Sometimes the most transformative technology trends emerge quietly, almost unnoticed, before they redefine our daily lives. Imagine your bank’s credit card department calls to ask whether an unusual purchase was actually your own. It almost appears as if a team of incredibly dedicated bankers was watching over you, yet it’s actually AI-powered pattern recognition driving that call, much like it has been for decades in credit fraud detection. This was fintech in its adolescence, and it’s now maturing rapidly, fueled by Industry 4.0, to reshape financial services and the industries it serves. Two events were pivotal in setting the stage for the fintech industry’s recent evolution. The first was the global financial crisis of 2008, which gave the world pause about traditional banking and a moment to reconsider the alternatives. The second, the covid-19 pandemic, brought online services starkly to prominence. Today, in the aftermath, fintech is making a splash.

Fintech’s current landscape

The recent focus of the fintech industry has been on expanding markets, making user experiences more dynamic, and improving financial inclusivity. Below are highlights of the technology driving the current landscape:

Open banking

In open banking, consenting customers’ bank data is shared to third parties that can offer them customized products and services and connectivity features to wider services. This means customers can link their bank cards with merchant programs, like Apple Wallet, or their banking data with mobile apps, like budgeting app Mint, to more easily manage personal finances. Open banking is made possible by complex backend infrastructure. This brings business to technology firms, like Synctera, from whom open banking companies can buy the infrastructure rather than build it in-house. Open banking apps with advanced ecosystems include fintech superapps such as Revolut and N26.

Neobanks

Neobanks are exclusively digital financial institutions for customers who want fast and simplified services on their mobile phones. Neobanks’ hallmark is an intuitive and user-friendly app experience, usually also the focus of company investments. Players include established banking heavyweights such as Goldman Sachs and JPMorgan, other corporates that have branched into finance, such as Apple, and more recent industry entrants, like Latin America’s Nubank. Given their user focus, neobanks are sometimes seen customizing experiences to appeal to specific sectors of society, for example, millennials, Gen Z, seniors, gig workers, and content creators.

Digital wallets and DeFi

Digital wallets are softwares that store or access user financial information, such as account balances, to enable transactions without physical currency. Digital wallets help increase retail sales on the trail of smartphones, especially among Gen Z. Big names in digital wallets include incumbents like Apple Pay and Google Pay and growing entrants like Rapyd, Paydiant, and Yoyo Wallet. Meanwhile, blockchain-powered decentralized finance (DeFi) makes possible peer-to-peer financial services that cut out traditional intermediaries (TradFi) such as banks. DeFi attracts a large market, demanding more blockchains to support it apart from Ethereum. Prominent DeFi players include EigenLayer, BabylonChain, and Ondo Finance.

Crypto and NFTs

Cryptocurrencies are decentralized, market-issued digital currencies, which are traceable on the blockchain, a permanent, web-hosted public ledger of transactions. Cryptocurrencies and non-fungible tokens (NFTs) are among the innovations that have been reinventing and increasingly democratizing financial services. An NFT is a digital asset represented on the blockchain by a unique, irreproducible token that resists counterfeiting. Despite the jargon, recent history shows that individuals and companies don’t need to be steeped in know-how about the fintech industry to adopt fintech widely. Recall how the global creative community—a demographic that stereotypically would have been the furthest from the blockchain—surprised everyone by their immersion in NFTs. Companies that understand this are pioneering the future of fintech.

The future of the fintech industry: trends to track

Fintech-powered innovations have been sweeping up new audiences through the draw of their flexibility, efficiency, and connectivity features. This is likely to continue as AI and Web 3.0 advance. Here are some future trends to watch out for:

The BNPL boom and ecommerce expansion

Statista coined millennials the “BNPL generation.” BNPL or ‘buy now, pay later’ is an alternative consumer credit system that lets customers defer payment but own the purchases immediately. The BNPL provider can either split a merchant bill into installments or reward the customer for paying upfront through its app, both of which boost sales and are popular among tech-savvy shoppers. Ecommerce, BNPL, and open banking together would soon access and grow with the 2-billion-strong Gen Alpha, the largest generation, and hence the largest global market by age group, to have ever existed. Social research firm McCrindle expects Gen Alpha’s economic power to surpass USD 5 trillion by 2029. This generation is likely to desire and inspire even more novel user experiences than those like tap-to-pay and BNPL rewards that have charmed others.

Fintech product updates

One-click-checkout technology, popularized by Amazon’s Buy Now button, helps online retailers dramatically simplify their checkout process into a quick, hassle-free experience, curbing cart abandonment. For example, fintech startup Bolt recently entered this space with its one-click-checkout button, “Bolt Checkout.” The button integrates a network of merchants and unifies multiple plug-ins including those for payments, fraud detection, tax, and shipping.

The development of AI assistants by BNPLs is a game changer in fintech. For example, Swedish BNPL Klarna rolled out an open-AI-powered virtual assistant for its app. Shoppers can prompt chatbots to help find styles and products, for instance, or compare products and check reviews. Other notable AI-focused fintech product launches include financial coaching chatbots BrightPlan and Pocketnest.

Open finance

In the future, open banking is expected to evolve into open finance, where customer financial information beyond banking data would be shared to third parties, including insurance, wealth, and investment data. Customers are likely to see a wider range of customized financial products and services through their open banking apps.

Increased fintech adoption

The industries being transformed by fintech industry trends, or at the very least influenced by them, are ever-expanding, both within financial services—e.g. regtech: regulatory compliance technology for financial services—and outside it. For example, agri-fintech assimilates fintech capabilities into farming. Bushel’s Bushel Wallet is a new digital payment portal aimed at the US agriculture sector that runs mostly on paper checks. Non-fintech industries joining the fintech bandwagon would not only prompt partnerships but also raise demand for tech players that build fintech infrastructure.

Fintech and the climate

The efficiencies provided by fintech, on the one hand, reduce carbon emissions. On the other hand, cryptocurrency mining incurs an exorbitant power demand, according to sustainability indexes that track the blockchain network. As industries fall in line with the global energy transition, it is worth watching companies like climate and conservation fintech players, such as Cultivo, that straddle this gap. (Read our latest Next-Gen Climate and Energy report here). Also noteworthy are fintech partnerships with climate-focused businesses as climate investments peak.

Fintech’s growth drivers and enablers

Fintech's rapid evolution is driven by a convergence of cutting-edge technologies, strategic collaborations, and forward-thinking regulatory frameworks. These forces are reshaping the financial landscape, enabling innovation and creating new growth opportunities across the industry. Below, we explore the critical factors fueling fintech’s momentum, starting with the transformative role of technology adoption.

Technology adoption

Quantum computing is likely to supercharge fintech: in 2023, D-Wave Quantum, the world’s first commercial supplier of quantum computers, partnered with European payment app Satispay to build a quantum hybrid application anticipated to improve the app’s customer rewards programmes by 50%. Meanwhile, developments in quantum computing that topple current cybersecurity and encryption frameworks call for new quantum-ready fintech. AI and GenAI adoption should drive further growth in this sector. Fintech players are seen increasingly bringing in AI integrations to charge up their insights and analytics.

Deals and partnerships

Mergers and acquisitions (M&As) strengthen the fintech industry, helping financial players assimilate tech players’ capabilities including big data, artificial intelligence, and machine learning, and their digital infrastructure such as APIs. A surge in M&As in fact drove a funding recovery in Q2 2024, led by neobanks, raising more than USD 6.2 billion during the quarter, even though tighter regulations had caused investors to cautiously hold back during the previous quarter. Meanwhile, partnerships also help players hone their product portfolios and even expand globally.

Regulatory updates

The World Bank recognizes an enabling policy environment to be one of the several enablers of fintech activity geographically. The UK, the US, and the EU have been leading the way in developing fintech regulations and recommendations. These regulatory models would be adapted by other governments as fintech’s global influence expands.

Some of the most recent regulatory focus areas in the US include fintech-related consumer credit and digital currency. For example, US regulators overseeing consumer credit and deposit insurance recently introduced new rules that encourage transparency and consumer protection in fintech. BNPL firms in particular are facing stricter regulations, as it’s increasingly highlighted that they require consumer protection similar to credit cards and other conventional forms of borrowing.

In the sphere of digital currency, legislation by the US House of Representatives as of 2024, now prevents the Fed from issuing Central Bank digital currency (CBDC) without authorization. Meanwhile, also in 2024, the US SEC approved Bitcoin exchange-traded funds (ETFs), paving the way for other crypto-based financial instruments.

Watch this sector: Stay with Speeda Edge

Fintech is transforming every corner of financial services, from banking and payments to wealth management and consumer credit. It’s a space where legacy institutions and innovative startups alike are driving disruption through M&As, partnerships, and cutting-edge technology. To stay ahead in this dynamic sector, explore our Top Fintech Companies Transforming Financial Services report and check our other fintech resources on the blog.

And for deeper insights, learn more about how SPEEDA Edge can help your business stay ahead of fintech trends with a personalized demo .