PSD3, Banking-as-a-Service and fewer passwords -- fintech predictions for 2024

In recent years, the financial sector has seen some of the biggest changes in the way technology is used. New regulations and disruptive technologies like blockchain, along with the rise of open banking, have seen traditional players scrambling to keep up with more agile newcomers.

So what does the fintech sector have in store in 2024? Here are the views of some industry experts.

Digital assets will be the centerpiece of fintech moving forward according to Alex Balazs, chief technology officer at Intuit, "Digital assets is a rapidly growing category in both scale and importance, and will be front and center for financial identity and fintech at large moving forward. The expanded use case is reflected today by the state of California's approach to tracking automobile titles and property deeds as digital assets -- the digital representations of physical assets -- and how the technology is also being used to show endorsements such as a driver's license, or credentials like a diploma. Moving forward, we expect significant, relevant work in the area of digital assets to continue, enabling broad use cases that prove things in an acceptable way without revealing underlying facts, such as age verification without revealing your birth date, to expedited loan approvals."

Richi Hartmann, director of community and office of the CTO at Grafana Labs expects to see things become more data-driven. "As companies continue to optimize their IT budgets for impact and efficiency, we'll see a more data-driven approach in the world of FinOps. As with other aspects of operations, data collection, organization, and analysis are key. Leveraging the power of modern observability tooling will give early adopters a key edge in managing and optimizing their spend. As an added benefit, this will also enable companies to correlate cost and profit centers more closely, and with the real-time data from the actual production systems, building a holistic understanding of what makes their company and business work. Successful businesses will be able to understand why and where they spend money in the cloud and on-prem, allowing for deliberate and well-informed choices and trade-offs, avoiding the trap of saving too much in areas that generate revenue."

Financial services companies will have to prepare next year for the enactment of Payment Services Directive 3 (PSD3), a new set of rules governing the EU payment markets expected to come into force by the end of 2024. Marius Galdikas, CEO at ConnectPay says, "To prepare for the changes PSD3 will bring, it will be necessary for fintech companies to thoroughly review and adjust their processes and compliance protocols. In the upcoming year, we will see enhanced efforts within the industry to adapt to the ever-evolving regulatory landscape, to better ensure the security of payment processes and customer data."

Galdikas also expects a shift to a Banking-as-a-Service model, "One approach to dealing with this shift is for BaaS providers to embed compliance into their offerings. Alongside traditional services, like accounts, payments, and cards, BaaS providers could also handle onboarding, authentication, monitoring. By offering embedded compliance, or compliance-as-a-service. BaaS providers can reduce the complexity of maintaining compliance, thereby allowing fintechs to focus on their core business, which is one of the principles that gave rise to BaaS in the first place."

Ryan Brown, regional VP, Trial Landscape at H1, believes fintech and healthcare will move closer together:

FinTech will merge with HealthTech to provide more robust patient experiences and aid in treatment plans. This combination will help ensure that healthcare services are accessible and tailored to individual patient needs. We’re also seeing technology enable more patient visibility into the personal data that is being shared with their healthcare providers, boosting patient confidence. Solutions will also emerge that will make it easier to navigate available clinical trials -- something like a 'Zillow.com for trials' that puts the patient experience at the center. Finally, we’ll see initiatives that will allow patients to monetize their personal health data and collaborate with health systems. All of these endeavors will help bridge the trust divide between patients and healthcare organizations.

Finally, there'll be a continuing move away from passwords to secure financial assets says head of passwordless at 1Password Anna Pobletts, "This past year, tech giants like TikTok, Google, Amazon, and Uber, among others, drove a substantial uptick in passkey adoption, laying the groundwork for billions of people to explore the security and convenience of passkeys, and for many other sectors to follow suit in the coming years. 2024 will be the year that more highly-regulated services embrace passkey technology -- including fintech and banking, particularly among consumer apps. Historically, these industries have been slow to embrace new technologies, but adopting passwordless authentication will give them with a unique competitive advantage -- there's the proven security of public key cryptography upon which passkeys are built on, and for the end user, the passkey sign-in experience will be one that’s simple and familiar."

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