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Biometrics in store? CBDC breakthroughs? GenAI to automate compliance? In a new report, Juniper looks ahead to the big changes coming to finance in 2024…
In tech, sometimes the simplest innovations make a big difference.
Consider the payment card that ‘speaks’. This is a recently-launched card that, when paired with the owner’s smartphone app, vocalises the transaction details every time a payment is made. The innovation is transforming the lives of visually impaired people, helping them to understand their financial lives better – and avoid fraud.
Of course, the speaking card is just one example of a much wider revolution in financial services that is being made possible by the coming together of a range of background factors – contactless transactions, mobile apps, Bluetooth technology, hands-free mobile POS terminals, biometrics and more.
In every country, these new technologies are nudging consumers to change their financial habits – to migrate away from cash and in-person payments towards digital and frequently remote transactions. Meanwhile fintech innovators are accelerating this switch by designing products that make the payment experience speedy and friction free.
This financial shake-up has been in motion for more than two decades. Every year brings a new wave of disruption. So what lies ahead in 2024? In its Top 10 Fintech and Payment Trends for 2024 report, Juniper Research identifies a number of potential game-changers.
Let’s take a closer look…
Juniper’s key fintech trends for 2024
#1. Gen AI will transform customer relationships
Without doubt, 2023 was the year of generative AI. Every industry obsessed over how it might change, improve or disrupt. That said, in fintech, there were few specific use cases. Juniper thinks this is set to change, and that in 2024 gen AI “will crystalise into specific benefits.”
The reason is simple: data. Banking has a deep well of info about transaction behaviour, account balances, spend categories. It can apply AI to this data to improve the customer relationship. Driving this impulse will be the threat from digital-only brands, which have grabbed market share thanks to innovation in user experience. AI offers the ‘legacy’ banks a chance to personalise their services and claw back some competitive advantage.
#2. AI tools will tame the challenge of AML compliance
While AI has the potential to ‘mass personalise’ customer banking experiences, another profound impact might come in a more ‘dry’ area: regulation.
Compliance is an enormous challenge for banks. It’s complex and time-consuming. Take anti-money laundering. There are a wide range of regulations in place to defend against it, some national, many multinational. So-called ‘regtech’ can help to manage the workload by automating many processes. The use of AI in compliance promises to improve the tech considerably.
#3. A European digital wallet emerges
Digital identity really matters in an increasingly online world. Citizens and consumers need to be able to authenticate themselves when they are not physically present. Yet the world’s identity infrastructure (passports, ID cards, driving licences) has been created for an in-person world.
Now, a variety of schemes are in place to address this challenge. For example, in India, there is the Aadhar, which gives every citizen an immutable digital ID. But according to Juniper, 2024 will be a breakthrough year for the area thanks to another launch: the European Union’s Digital Identity Wallet. It will be based on the Electronic Identification and Trust Services (eIDAS) regulation.
The EU ID Wallet will let users store identity data, credentials and attributes linked to their identity, as well as regulating cross-border electronic identifications. Expressed more plainly, it will let people access their own ID and share it as needed with third parties – reliably and securely.
While launch timelines are unclear, Juniper believes member countries will start the process of becoming compliant with the regulation this year.
#4. Rising demand for sustainable fintech
Environmental and social concerns matter to all bank stakeholders – from customers to employees to investors. In this context, we are seeing more initiatives from technology vendors aimed at addressing ESG (Environmental, Social and Governance) issues.
In 2024 Juniper expects to multiple ESG initiatives to come together in a joined-up fashion, with banks using their activities to position themselves as the ‘green’ or ‘sustainable’ choice.
Some of these efforts will be consumer focused. A good example is the POS device with audio-based confirmation (see intro). Others will explore the supply chain. This might include more focus on reducing levels of virgin plastic in bank cards.
#5. Biometrics to go in-store
Biometrics have gone from exotic to mainstream in the last 10 years. Virtually every phone user is now familiar with fingerprint and/or facial recognition. In 2024, we could see this trend migrate into the in-store payments arena.
According to Juniper, a big reason why is Amazon One. These experimental retail locations use palm vein scanning for customer recognition – and the system is being rolled out to all Amazon-owned Whole Foods stores.
Biometrics make sense at physical retail. They enhance security, cut journey times and reduce checkout friction to enable the ‘just walk out’ experience. On the flipside are concerns about privacy, surveillance and cost. This is where Amazon comes in. It has the will and the cash to experiment – a process from which all other retailers can benefit.
Another biometrics breakthrough the biometrically-enhanced card. The extra layer of authentication makes payment highly secure, and also allows the user to make a high value payment with a frictionless UX. The first product to include a fingerprint sensor was launched in 2021.
#6. CBDC to go from theory to practice
Central banks have been wary of digital currency since Bitcoin burst onto the scene in 2009. Now, however, they are trying to co-opt it by creating CBDC (Central Bank Digital Currency).
In simple terms, the CBDC promises a new kind of payment instrument – a form of ‘digital cash’ that combines the advanced features of cards with the instant and universal benefits of coins, but is issued and controlled by national governments. Today, there are 150 CBDC trials taking place worldwide.
Analysts believe there should be specific use cases that demonstrate the benefits of CBDCs. So far, however, these have been lacking. Juniper thinks 2024 will change this. It cites how, in 2023, China showed the way by using digital yuan to complete a cross-border payment for crude oil. Juniper Research thinks this is a taste of the future. It forecasts that by 2030, there will be $213 billion in spend via CBDCs.
#7. ‘Account to account’ to challenge card payments
In most global markets consumers use cards to make online payments. There are few alternatives. But a promising option is the direct ‘account to account’ transfer enabled by open banking. This channel is well-established in India, Brazil and China, and Juniper argues that it could gather momentum in Europe and the US too this year.
#8. FedNow will not transform real-time payments in the US – yet
In July 2023, the US Federal Reserve launched its FedNow instant payments service.
Will it transform the payments backbone as real-time payments systems have in other markets?
Not immediately, says Juniper. Instead, it predicts a lot of experimentation in value-added services (VAS) that can be built on top of FedNow.
#9. Mobile Money to expand from payments to banking services
In developing markets, mobile money services like M-Pesa have transformed lives.
To date, they have been all about making payments speedy, instant and reliable. But in 2024, their focus will shift from P2P transactions to more advanced, banking-like services.
#10. BNPL to move into the B2B space
BNPL (Buy Now Pay Later) has enjoyed a huge boom in consumer online commerce.
Can it migrate into the business to business space?
Juniper thinks so. It believes 2024 will see BNPL firms start to provide flexible credit options to smaller businesses.
Every year brings new innovation in finance. 2024 will be no different, with genAI and the on-going digitisation of banking driving the creation of new products, services and experiences. Juniper’s report provides much food for thought. But there will no doubt be unexpected changes too.
Let’s meet again and review them in 2025…