Get All Access for $5/mo

4 Major Themes Will Shape the Future of Fintech: BCG Report Even though, the funding went down by 70 per cent and valuations fell from 20x to 4x on average, it still holds huge potential in the coming years.

By Paromita Gupta

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Freepik

In recent years, the fintech industry has witnessed various ups and downs; however, the sector holds a bright future in the global market. From 2021 to 2023, global fintech revenues grew at a compound annual growth rate (CAGR) of 14 per cent, and 21 per cent when crypto- and China-exposed fintechs are excluded. Even though, the funding went down by 70 per cent and valuations fell from 20x to 4x on average, it still holds huge potential in the coming years.

Four Themes Which Will Shape the Future of Fintech

Embedded Finance

Embedded finance will grow into a USD 320 billion market by 2030—integrating financial services directly into everyday tools and platforms. About half of this market will come from small and medium-sized businesses (USD150 billion), while the consumer segment, which includes payments, insurance, and lending, will account for USD 120 billion. The enterprise segment will generate USD 50 billion. The already established fintech companies will benefit the most in the short term, but larger traditional banks will gradually capture a bigger share.

Connected Commerce

Connected commerce will change the face of the banking sector by creating new revenue streams, increasing customer loyalty and it will also enable banks to offer a marketing channel to their SMB and enterprise customers. Banks will use detailed customer data to show personalized ads, and merchants will pay banks based on the sales or traffic these ads generate. As traditional revenue sources come under pressure, connected commerce offers a promising new business model for banks.

Open Banking

Open banking system which allows third-party developers to build applications around financial institutions, will continue to be relevant, but is unlikely to change the basis of competition in consumer banking. However, a bigger impact will be noticed on advertising—access to transaction-level data will enable more timely, targeted, and personal offers.

Generative AI

Generative AI (GenAI) is already significantly improving productivity in financial services, especially in areas like coding, customer support, and digital marketing. Fintech companies, with their digital-first approach, are seeing substantial benefits. While the impact on new product development will take longer, it is expected to follow as the technology matures.

India; the emerging fintech ecosystem

India is a shining market in the fintech sector since its government is enjoying the fruits of investment in integrated digital public infrastructure, great growth in digital payments and several innovations—with a greater focus on unit economics and profitability over growth at all costs with margins improving by 9 percentage points on average. The insights taken from the report, Global Fintech 2024: Prudence, Profits, and Growth by BCG and QED Investors.

Paromita Gupta

Entrepreneur Staff

Features Writer with Entrepreneur India

Covering news and trends in AI and Metaverse segments. An avid book reader running her personal blog on the side. You may reach me at paromita@entrepreneurindia.com. 
Business News

How to Be a Billionaire By 25, According to a College Dropout Turned CEO Worth $1.6 Billion

Austin Russell became the world's youngest self-made billionaire in 2020 at age 25.

Starting a Business

3 Things to Consider Before Your Perfect Business Partner Becomes Your Perfect Disaster

There are many reasons for start-up businesses' high failure rate, including lack of cash, not doing enough research and poor marketing. But this one reason is definitely not getting enough attention.

Living

Taylor Swift Has a Lucky Number. And She's Not the Only High Performer Who Leans Into Superstitions to Boost Confidence.

Even megastars like Swift need a little extra something to get them in the right mindset when it is game time.

Buying / Investing in Business

I'm a VC With Over 50 Startup Investments. Here Are the 4 Secrets to Securing Funding for Your Ventures.

Investor relationships are crucial in most businesses, but navigating them is no walk in the park. These insider tips from a former founder and current venture capitalist reveal how entrepreneurs can tap into the investor mindset and masterfully manage investor relations.

Marketing

SEO Trends You Need to Be Aware of Right Now, According to a Seasoned Pro

Navigate the future of search engine optimization to elevate your online presence and drive meaningful engagement.