Fintech Trends of 2023 and Predictions for 2024: Insights from Industry Leaders

As we approach the end of 2023, it’s a time of both reflection and anticipation in the fintech industry. The Fintech Times has taken the opportunity to look back at the developments and trends of the past year while also looking forward to what lies ahead in 2024. We’ve reached out to a community of fintech CEOs and industry leaders to gather their thoughts on the major trends of 2023 and their predictions for the coming year.

One of the standout trends of 2023 has been the rise of generative artificial intelligence (AI). OpenAI’s introduction of ChatGPT in November 2022 marked a significant milestone in AI development. Since then, ChatGPT has become the world’s most popular chatbot, boasting over 180 million users. According to research conducted by the Gillmore Centre for Financial Technology, 93% of fintech professionals believe that generative AI will continue to revolutionize the fintech and financial services sector. This sentiment was echoed in a survey of 250 senior decision makers at UK financial institutions and banks, revealing that 91% foresee Gen AI playing a pivotal role in driving financial democratization, fostering accessibility and inclusivity.

The adoption of GenAI tools has been widespread across various sectors, including customer operations, software development, sales, marketing, and research and development. McKinsey Global Institute estimates that these efforts could contribute significantly to the global economy, potentially adding $2.6 trillion to $4.4 trillion annually.

Another significant development in 2023 was the implementation of the Financial Conduct Authority’s Consumer Duty in July. This marked a substantial shift in regulatory expectations, emphasizing a commitment to consumer protection. With Consumer Duty now in effect, banks are not only prioritizing customer trust-building but also preparing to report on critical areas.

KPMG’s quarterly Global Analysis of FinTech Funding Reports has provided valuable insights into the fintech funding landscape. The first half of 2023 brought its share of challenges, including soaring inflation, rising interest rates, geopolitical unrest, sluggish valuations, and a lack of exits. Despite these hurdles, fintech funding in the Americas surged from $28.9 billion in H2 2022 to a robust $36 billion in H1 2023. Logistics and supply chain-focused fintech reached unprecedented funding levels, amassing $8.2 billion. Additionally, ESG-focused fintech secured $1.7 billion, surpassing the figures for the entire year of 2022.

Looking ahead, challenges will continue to persist, but the fintech industry remains resilient. While overall fintech activity may remain subdued, sectors such as payments, insurtech, and wealthtech are poised for sustained and potentially accelerated funding. AI will continue to be in the spotlight as a driving force behind innovation in the financial services sector.

2023 has been a transformative year for fintech, with the widespread adoption of generative AI, the implementation of Consumer Duty, and notable funding trends. As we enter 2024, the industry faces both challenges and opportunities, with a strong focus on AI-driven advancements and a commitment to serving consumers’ needs.