Bold Commerce Launches Dynamic Payment Feature

Bold Commerce Launches Dynamic Payment Feature
  • Headless checkout company Bold Commerce launched a dynamic payment feature for Bold Commerce.
  • The feature allows merchants to show only the payment options relevant to therm.
  • Bold Commerce has raised $44 million and is headquartered in Canada.

Headless checkout company Bold Commerce announced the launch of its dynamic payment feature for its Bold Checkout product this week.

Bold Checkout is the company’s tailored checkout solution that aims to help businesses increase conversion, lifetime value, and average order value, ultimately driving more revenue. The newly launched dynamic payment feature offers companies the ability to expand and manage multiple different payment options, including digital wallets, buy now, pay later (BNPL) and account-to-account payments. By offering a wider range of payment methods, brands can reach more consumers and convert shoppers into buyers.

The dynamic payment feature complements Bold Checkout’s Payment Booster, which helps brands deliver payment options tailored for individual shoppers based on their profiles, the device they’re using, and past purchasing behavior. Bold Checkout harnesses extensive data to enable brands to deliver hyper-personalized experiences to their customers. By displaying only the payment methods pertinent to each individual, it ensures a tailored approach, preventing information overload by streamlining the available options at checkout.

“The only way to offer shoppers flexibility in payment methods–without going overboard on options–is to carefully curate and personalize options to them based on who they are, how they shop and where they’re shopping from,” said Bold Commerce CEO Peter Karpas. “The ability to personalize payments for individual shoppers rounds out a fully tailored checkout experience powered by Bold–from when shoppers enter the checkout to payment to even post-purchase. This not only increases conversion for brands, but increases average order value and customer lifetime value as well.”

Bold Commerce was founded in 2012 and is headquartered in Canada. Earlier this year, the company teamed up with PayPal to offer the payment technology among its options at checkout. And last month, Bold Commerce partnered with open banking technology company Link Money to help its merchant clients offer more payment options in the checkout experience for their end customers.

Bold Commerce has raised $44 million and has been named to Deloitte’s Tech Fast 50, E&Y’s Entrepreneur of the Year, and CBInsights’ Retail Tech 100.

Photo by Steve Harvey on Unsplash

Hot or Not? Experts Weigh in on Fintech Trends

Hot or Not? Experts Weigh in on Fintech Trends

Much of our behind-the-scenes work at Finovate is determining what’s hot and what’s not in fintech and banking. But given the ever-evolving regulatory landscape, volatile consumer preferences, and fast-changing enabling technologies, it can be hard to keep up on current trends.

And while we like to consider ourselves experts on the fintech landscape, it is always important to consult external thought leaders to gauge their thoughts on industry themes. That’s exactly what we’ve done in our recent Hot or Cold Video Series. We talked with eight experts to glean their insights on a range of current industry trends. Check out the videos below to delve into topics such as embedded finance, BNPL, regtech, automation, decentralized finance, generative AI, the metaverse, and open banking.

Jonathan Alloy, VP Design Thinking at Credit Suisse

Barry D’Souza, VP Digital Strategy at Inerra Credit Union

CJ Conrad, SVP Innovation & Operations at Middlesex Federal

Eric Sorensen, Director Digital Services

Catherine Porter, Chief Business Officer at Tillia

Rachel Muench, Security and Biometrics Lead at Nuance

Tomas Chamorro-Premuzic, Author of I, Human: AI, Automation, and the Quest to Reclaim What Makes Us Unique

Luke Williams, Professor of Innovation at NYU’s Stern School of Business

Photo by Pixabay

Meniga Lands $16.5 Million to Drive New Strategy

Meniga Lands $16.5 Million to Drive New Strategy
  • Meniga has raised $16.5 million (€15 million) in Series D funding, bringing its total raised to $60.5 million (€55 million).
  • The round will be used to fuel the company’s new strategy that focuses on creating hyper-personalized insights and enabling payments capabilities that leverage open finance ecosystems for financial services companies.
  • Meniga is pursuing the new strategy after appointing Raj Soni as new CEO earlier this year.

Personal finance solutions fintech Meniga has landed $16.5 million (€15 million) in Series D funding.

Today’s round boosts the U.K.-based company’s total funding to $60.5 million (€55 million). Contributors include major European banks, Groupe BPCE and Crédito Agrícola, Omega ehf, and several existing shareholders.

Just as notable as the investment is what the funds will be used for. Meniga plans to use the round to fuel the company’s new strategy that focuses on creating data enrichment and hyper-personalized insights for financial services companies. Meniga will also shift to emphasize enabling payments capabilities that leverage open banking and open finance ecosystems for financial services firms.

The new strategy hatched after the company appointed Raj Soni as the new CEO earlier this year. Soni’s aim to simplify Meniga’s product portfolio, diversify into verticals beyond banks, target new customers in emerging markets, and create new operational hubs to drive growth and offer customer support.

“We are looking forward to seeing [Meniga’s] continued focus on enrichment as well as personalized insights,” said Groupe BPCE Chief Digital Officer Emmanuel Puga Pereira. “These capabilities are critical for all BPCE banks to effectively engage with their end users and we have seen firsthand how Meniga’s solution is a key component for banks to succeed.”

Meniga notes that part of today’s funding will also be used for clearing the company’s debt, which will make Meniga almost debt-free.

Founded in 2009, Meniga empowers digital banking experiences for 10 million end users and serves more than 100 million banking customers across 30 countries in Europe, North America, the Middle East and Asia. Among the company’s clients are UOB, UniCredit, Groupe BPCE, Crédito Agrícola, Swedbank, and Commercial Bank of Dubai.

Meniga is among many fintechs and financial services firms that are shifting their focus to operate in the new open finance economy, where accessibility, data-driven insights, and personalized experiences reign supreme. Meniga’s strategic pivot underscores the industry-wide recognition that open banking and open finance will transform financial services for the better. It also sets a precedent for customer-centric developments going forward into 2024.

Affirm and Zip to Power BNPL for Google Pay

Affirm and Zip to Power BNPL for Google Pay
  • Google Pay is partnering with both Affirm and Zip to offer BNPL at checkout.
  • The BNPL option will launch with select merchants in the first quarter of next year in a pilot phase.
  • Google’s move into BNPL follows Apple’s launch of Apple Pay Later and Amazon’s integration with Affirm, both of which began this fall.

As buy now, pay later (BNPL) rises high on analysts’ lists of hot trends for 2024, today’s news of Google adopting the technology may make the BNPL trend climb to the top next year.

Affirm and Zip announced separately (Affirm’s and Zip’s) that their BNPL technology will be available to U.S. consumers transacting online using Google Pay at select merchants. The integration will roll out in a pilot phase in the first quarter of next year and will roll out to more merchants after that.

During the pilot phase, shoppers at select merchants will see a promotional banner at the top of the Google Pay online checkout page promoting Zip’s and Affirm’s BNPL options. If the user chooses BNPL as their payment method and are approved, they can spread out their payments in installments for purchases over $35.

“With Zip available in the Google Pay checkout experience, we are bridging a gap and providing a flexible credit product for the many consumers overlooked by traditional credit products,” said Zip Co-founder and U.S. CEO Larry Diamond. “By offering Zip payment solutions through Google Pay, we’re empowering consumers with more choices while providing merchants with a powerful tool to increase conversion rates and build lasting customer relationships. It’s a win-win scenario where convenience meets commerce, fostering a more dynamic and responsive shopping experience.”

Zip’s Pay-In-4 BNPL tool is limited to four installments spread across six weeks, while Affirm offers consumers repayment terms that range from four interest-free payments every two weeks to monthly installments.

“By integrating Affirm into Google Pay, we are making it easier for consumers to take advantage of Affirm’s flexible and transparent payment options and for merchants to drive growth,” said Affirm Director of Strategic Partnerships Jamie Cunningham. “This is an exciting step forward in our distribution strategy, as roughly half of shoppers are using digital wallets more frequently than they did before the pandemic and mobile commerce is growing faster than overall e-commerce.”

Google’s use of two vendors in this area is unusual. It is possible that it plans to test which offering is most popular among users during the pilot phase and then limit its partnership to one BNPL player for the official launch. However, it’s more likely that Google aims to expand its customer base by targeting users familiar with either Zip or Affirm, enhancing its reach across different customer segments.

Also worth noting is how closely Google is following its competition. Apple Pay rolled out its own BNPL tool, Apple Pay Later, in October and Amazon entered the BNPL space last month in partnership with Affirm. With Google Pay joining the ranks and making BNPL more accessible for consumers, the use of BNPL is likely to skyrocket in 2024, especially as consumers recover from holiday spending while fighting cost of living increases.

Photo by Matthew Kwong on Unsplash

Ncontracts Acquires Quantivate for Undisclosed Amount

Ncontracts Acquires Quantivate for Undisclosed Amount

Risk management and compliance solutions provider Ncontracts has acquired Quantivate this week. Financial terms of the deal were not disclosed.

Quantivate, which provides governance, risk, and compliance (GRC) solutions for banks and credit unions, was founded in 2005. Quantivate’s flagship offering is its Business Continuity Software. Today, the company has a suite of governance, risk, and compliance management solutions, including ERM Intelligence, Compliance, Operational Resilience, IT Risk, Procurement, Audit, and more.

“Quantivate has always believed in the power of innovative technology and exceptional people to help banks and credit unions thrive,” said Quantivate Founder and CEO Andy Vanderhoff. “Ncontracts shares this mission, and I’m excited to watch as the strength and experience of our united teams take risk management solutions to the next level.”

With today’s acquisition, Ncontracts aims to position it as a software-as-a-service (SaaS) and knowledge-as-a-service (KaaS) leader. Quantivate’s GRC solutions and broader suite covering areas like ERM Intelligence, Compliance, IT Risk, and more, strengthen Ncontracts’ portfolio by enhancing its capabilities in addressing the complex needs of financial institutions.

This acquisition not only expands Ncontracts’ workforce to 350 employees and customer base to 4,000 financial services companies, but it also emphasizes the industry’s increasing reliance on sophisticated risk management solutions.

Ncontracts was founded in 2009 and specializes in risk, vendor, and compliance management software for financial services companies. The company currently serves more than 4,000 financial services organizations, including Tinker Federal Credit Union, Columbia Bank, Security Bank of Kansas City, and more. Earlier this fall, Ncontracts teamed up with fellow Finovate alum True Digital to enhance banks’ vendor data.

Ncontracts most recently demoed at FinovateFall 2022 where the company debuted Nrisk, an online risk management solution that strengthens compliance controls in real time. Tools like these are especially imperative to financial services firms in today’s regulatory environment in which regulators have increased their scrutiny of enterprise risk management practices.

“We are thrilled to join forces with Quantivate,” said Ncontracts founder and CEO Michael Berman. “We are both mutually committed to helping financial institutions reduce risk, improve compliance, and control costs, so combining our resources empowers us to be an even better provider of software and services for our customers and the financial industry.”

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Splitit Goes Private, Motive Partners Acquires Controling Stake

Splitit Goes Private, Motive Partners Acquires Controling Stake
  • Buy now, pay later company Splitit has officially delisted from the Australian Stock Exchange.
  • Accompanying the move, Splitit will receive a $50 million growth investment from Motive Partners.
  • Splitit has already received the first $25 million and will receive the next $25 million after achieving 2023 financial performance milestones.

Four months after announcing its plans to delist from the Australian Stock Exchange (ASX), Splitit revealed today that it has officially taken the company private.

The buy now, pay later (BNPL) company delisted from the ASX after closing on half of a $50 million growth round. The new round is comprised of two $25 million installments from funds advised by Motive Partners in exchange for the issuance of new preference shares. Motive Partners will issue the second $25 million tranche after Splitit achieves 2023 financial performance milestones. Splitit said it is currently exceeding these milestones.

“Attracting a strategic investor of this caliber is a testament to the quality of our team and our unique, innovative offering,” said Splitit Managing Director and CEO Nandan Sheth. “Motive’s investment significantly strengthens our balance sheet and brings additional global payments expertise, allowing the team to accelerate our white-label product strategy, product innovation, and our Tier One global distribution partnerships.”

Once the round fully closed, the $50 million will bring Splitit’s total funding to $350 million. The company will use today’s funds to accelerate its growth and support its “strategic plan.” The investment gives Motive Partners a controlling stake in Splitit.

Splitit’s decision to delist from the ASX follows the approval granted by its shareholders last month. The approval encompassed both the voluntary delisting from the ASX and relocating the company’s headquarters from Israel to the Cayman Islands.

According to the company’s announcement from earlier this year, Splitit agreed to delist from the ASX for five primary reasons:

  1. The funds offer growth capital in the midst of a difficult fundraising environment.
  2. The partnership with Motive Partners was especially attractive, given the firm’s resources, network, and talent.
  3. The ASX undervalues Splitit’s business and doesn’t appreciate the company’s “differentiated value proposition and prospects.”
  4. The move to become a private, Cayman Islands-based company will offer Splitit more flexibility and less administrative costs.
  5. The move from the ASX will offer existing shareholders the option to choose to retain ownership in Splitit as a private company or to decrease their ownership in the run-up to the delisting.

Splitit was founded in 2012 under the name PayItSimple. The company’s Installments-as-a-Service offering allows merchants and payment processing firms to embed a white-labeled BNPL option into their checkout flow. Splitit holds partnerships with Atlantic-Pacific Processing Systems, Stripe, Shopify, and Alipay to act as an Installments-as-a-Service option for their merchant clients.

Photo by Tim Mossholder

Icon Solutions Lands New Investment from Citi

Icon Solutions Lands New Investment from Citi
  • Icon Solutions received a strategic investment from Citi Treasury and Trade Solutions.
  • The amount of the recent investment, as well as the amount of the company’s 2020 funding round, are undisclosed.
  • Citi Treasury and Trade Solutions also announced it will expand its use of Icon Solutions’ Icon Payments Framework (IPF) to enhance its ecosystem.

Payments technology and consultancy services company Icon Solutions recently announced it received a new funding installment from Citi Treasury and Trade Solutions (TTS).

This marks Icon Solutions’ second funding round since it was founded in 2009. Prior to this round, the company received a Corporate Round in 2020 that was led by JP Morgan Chase. The amounts of both today’s round and the company’s 2020 round were undisclosed.

Citi TTS holds banking licenses in over 90 countries and manages a global network with membership in over 270 clearing systems. Clients use Citi TTS to make payments in 145 currencies. As a key part of today’s partnership, Citi TTS will expand its use of the Icon Payments Framework (IPF) to enhance this ecosystem. Icon Solutions’ IPF is a low-code based framework that enables banks to develop their own payment processing solution.

“We are on a journey to unlock the full potential of the Citi network and respond to the need for a streamlined and efficient payment processing system,” said Citi TTS Head of Payments Debopama Sen. “Through this relationship, we are removing platform complexity across our multiple products by following a process of ‘de-platforming’ common business services and creating reusable and extensible services that can be orchestrated using the IPF framework.”

Part of this “de-platforming” will help Citi remain flexible and accelerate its ability to respond to changes in infrastructure, regulation, and evolving customer expectations. “Our new approach will empower our engineering teams to respond quicker and more efficiently to industry developments, such as ISO 20022, and deliver high-quality innovation and functionality for our clients,” Sen added.

Icon Solutions delivers payment and technology solutions to banks and financial services organizations across the globe, including BNP Paribas, Lloyds Banking Group, Nationwide, and HSBC. The company’s payments platform, IPF, is used by Tier 1 banks to help them accelerate their payments transformation and roll out instant payments around the world.

Photo by Declan Sun on Unsplash

Scalable Capital Raises $64.7 Million

Scalable Capital Raises $64.7 Million
  • Scalable Capital received $64.7 million (€60 million) in a venture round led by Balderton Capital.
  • The new funds boost Scalable Capital’s total funding to $352 million (€326 million).
  • Scalable Capital is facing new competition, with U.S.-based stock brokerage app Robinhood entering the market this fall.

Digital investment platform Scalable Capital landed some capital of its own this week. The broker and roboadvisor announced it received $64.7 million (€60 million) in a venture round led by Balderton Capital.

The round, which saw participation from HV Capital’s new growth fund and existing investors, is an extension of the company’s 2021 Series E fund. Today’s investment boosts Scalable Capital’s Series E Round to $227 million (€210 million) and brings its total funds to $352 million (€326 million).

According to TechCrunch, Scalable Capital’s valuation with the new round sits at $1.4 billion, the same valuation the company held at its 2021 Series E round.

The Germany-based company will use today’s investment to grow its investment platform and to “capitalize on its position as a leading provider of easy and cost effective investing solutions for retail clients.”

Founded in 2014, Scalable Capital has a mission to empower everyone to become an investor. The company, which is active in Germany, Austria, France, Italy, the Netherlands, Spain, and the UK., has 600,000+ users who currently hold $17.3 billion (€16 billion) in stocks, ETFs, derivatives, bonds, commodities and crypto on its platform. The fintech’s cost for brokerage range from free to $5.39 (€4.99) per month. For users who prefer an automated approach, Scalable Capital also has a roboadvisor offering that has a varied fee structure based on the client’s holdings.

Earlier this year, Scalable Capital launched Credit, a tool that offers users access to secured loans in the Scalable Brokerage product. Residents of Germany can buy additional securities or withdraw a personal loan without having to liquidate existing positions.

As part of today’s fundng announcement, Balderton Capital General Partner Rana Yared will join Scalable Capital’s board. “Scalable’s one-stop, digital-first, wealth building and generating platform brings a suite of top-class financial products to individuals across Europe, and is unparalleled in the market. We’ve been impressed by Erik, Florian, and team’s vision and execution to date and are delighted to be supporting them in this next chapter.”

Scalable Capital recently began facing new competition in the European wealthtech market, as U.S. stock brokerage app Robinhood launched operations in the U.K. Today, the California-based company unveiled it will offer crypto trading for its European Union-based users.

Photo by Monstera Production

Brim Financial Adds Open Banking Capabilities to its Credit-Card-as-a-Service Offering

Brim Financial Adds Open Banking Capabilities to its Credit-Card-as-a-Service Offering
  • Brim Financial has partnered with Mastercard.
  • Brim Financial will embed Mastercard’s open banking capabilities into its own platform.
  • “This partnership with Mastercard will be transformational for companies seeking a sophisticated, modern credit card platform to better serve their customers,” said Brim Financial Founder and CEO Rasha Katabi.

Credit-card-as-a-service Brim Financial announced it has partnered with Mastercard this week. Under the partnership, which aims to fuel innovation in U.S. credit card platforms, Brim will embed Mastercard’s open banking capabilities into its own platform.

“There is significant momentum happening in the U.S. market when it comes to innovating credit card infrastructure across consumer, small-and-medium-sized-business, and commercial segments,” said Brim Financial Founder and CEO Rasha Katabi. “This partnership with Mastercard will be transformational for companies seeking a sophisticated, modern credit card platform to better serve their customers.”

Canada-based Brim was founded in 2015 and provides a credit-card-as-a-service offering for organizations including Air France KLM and Canadian Western Bank. With Brim’s platform, clients can deploy, run, and scale their own branded commercial and consumer credit card offering quickly.

By adding Mastercard’s open banking capabilities to its platform, Brim will provide clients with a more seamless payment experience by embedding payment solutions across its end-to-end platform. “In partnership with Brim, we’re able to help our customers and partners remain competitive, with innovative payment solutions that create seamless, secure experiences,” explained Mastercard EVP of North America Business Development Hunter Woolley.

Mastercard became more involved in the open banking scene after it acquired Finicity in 2020 in an $825 million deal. Mastercard currently partners with brands including Brex, LoanPro, and Experian to help connect their customers’ permissioned financial data to their app. Mastercard is currently connected with 95% of financial institution accounts in the U.S.

Photo by Ron Lach

What Will Be the Top Fintech Trend in 2024? Hint: It’s Not AI.

What Will Be the Top Fintech Trend in 2024? Hint: It’s Not AI.

When it comes to predicting the next leap in fintech, you have to risk not only getting things wrong, but also being ok with it. So while I could play it safe and predict that the top fintech trend in 2024 will be AI, or industry consolidation, or even growth in the use of buy now, pay later tools, I’m going to step into less charted territory and say that the 2024 fintech buzzword will be quantum computing.

Why quantum computing?

The concept of leveraging quantum computing in financial services is dated; it has been around since the early 2000s. However, there are three main factors why 2024 may be the year the conversation around this topic really takes off.

  1. Cost savings opportunities
    Banks and other industry players are currently in a wrestling match with today’s economic environment, the expensive cost of capital, and an increase in competitors vying for customer attention. This, combined with an onslaught of new regulatory constraints that not only restrict operations but also result in new costs, has banks looking for new ways to both cut costs and add new revenue streams. Quantum computing’s promise to help firms increase speed, efficiency, and decrease risk appears to be a green field of revenue opportunity for organizations across the sector.
  2. Technological demands
    The financial services industry loves generative AI, but even though it is the hottest topic in fintech at the moment, it comes with its own set of restrictions. Because it relies on enormous sets of data to work effectively, generative AI requires scalable computing power. As the use of AI evolves and data sets become increasingly larger and more complex, quantum computing may become a requirement to train AI models quickly.
  3. Hardware developments
    Developments in quantum computing hardware have been slow over the past few years, making the technology inaccessible and unreasonable, even for larger financial services firms. IBM may be changing this, however. Earlier this month, the computing giant unveiled its latest computing chip, Condor, that has 1,121 superconducting qubits and can perform computations beyond the reach of traditional computers. IBM also released Heron, a chip with 133 qubits that boasts a lower error rate.

    Along with these hardware releases, IBM also unveiled its development roadmap for quantum computing, which pegs 2024 for the launch of its code assistant and platform.
Image courtesy of IBM

What to expect in 2024?

Let me be clear that next year won’t be the year that financial services organizations experience widespread adoption of quantum computing. The industry has a long road ahead when it comes to leveraging the new technology and will face challenges with hardware stability, algorithm development, and security.

Despite these challenges, we will see a small handful of larger firms dabble in quantum computing in 2024. Many already are. Earlier this year, Truist Financial joined IBM’s Quantum accelerator program and MUFG purchased an 18% stake in a quantum computing startup called Groovenauts. And just today, HSBC announced it has implemented quantum protection for AI-powered foreign exchange trading, using quantum cryptography to safeguard trading data against cyber threats and quantum attacks.

These firms’ developments in quantum computing will spark conversation and development plans among mid-market firms. It is the conversation– rather than the implementation– around quantum computing that will burgeon in 2024.

Use cases in financial services

So how will firms end up using quantum computing? Specifically, the new technology will enable organizations to develop better algorithms around risk assessment, portfolio optimization, encryption, and security.

In the coming years, as quantum computing chips become more accessible, we’ll see use cases including faster transaction processing for high-frequency trading and settlement systems, customer behavior analysis and personalized financial services, and financial modeling that can more accurately predict market behavior and economic scenarios.

Photo by Dynamic Wang on Unsplash

Adyen Partners with Klarna as Acquiring Bank

Adyen Partners with Klarna as Acquiring Bank
  • Adyen and Klarna are extending their partnership, with Adyen agreeing to serve as the acquiring bank for Klarna.
  • The two fintechs first partnered ten years ago, when Adyen started offering Klarna’s buy now, pay later technology to its customers.
  • Klarna has evolved from BNPL into a shopping marketplace and currently hosts 500,000 merchants on its platform marketing to 150 million shoppers who transact two million times each day.

Netherlands-based fintech platform Adyen and Sweden-based ecommerce solutions provider and shopping platform Klarna are doubling down on their partnership. The two announced this week that Klarna will leverage Adyen’s acquiring capabilities to power card payments for its 150 million consumers and 500,000 retail partners across the globe.

The fintechs’ initial partnership dates back ten years, when Adyen began offering Klarna’s buy now, pay later (BNPL) technology to its customers. The new acquiring bank agreement will begin in Europe, North America, and Asia in 2024.

“Klarna has, in many ways, revolutionized the digital shopping experience,” said Adyen Co-founder and Co-CEO Pieter van der Does. “I am proud to say we are now joining forces in a partnership set out to simplify payments and shopping in our respective areas of expertise. Adyen’s financial technology platform combined with Klarna’s various consumer offerings will raise the standard of payments and consumer experiences worldwide.”

Adyen was founded in 2006 and offers payment acceptance, embedded payments, virtual card capabilities, authentication, risk management, insights, and more. Among the company’s corporate clients are Meta, Uber, H&M, eBay, and Microsoft.

“Adyen, a world-class financial technology platform for businesses with global ambitions, aligns seamlessly with Klarna’s role as the preferred payments network and shopping assistant for consumers and retailers worldwide,” said Klarna Co-founder and CEO Sebastian Siematkowski. “In our journey towards strengthening our global commerce offerings, Adyen will play an integral role as our trusted partner.”

Originally launched as a BNPL technology provider, Klarna has evolved into a shopping marketplace similar to Amazon or Walmart. The company works with more than half a million retail partners who list goods across a range of categories. Klarna counts 150 million shoppers– 40 million of which are U.S. based– who make two million transactions on its platform each day.

Earlier this year, Klarna teamed up with Open AI to leverage ChatGPT to help enhance the shopping experience to power a product recommendation engine. Klarna was founded in 2005 and is now live in 45 countries.

What ChatGPT Got Wrong about Top 5 Fintech Trends of 2024

What ChatGPT Got Wrong about Top 5 Fintech Trends of 2024

I’ve received dozens of 2024 fintech trends prediction pitches in my email inbox over the past month. And while many of them are insightful, I wanted to see what our AI overlord ChatGPT had to say about the matter.

My prompt read, “What are your predictions for the top five newest and hottest trends in fintech for 2024?” Here is how the AI responded:

Predicting the exact trends for 2024 is speculative, but here are potential emerging trends in fintech:

  1. Embedded Finance: Further integration of financial services into non-financial platforms like e-commerce, SaaS, and marketplaces. This trend will offer users seamless access to financial products within their daily activities.
  2. Metaverse Finance: With the growing popularity of the metaverse, fintech might explore virtual currencies, digital assets, and decentralized finance (DeFi) solutions tailored for this space.
  3. AI-Powered Personalization: Enhanced AI-driven tools for hyper-personalized financial recommendations, wealth management, and banking services. AI will further analyze vast datasets to offer tailored financial advice.
  4. Climate and Sustainable Finance: Continued growth in green finance, impact investing, and ESG-driven financial products as consumers and investors prioritize sustainability.
  5. Regulatory Evolution: Fintechs navigating evolving regulations, especially around data privacy, digital currencies, and open banking. Compliance and adapting to regulatory changes will remain crucial.

As usual, ChatGPT not only did a pretty good job, but it also sounds pretty convincing. And while there are truly no blatant errors in the prediction, it could be better. Here’s what’s wrong or what’s missing in each of the five predictions.

Embedded finance

ChatGPT was spot on. It is quite obvious that this will be a big trend in 2024. Why? Because it’s a big trend right now. However, this is more of a continuation of a current trend rather than a new trend in 2024. Also, ChatGPT failed to mention the role that regulation will likely play in embedded finance next year, especially in the U.S. That’s because partner banks have become more wary to partner with fintechs after the FDIC issued a consent order to Cross River Bank, saying that it was involved in unsound banking practices. Where there is opportunity, there is liability.

Metaverse finance

ChatGPT was wrong. This is one trend that can be thrown away with all of those 2023 desk planners out there. The metaverse offered a fun distraction during the pandemic, when the industry was obsessed with moving all of a bank’s operations to digital channels. However, most consumers lack interest in moving their lives to the metaverse, and banks have realized that their investments in more traditional channels are more likely to pay off.

AI-powered personalization

This is another win for ChatGPT. However, personalization is not the only AI-powered aspect of banking and fintech that will surge in 2024. Many organizations are now turning toward generative AI, which has the potential to produce creative outputs for generating investment strategies, designing financial products, building marketing campaigns, simulating data to predict market movements, simulating economic scenarios, or stress-testing financial systems.

Climate and Sustainable Finance

While I want to believe ChatGPT on this prediction, I wouldn’t list it among the top five trends for 2024. There are two major reasons why sustainable finance will take a backseat (though not disappear) next year. First, the high cost of capital has both banks and fintechs searching for new revenue opportunities. Given this high interest rate environment, firms are more focused on direct cost-saving and revenue growth initiatives such as AI. Second, in many geographies, regulation has not caught up with sustainability initiatives. This lack of regulation and industry standards makes it difficult for organizations to pose definitive claims about what they are doing for the environment.

Regulatory evolution

This is absolutely among the top trends I have my eye on for 2024. Again, this is a continuation of a current trend and not a new development, but it will remain at the forefront in fintech next year. ChatGPT cited regulatory changes across data privacy, digital currencies, and open banking. In regards to open banking, the CFPB released its notice of proposed rulemaking to implement Section 1033 of Dodd-Frank earlier this year and made clear that it will issue the final regulation in the fall of 2024.

One piece that ChatGPT left off its list of anticipated regulatory changes is the formalization of rules around buy now, pay later (BNPL) companies. As consumers rely on BNPL payment technologies as an alternative to traditional credit models, regulators in both the U.S. and the U.K. have announced their intent to formalize regulation in the space.

Photo by Matheus Bertelli