The machinery of finance is still slow, clunky, and wrapped up in red tape. Fintech companies are looking to change that in 2024. From crypto and AI to regulator moves, digital payments and more, here's what we're seeing in fintech news lately.
FinTech companies are getting some good news from regulators
This month, something pretty game-changing happened for a whole group of fintech startups that have been holding out for just this kind of breakthrough. The SEC's thumbs-up to a Bitcoin ETF signaled a shift in the perception of cryptocurrencies from niche digital assets to recognized components of the broader financial landscape.
"It's a huge positive for the institutionalization of bitcoin as an asset class," Andrew Bond, managing director and senior fintech analyst at Rosenblatt Securities, told Reuters.
In the fintech world, it's rare to encounter regulatory developments as favorable as this. Agencies like the SEC, the Federal Reserve, and the Consumer Financial Protection Bureau (CFPB) typically navigate a challenging balance between fostering innovation and ensuring the safety and stability of financial markets.
What’s really going to break ground is the CFPB’s implementation of open banking regulations in the United States. These regulations, once implemented, aim to give consumers unprecedented control over their financial data, empowering them to securely share this information with third-party providers.
FinTech is facing ‘the great rebundling’ in 2024
In the fall, Elon Musk shared his plans to make X a “super app.” For the layman, this could seem like a buzzword. But this is no new term for fintech companies.
In the context of fintech, a super app is a one-stop-shop for all your financial needs. Think about budgeting, saving, spending, borrowing, investing, loyalty programs, rewards, you name it, all in one dedicated marketplace.
Initially, financial services were 'unbundled', with different apps handling different financial tasks – one app for budgeting, another for investing, and so on. Now, we're seeing a 'rebundling', where all these diverse services come together in one comprehensive platform.
Musk’s previous venture, PayPal, was the first Western fintech to really start building a super-app, integrating direct deposit, bill pay, a digital wallet, peer-to-peer payments, shopping tools, cryptocurrency trading, and a whole load of other services into its platform.
China’s WeChat is like PayPal on steroids. Starting as a simple chat app, it's now a jack-of-all-trades, handling everything from shopping to scheduling doctor visits. It's stitched itself into the fabric of daily life in China, but there’s valid concern about how much it peeks into personal data and ties into the country’s social credit system, turning into a Big Brother in your pocket.
Back in the West, we're still figuring out this whole super-app scene. For the bright minds in fintech, the big puzzle is balancing all these cool features with respecting user privacy and keeping data safe.
Many FinTech companies (especially digital banks) aren’t profitable, and investors are tapping out.
The funding downturn has hit almost every tech company pretty hard in the last year, and fintech companies were no exception. S&P Global Market Intelligence found recently that venture capital into fintech companies plummeted globally by 36% year over year to $6 billion in the third quarter of 2023.
Just this week, TechCrunch reported an challenger bank based in Africa called Kuda tried to raise $20 million in financing. Operating word here is “tried.” If you dig further into the story, you’ll see that the raise, if it closed (which it didn’t), would be at a flat valuation.
It’s a bit ironic that while many neobanks champion financial wellbeing for their customers, but seriously struggle to stay in the black themselves. A few weeks ago, Chime’s CEO disclosed his company is not yet profitable, while Revolut saw its profits plummet in 2023.
There are some exceptions to this rule, however. Monzo crossed the profitability milestone last year, and Starling also recorded it 6x’ed its profits around the same time. Most of this, according to TechCrunch, is due to these challengers launching lending products. But these are the big guys. For smaller fintech companies, there’s a long road ahead to profitability.
Here's the bright side for challenger banks: they really have a way of winning over customers, especially with their knack for ditching those pesky fees that traditional banks are infamous for. It's this user-friendly approach that's made them quite the favorite. For fintech companies as we head into 2024, sticking to this popular strategy and highlighting it in their messaging is crucial.
What’s your PR strategy for your FinTech company in 2024?
2024 is shaping up to be a defining year for fintech companies. Funding dynamics are shifting. Regulators are watching closely. The competitive heat is turning up. How will you stand out?