While 2024 news cycles focused a lot on gen ai, fintech most certainly is going to be one area to look at. We cover there some of the major areas to look at.

Transforming traditional banking

A lot of banks are struggling to meet the challenges of the modern world where younger generation prefers to simply bank from home and is unafraid of using new products like Buy-Now-Pay-Later (BNPL).

The modern banking apps seem dated for most people compared to how rest of the world has changed. Various companies have innovated to create wide array of payment services and even Google and Apple have ventured in payments domain with renewed focus. Generative AI would bring even more challenges for the slow and conservative traditional banks.

Banks having realized the weakness have now focused on open banking. In open banking, banks like to create APIs and expose them to their strategic partners. This means while bank provides all the standard banking services, the necessary actions may happen on user surfaces owned by other companies.

Some example of this is Plaid where people can connect their bank accounts and access all information as an API .

Finance embedding is another areas banks are focusing on using this approach. Very likely we will see Google and Apple provide Fintech wrappers around existing banks and credit cards.

Payment security

We are going to see a lot of changes in payments security domain. 2FA is a well known innovation but now that users have a lot of personal devices. But now companies are moving to create more innovative methods.

One of the approaches is using Passkeys. A passkey is a symmetric encryption key that is created on your device and stays on your device, and the company gets a copy too. The payments platform can challenge the user to prove that they have this passkey, and the user can achieve this by encrypting a provided block of text. This removes the need to deliver text messages as OTP or for the user to enter a password every single time.

We will also see more cross-device authentication. For example, when you make a transaction on your laptop, you might be asked to unlock your phone to prove that you have it with you.

Chances are sooner or later these sort of authentication mechanisms would be part of spec.

New type of lending

Chances are we will see more different types of debts than traditional credit cards. We have already seen BNPL and we know that younger generation is much more enthusiastic about using such innovative and different methods of financing their purchases.

Aven is a company that is providing home equity backed (HELOC) credit card. Various BNPL providers are likely to provide specialized credit cards that turn any payment into a interest free monthly installment payment.

Other than this we are likely to see a rise of P2P money lending platforms as well where individuals can lend small amounts to other individuals or business for short term needs.

Traditionally this was seen as useful method only in poor countries but might also work in high trust developed and rich countries.

Extended Reality

Web3, Metaverse and many other new ideas are emerging that talk about a reality that exists totally in the virtual world. However this virtual world might also have its financial needs and new financial services might be needed in this space.

It is unlikely this field will be materializing in 2025 but we will see some growth in this space and we will get a clearer idea of this field in coming years.