Financial software provider Finastra has shared its executive insights expert predictions for the fintech and banking technology landscape in 2024.
Each executive offers a unique perspective from their own business segment, focusing on key areas across lending, payments, treasury services and trade finance.
Their combined insights provide a comprehensive outlook to readers, highlighting emerging trends, challenges and opportunities that are shaping the fintech landscape in the year ahead.
Leveraging AI for personalised lending
Source: Freepik
According to Isabel Fernandez, EVP of Lending at Finastra, mid-sized and community banks are advancing beyond larger banks due to their agility and less cumbersome legacy systems.
They are focusing on digital transformation, developing customised credit solutions, and improving risk management. Notably, this trend is evident in emerging markets like Indonesia, Vietnam, Thailand, and the Philippines.
The region is also seeing an increased focus on Environmental, Social, and Governance (ESG) criteria, with growing regulatory demands for green financing. This shift necessitates enhanced ESG data collection and reporting capabilities among lenders.
Moreover, the use of Artificial Intelligence (AI) is revolutionising lending by facilitating access to credit and reducing costs. AI is being employed to assess financial health, create personalised loan offers, and improve customer education and financial literacy programmes.
Fernandez added,
“For me, the biggest tech trend of the moment, and one that will only continue to accelerate in 2024, is Gen AI. At Finastra, we’re very optimistic about its significant benefits for our customers and our people. It is an exciting time for the industry, and proof points will emerge as we test and learn with the technology.”
Rise of instant payments in 2024
Source: Freepik
Barry Rodrigues, EVP of Payments at Finastra highlights that instant payments are set to be a major focus in 2024, building on the momentum of initiatives like the US FedNow Service and the European Commission’s move towards instant euro payments. This shift caters to the growing demand for real-time payment services among consumers and businesses.
The adoption of the ISO 20022 standard is crucial in this transition, providing banks with structured, rich data sets that enhance automation and customer service personalisation. Despite the 2025 deadline, many banks are adopting this standard early for competitive benefits.
However, the rise in instant payment technologies also increases the risk of financial fraud, necessitating advanced security measures like machine learning and artificial intelligence for efficient fraud detection. Banks are also looking into generative AI for creating more robust fraud detection models.
In response to these developments, banks are modernising their payment systems, with cloud solutions and Payments as a Service (PaaS) models becoming essential for handling increased payment volumes and reducing overall service costs.
Balancing risk and innovation
Source: Freepik
Wissam Khoury, EVP, Treasury & Capital Markets at Finastra describes 2023 as a turbulent year for the financial sector, a trend that’s likely to continue into 2024 with global economic growth slowing down.
Banks are focusing on balancing risk and innovation, particularly in Asset Liability Management (ALM), to adapt to these challenges.
They are increasingly investing in new technologies, such as cloud-based solutions, artificial intelligence, and machine learning, to manage risks, optimise balance sheets, and enhance services to communities and small-medium enterprises.
He said,
“The good news is that banks don’t have to follow a big-bang approach. With microservices and composable banking, institutions can enhance agility, scalability, innovation and speed of deployment by breaking down applications and services into smaller parts. As a result, banks can react quickly to economic events and adjust risk accordingly, while ensuring their long-term growth.”
Digitalising trade finance
Source: Freepik
Iain MacLennan, Head of Trade and Supply Chain Finance at Finastra discusses the acceleration of digital transformation in trade finance, despite challenges such as complex supply chains and reliance on paper processes.
Key to this shift is the adoption of laws like the Model Law on Electronic Transferable Records (MLETR), which aim to digitise traditional paper documentation, thereby reducing costs and risks while enabling real-time transactions.
The transition to complete digitalisation in trade finance is a gradual process, with a target set by the Digital Container Shipping Association for fully electronic bills of lading by 2030.
Banks are moving towards platforms that integrate superior products with robust security measures to enhance digital customer experiences.
In 2024, the focus will be on incorporating fintech solutions, including artificial intelligence and machine learning, for efficient document processing and compliance.
Featured image: (From left) Iain MacLennan, Head of Trade and Supply Chain Finance, Wissam Khoury, EVP, Treasury & Capital Markets, Barry Rodrigues, EVP of Payments and Isabel Fernandez, EVP of Lending. Edited from Freepik
