It’s a time of reflection and anticipation at The Fintech Times throughout December, as we look back at developments and trends over the last 12 months and forward to the year ahead.
We’re delighted to share the thoughts of fintech CEOs and industry leaders from across the globe to 2023’s key takeaways and what we should expect to be top of the agenda in 2024.
From AI-driven personalisation in banking to the challenges posed by deepfake technology, Pete Trainor, strategy partner at digital optimisation company MMT, Oliver Blower, CEO of global regtech VoxSmart, Alan Primitivo, VP of compliance and product operations at payments risk fintech G2 Web Services, and Miroslava Betinova, head of fintech at banking-as-a-service fintech Griffin, collectively paint a picture of what lies ahead.
“Fintech isn’t dead. It just grew up”
The lessons learnt in 2023 should be the driving force for 2024, says Griffin’s Betinova.
“We have seen a downturn in VC funding, a slow down in rocketing valuations and a lot of great talent having to find a new home in 2023,” she says. “In spite of all of this, we continue to see many exciting launches that embed financial services into every aspect of life – they just happen to come with fewer laptop stickers and swag. Definitely looks like it is time to take a step back and re-examine all our business models.
“Innovation continues to drive added value – as long as it is built around compliance. Not all heroes wear capes, but the fraud prevention teams really deserve them. This year, we’ve seen the regulator pause and stop many fintechs due to a number of compliance woes which can be traced back to poor onboarding, KYC and due diligence.
“Embedding a superior onboarding tool in your fintech offering will always help to fight fraud and money laundering at its roots, without giving it a chance to sprout beyond.
“It’s fascinating how many industry experts (VCs inclusive) can’t tell the difference between electronic money institution (EMI) and bank licenses. There is still a lot of confusion around the different propositions these licenses have the ability to drive. This is also a cause of some of the regulatory incidences we saw in the fintech space in 2023.
Blower at VoxSmart outlines the urgent need for a paradigm shift in risk management, underscoring the importance of responsible communication and innovation.
“In the face of unprecedented fines levied against investment banks for the misuse of messaging apps, attempting to ban an entire generation’s communication behaviour next year is short-sighted and misguided. The $549million penalties underscore the urgency for a paradigm shift in risk management.
Rather than suppressing evolving communication channels, banks must embrace adaptability. It’s time to recalibrate risk strategies to align with modern trading practices, fostering a culture of responsible communication and innovation instead of futile attempts to curb the inevitable evolution of technology-driven collaboration.
However, it is not just the WhatsApp issues that needs to be tackled in the New Year. It has been beyond frustrating that every man, woman and their dog have been fixated with talking about AI in the abstract in 2023. If you are a senior executive within an investment bank being bombarded with all this AI literature in January, where on earth do you start?
“Until the industry as a whole starts having a grown up, pragmatic and practical debate on specific use cases for AI in 2024, then we will continue to be left spellbound by grandiose and vacuous statements about how the technology is going to revolutionise capital markets.”
Automation through AI
Trainor at MMT believes the financial industry is poised for transformative changes driven by technological advancements in 2024.
He says: “AI and machine learning are set to take centre stage, influencing various facets of financial services. Personalisation in banking will be elevated through AI-driven engines, tailoring experiences, and providing customised recommendations based on individual profiles. Fraud detection systems will become more sophisticated, identifying complex models, fostering fair lending practices.
“Regulatory compliance will witness automation through AI, reducing costs and minimising errors in tasks like anti-money laundering monitoring. In risk management, advanced AI algorithms and predictive analytics could enhance assessments in financial markets, improving investment decisions, while chatbots and virtual assistants will handle complex customer inquiries more efficiently.
“The evolution of Robo-Advisors 2.0 could introduce sophisticated investment strategies, while integrating AI with blockchain technology promises intelligent contract management and enhanced efficiency in insurance underwriting processes. The adoption of blockchain and cryptocurrencies is expected to expand, with potential benefits for cross-border transactions and transparency. In turn, causing cybersecurity to gain even more importance, incorporating advanced measures like biometric authentication.”
Future of payments
Based on G2’s data analysis and understanding of trends, here’s where it sees payments risk headed in 2024, Primitivo outlines how AI is being used to create convincing deepfakes, posing serious compliance challenges.
“Bad actors immediately seized upon generative AI’s natural language processing capabilities to make their fraud more convincing, hiding spelling errors and other tell-tale signs of a risky merchant site.
“In 2024, we expect bad actors to accelerate their efforts with greater sophistication, using AI to create convincing celebrity deepfakes for product endorsements. AI is able to ingest widely available images and voice samples of popular celebrities to create realistic-looking – but totally fake – content where a celebrity appears to endorse an illegal or violative product.
“The major card brands are on high alert as they recognize the potential scope and severity of the problem. Merchants who entice violative transactions through AI deepfakes put payment providers at serious risk of fines and brand damage. It will require new levels of vigilance and skill to successfully combat this problem in 2024.”