By Ivo Gueorguiev, co-founder at Paynetics
2023 wasn’t a walk in the park for financial services. Economic crises like inflation and recessions tested business resilience, reshaped priorities, and sparked unexpected innovation.
Now, as the curtain rises for 2024, let’s delve into the pivotal themes shaping the payment landscape in the months ahead. From embedded finance weaving seamlessly into our lives to digital wallets aiding our every financial need. We’re not just talking about trends. We’re talking about a paradigm shift. The payment journey in 2024 isn’t just about shiny new tools but redefining how we interact with money itself.
Embedded Finance: An Unsung Hero for SMEs
Embedded finance, the integration of financial services into non-financial platforms, has become increasingly popular. According to an IBM report, 70% of banking executives say embedded finance is either core or complementary to their business strategy. This highlights the significant acknowledgement among banking executives that embedded finance plays pivotally in advancing their overall business strategy, emphasising its growing importance in the financial industry landscape.
While it has quietly revolutionised financial access for individuals, embedded finance is set to take on a new role in 2024 – bridging the financial services gap for small and medium-sized enterprises (SMEs). Tailored intuitive solutions, including expense tracking and automated invoicing, empower SMEs to leverage embedded finance for enhanced competitiveness, addressing challenges like access to capital.
Additionally, embedded finance provides SMEs access to sophisticated financial products previously limited to large corporations. Integration with non-financial platforms enables SMEs to utilise tools like insurance products and advanced risk management solutions. Democratising financial services levels the playing field for smaller businesses by fostering innovation and growth. Embedded finance helps SMEs streamline operations, cut costs, and enhance decision-making through data analytics. This integration marks a significant step forward to empower SMEs to thrive in competitive markets.
Empowering the public
The real spark of hope lies not in sleek apps to draw in tech-savvy consumers but in the public sector’s potential to become a champion for financial inclusion. By embracing embedded finance, governments can extend the digital payments revolution beyond credit cards and fintech startups, reaching those who need it most: the underserved and the underbanked.
Imagine social cards that handle benefits distribution and budgeting or refugee support programs with built-in mobile payments. Embedded finance can weave financial services into government programs to simplify payment processes for the most vulnerable. This isn’t just about efficiency. It’s about taking a legacy system lacking innovation and unlocking the opportunity to improve financial literacy for a more inclusive society.
Mobile Payments: Adding Value Beyond Transactions
In the coming year, we expect mobile payment providers to be gearing up to level up their offerings with value-added services such as money management, lending, savings, and insurance. Neobanks and fintechs will lead the charge with features that streamline banking tasks, providing a more convenient and user-friendly experience than traditional banks.
Simultaneously, traditional banks will invest in digital transformation, releasing sleek mobile apps covering a range of products to catch up with their competition. The problem with consumer-centric design is that it’s replicated easily. That is what most traditional players have done, slowly eliminating the competitive advantage of the neobanks.
Neobanks need to find different value propositions to retain the clients. As neobanks expand into areas like credit and deposits, offering better consumer terms and inclusivity means the competition will continue investing in product innovation whilst strictly adhering to the seamless and frictionless user experience.
Customer Freedom in the Digital Payments Era
The fusion of mobile and AI will redefine the financial services industry, thanks to what AI has achieved so far. Machine learning algorithms leverage vast data from financial institutions for insightful analysis and shifting customer interactions. Financial services can use this customer knowledge to deliver tailored advice that aligns with the evolving needs of today’s tech-savvy consumers.
Payment innovation is shifting the focus from products to customers, creating a market where simplicity, convenience, and personalisation take centre stage in product development. Customers are at the forefront, demanding more from their financial experiences, and the industry is responding with a newfound commitment to meet these evolving needs. This means a surge in demands for seamless, secure transactions, personalised financial insights, and user-friendly interfaces.
Anticipate a transformative shift towards more intuitive and tailored digital payment solutions, such as user-friendly mobile wallets and AI-driven fraud detection systems. The industry is ushering in a new era of user-centric innovation, where customer satisfaction and ease of use are not just priorities but guiding principles shaping every development.
How SaaS providers can grow using embedded finance
Payment services are a natural addition to several SaaS payers in accounting, tax, and expense management, to name a few. Integrating payments into the main proposition of embedded finance creates a catalyst for change. It will empower non-financial businesses to streamline financial processes, enhance customer experiences, and make informed, data-driven decisions.
Beyond operational improvements, the expected ripple effects of strategically incorporating embedded finance will shape a consumer-centric business landscape. Simplicity, convenience, and personalisation are poised to become the focal points, signifying a significant shift in the industry.
Innovation is on the Way
In conclusion, 2024 promises to be a thrilling chapter in the ongoing payments evolution. As we navigate these trends, one thing is clear – the future of financial services is shaped by innovation, inclusivity, and a relentless commitment to putting customers first.
Get ready for a year where the only constant is change, and the possibilities are boundless.
