Tuesday, June 25, 2024

    How A2A, mobile wallets, generative AI and faster payments are all set to reshape the payments sector in 2024

    There has been a lot of change in the world of payments and fintech over the past few years – much of it driven by PSD2 and Open Banking – but experts are predicting more to come in 2024, writes Elizabeth Streeter.

    Consumers are looking for more efficient and easy ways to pay, while merchants, retailers, content providers and others across the telemedia sector all have a vested interest in making payments as flexible and simple as possible. After all, the easier it is to spend, the more they will buy.

    So, what does 2024 have in store for the fintech sector and what does this mean for telemedia? Juniper Research has released what trends it believes to be happening in the coming year …

    • Account to account (A2A) payments will hit the mainstream, allowing consumers to move money directly between accounts without the need for payment instruments such as cards. A2A payments will become a more common challenger to card use in ecommerce and for funding wallets. This development will cut out the middleman and allow for more efficient payment methods.
    • Central Bank Digital Currency (CBDC) cases will emerge in practise. Digital currencies issued by a central bank as opposed to a commercial bank will enable CBCDs to be more of a part of the developing banking world.
    • Generative AI in banking can transform spending Insights. AI will enable banks to offer more personalised experiences to clients and can help to reduce risk by more intelligently analysing credit scores among other relevant data. It can also detect fraud, minimising risks to banks and allows them to make more informed decisions when approving loans.
    • Digital Identity adoption through digital wallet integration will allow for many market developments, with particular improvements in linking digital wallets and digital identity. Having the potential to boost efficiency, minimise fraud and establish more secure connections.
    • AML (Anti Money Laundering) tools will be increasing used to help prevent financial crimes and in assisting companies in meeting legal requirements. AML tools will be increasingly leveraging AI as alternative payments are complicating compliance. In 2024 AML tools will be rapidly evolving to ensure compliance is maintained, as alternative payments are becoming more widespread and popular.
    • Acquiring more sustainable outcomes to problems is also going to have a major impact on fintech developments in 2024. As Fintechs strive for greener solutions, top of the agenda will be ESG (Environmental, Social, Government) compliance. Fintech is supporting new initiatives from service providers and is working towards addressing their ESG requirements. This should help to positively impact the environment.
    • Value-added services will flourish, whereas the US Federal Bank-backed faster payments inititative FedNow may fail to match the instant payments successes seen in Europe, it will lead to important innovations and development in banking. It won’t, however, be receiving the same amount of growth as seen in systems such as India’s UPI (the Unified Payments Interface) and Pix, the instant payment method in Brazil).
    • Mobile financial services are going to accelerate the transition to more advanced banking services, reducing reliance on P2P (person-to-person) transactions and making money transactions more efficient.
    • Checkout Innovation is on the rise, causing biometric in-store payments to surge. Catalysed by developments in the market, these biometrics have the potential to revolutionize the consumers daily checkout experience.
    • B2B BNPL (business-to-business, buy now, pay later) are to provide ‘critical’ financing for SMEs (Small-Medium Enterprises) BNPL scheme. It has real potential to fill a lingering gap in the market, and this should ensure the continuance of SMEs having access to their much-needed financial aid.

    Commenting on the predictions, Juniper Research’s VP of Fintech Market Research, Nick Maynard, says: “The fintech and payments market is undergoing fundamental changes, with new payment methods and different business models threatening to completely uproot existing operations. Stakeholders must fundamentally reassess the viability of their offerings, and build ambitious roadmaps for future developments, or they will be left behind by more agile competitors.”

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