobile payment users will reach one billion for the first time in 2024, according to Juniper Research. Consumers like the convenience, banks deliver services quicker as a result, fintechs power it, and Big Tech invests in it. There are no limiting factors for the mainstream adoption of mobile payments, and 2024 will be another year of significant growth.

Mobile payment technology has made making and managing payments more accessible for consumers. People are increasingly comfortable with using digital wallets. However, the cost of living crisis has caused many consumers to turn back to cash to manage their money. This trend is an opportunity for fintechs to target these clients and offer them better budget control tools – as payments become easier, seamless processes need addressing with new digital propositions.

The next 12 months present an opportunity for fintechs to use data from mobile payments to develop tailored solutions to support consumers. Thanks to an established foundation for mobile payments, we will continue to see a focus on the user experience and delivering above and beyond the traditional experience of simply “going to the bank”.

AI will become more intelligent

2024 will be a big bang for AI and machine learning, and no industry will be untouched. With Klarna announcing the Buy-Now-Pay-Later (BNPL) firm is “going all in on AI”, it will be the year of truly testing the extent of the technology’s sophistication.

The financial services industry can expect to see an increase in exploring different AI and machine learning models. Whether that’s levelling up chatbots, speeding up data analytics or AI-powered product recommendations. Not only that, but businesses will continue to invest in streamlining processes with AI.

As the finance industry pursues AI, it must remember to balance innovation with ethics and data privacy. As with any tech, considered deployment is essential to see the sustainable transformation and ensure fairness, transparency and accountability. That said, AI is set to be a huge focus for 2024, and the effects of tech developments will be felt later in the decade.

Improving inclusion with embedded finance

Embedded finance will play a growing role in enhancing the product and service offerings of non-financial players. The public sector, for example, needs innovative solutions to meet the demands of local communities for financial convenience, simplicity, and inclusion. As a result, we will see more payment integrations for things like prescriptions, receiving benefit payments, managing budgets and more.

Consumers expect the same efficiency and user-friendliness they experience with other online platforms, including apps to manage their finances or shop online. Thanks to the scalability of embedded finance, the public sector can make significant operation efficiencies over the next 12 months.

A fruitful future for digital finance

2024 will further the era of customer freedom in digital payments. Technology innovation is continuing to put customers first rather than products. This creates an exciting market where simplicity, convenience and personalisation are at the heart of business development.

Mobile is making serious movements, and in 2024, this will be no different. Artificial intelligence is poised to revolutionise the financial services industry and rewrite the rulebook governing its operations. Finally, the UK’s non-financial sector is at a critical juncture, where digital capabilities such as embedded finance are emerging as a path to enhanced efficiency, deeper customer insights, and expanded financial inclusion.

All of these trends will change how digital payments are perceived by consumers and businesses alike. It will open doors for financial and non-financial players to make significant headwinds in delivering a best-in-class customer experience.