Home Finance & Fintech How Will AI Impact the Fintech Industry in 2024?

How Will AI Impact the Fintech Industry in 2024?

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Throughout 2023, the fintech industry was abuzz with articles, panel discussions, product launches and everything in between waxing lyrical about AI. The potential of the emerging technology certainly appears to be limitless. But how much can AI really change in the next 12 months when it comes to fintech?

To find out, we reach out to the experts to ask: Will AI drastically impact the fintech industry in 2024?

‘The imperative to put AI first’

Kicking things off, Malcolm deMayo, VP of financial services at NVIDIA, explains his view that the firms prioritising AI will lead the way: “As the pace of AI advancement reaches exponential scale, financial services firms are realising the imperative to put AI first: bringing the computing power to the data rather than the other way around.

“Firms will undergo a strategic shift toward a highly scalable, hybrid combination of on-premises infrastructure and cloud-based computing, driven by the need to mitigate concentration risk and maintain agility in the face of rapid technological advancements.

“Firms that handle their most mission-critical workloads, like AI-powered customer service assistants, fraud detection, risk management and more on a hybrid solution will lead.”

‘Poised to profoundly impact the fintech industry’

Christopher Lay, co-founder and CEO of LEONID, explains: “In 2024, AI is poised to profoundly impact the fintech industry, just as it did in 2023.

“Also, the implementation of natural language processing in customer interactions will elevate the quality of service, fostering stronger client relationships. The ability to harness AI for personalised financial product development will position our company at the forefront of innovation, ensuring that we deliver tailored solutions that meet the unique needs of our B2B clients.

“As we embrace AI, we anticipate not only improved efficiency in our operations but also a significant competitive advantage in the evolving landscape of fintech.”

Two big challenges to overcome

Tom Harris, CTO of digital bank Clearbank, details which challenges he feels need to be overcome before the fintech industry can make the most of AI: “‘Drastically’ is perhaps too strong a word for 2024, but that’s not down to limited potential. Two big challenges will hold the fintech industry back, and they are not simple to solve.

Tom Harris, CTO of Clearbank
Tom Harris, CTO of Clearbank

“It’s easy to find excitement and hype around AI – rightly so – but far harder to find those with the skills to make the most of it. Partly this is down to a general tech skills shortage, but what’s even more acute is the lack of specialist data skills. Using ‘black box’ generative AI can go a long way to bridging this gap, but this brings with it the second big problem: data governance. Concern about this black-box approach means you end up with humans in the loop as a control.

“However, the fintech community is vast, and regulatory status varies. Those entities that are less regulated may be able to adopt AI faster than others. 2024 will be the year that fintech looks to address these challenges, making 2025 much more likely to be the year where AI has a drastic impact. That just makes it all the more important to get on board now and try to bridge the skills gap so as not to be left behind.”

Is fintech’s AI bubble going to ‘pop’?

As Nelson Wootton, CEO and co-founder of UK core banking engine SaaScada, explains, some of the enthusiasm for AI in financial services may be jumping the gun. 

Wootton says: “Klarna’s declaration that they’re going ‘all-in’ on AI represents the mood of the financial services industry, with even legacy financial and banking players touting AI capabilities in their future offerings.

“In 2024, however, executives and investors are going to wake up to an ugly truth: most banks are years away from having the data needed to train and deploy effective generative AI models.

“Most deployed AI solutions in finance are repackaged old tech, and these can’t hope to meet the sky-high expectations set in 2023. This will mean, in 2024, fintech’s AI bubble is going to pop.”

‘Fintech will need to show a responsible use of AI in 2024’

While most recognise the potential benefits of AI for the fintech industry, not everyone is watching through rose-tinted glasses. Dr Scott Zoldi, chief analytics officer at FICO, says: “AI is already drastically impacting the fintech industry but not in necessarily positive ways.

“Masses of fintech companies are completely rebranding in a generative AI suite of clothes without asking the question which problems are GEN AI appropriate, and why?

“Fintech will need to show a responsible use of AI in 2024 which will include thoughtful algorithm selection such as interpretable machine learning algorithms with appropriate transparency, bias controls, and auditability. This will allow firms to use AI to generate business value versus adding the spectacle of AI use.”

‘AI’s expansion in various industries suggests its impending prominence’

Tomas Navickas, CTO and co-founder of digital banking platform myTU, comments: “In 2024, the influence of AI in the fintech industry should be considerably more significant.

“Roles such as risk analysts, AML officers, and mid to senior-level management are likely to benefit from the introduction of new AI-powered tools. Consequently, this could lead to a reconfiguration of the job market, potentially reducing the necessity for certain specialised roles.

“Regarding the payment sector, AI’s expansion in various industries suggests its impending prominence. Beyond the conventional applications such as automated personal assistants (chatbots) and improved financial literacy, a notable innovation is the potential transformation in user authentication methods.

“Future payment systems may employ AI to identify individuals based on unique behavioural characteristics, like gait and speech patterns, paving the way for a concept of ‘seamless identity’, but this should not be production-ready in 2024.

“Furthermore, the prospect of AI autonomously executing transactions invites reflection on its role within payment system architectures. This development prompts the question: will AI assistants become integral features of larger payment platforms, or will the relationship be reversed? It appears that the evolution of payment technologies is likely to merge individual technologies, offering an integrated, seamless user experience.”

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