924. Insights: Was 2024 the year fintech bounced back?
Dec 19, 2024
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Benjamin Ensor, Director of Research & Strategy at 11:FS, discusses open banking and digital transformation. David-Barton Grimley, FinTech Strategy Director, shares insights on the impact of mergers on banking services. Jason Mikula, fintech expert and founder of Fintech Business Weekly, reflects on the neobank profitability surge in 2024. The trio examines challenges in obtaining banking licenses and the role of AI in finance, balancing productivity with fraud risks. They also explore consumer shifts towards digital banking and reminisce humorously about social media experiences.
Fintech showcased resilience in 2023 post-banking crisis, indicating growth potential and adaptability within the industry for 2024.
Mergers and acquisitions dominated the financial services landscape in 2024, reflecting a strategic shift towards consolidation and economies of scale.
The collapse of traditional banking-as-a-service providers underscored the need for regulatory improvement and new business models across the fintech space.
Deep dives
Finimize's Role in Customer Retention
Finimize provides engaging finance content tailored for retail investors, addressing the challenges in customer acquisition and retention faced by financial services. With a library of over 20,000 pieces, created by former Wall Street analysts, the platform allows firms to white label the content, enhancing their brand's value. Features such as advanced tagging enable personalization according to customer portfolios, making content more relevant. The ability to access this content in over 29 languages positions companies to cater to a global audience effectively.
Fintech's Resilience Following Turbulence
The fintech industry demonstrated remarkable resilience and growth in the wake of the banking crisis in 2023, suggesting a potential maturation in 2024. Key themes included adaptability and learning, showing that fintech firms can weather adversity while seizing new opportunities. However, the landscape is not solely positive, as certain stories could have lasting negative implications for the industry. As a result, experts are focusing on both the successes and the challenges that shaped fintech over the past year.
2024's Consolidation Trend
Mergers and acquisitions became a defining trend in the financial services sector in 2024, with numerous high-profile deals indicating a push for consolidation. The U.S. saw 83 bank deals announced, while the UK experienced significant domestic consolidations as well. Noteworthy acquisitions included Nationwide's purchase of Virgin Money and Barclays' acquisition of Tesco Bank, highlighting strategic moves within the market. This consolidation reflects the need for firms to achieve economies of scale to operate effectively amidst evolving financial landscapes.
The Impact of Banking-as-a-Service
The collapse of traditional banking-as-a-service providers like Synapse raised significant concerns about the industry's future, particularly regarding regulatory framework and consumer trust. The bankruptcy process revealed grave inaccuracies in financial records, leaving many users in precarious situations as they awaited refunds. Ongoing discussions revolve around whether this was an isolated failure or indicative of broader systemic issues within the banking-as-a-service model. The scenario highlights the need for improved oversight and potentially redefined business models in the fintech space moving forward.
Wave of Profitability Among Neobanks
In 2024, neobanks such as Monzo, Starling, and Revolut reported substantial profits, marking a shift towards financial viability in the sector. Successful lending strategies, coupled with increased revenue per customer, contributed to these positive financial outcomes, signalling a maturation in their business models. Additionally, rising interest rates presented an opportunity for many of these banks to enhance their net interest margins, further driving profitability. This trend suggests that neobanks have not only adapted but are now positioned to compete effectively against traditional banks.
It’s our final Insights episode of the year! This week, we’ve gathered a panel of certified Fintech Insiders to look back at the stories that shaped the past 12 months in fintech and ask: If 2023 was a year of turbulence and reckoning for the industry, was 2024 the year fintech bounced back?
Host:
Kate Moody - Customer Strategy Director at 11:FS
This week's guests:
Benjamin Ensor, Director of Research & Strategy at 11:FS
David-Barton Grimley, Strategy Director at 11:FS
Jason Mikula, Founder of Fintech Business Weekly & Head of Industry at Taktile
Fintech Insider by 11:FS is a bi-weekly podcast dedicated to all things finance, banking, technology, and financial services.
Our expert hosts, with real industry experience, are joined by the biggest decision-makers, VCs, and reporters from across financial services including guests from Visa, Nubank, M-Pesa, Starling, and JP Morgan Chase to discuss the latest news, developments, and trends within the industry.
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