Finnov 2023 was a rich event!
Very rich and expertly orchestrated by France Innovation 🙂
Having had the pleasure of participating, here is a brief summary of the major trends for 2023/2024 that could be discerned.
Firstly, unanimously among the speakers, the year 2023 was marked by a challenging economic context, notably the Ukrainian crisis, the drying up of funding, and significant instability across all industries.
This economic context predisposes to a year 2024 under the banner of resilience and sustainability.
Arbia Smiti, CEO of Rosaly, noted in her retrospective that from her entrepreneurial perspective, 2023 notably marked the end of hyper-growth for startups.
After the pandemic and a relative improvement from investors, startups have moved to a much more resilient, pragmatic, and realistic model in their growth.
Bernard-Louis Roques, Business Partner at Truffle, also agreed regarding the healthier nature of the economic and financial context as 2023 comes to a close.
For him, there has been a certain overvaluation in investment in startups and in Fintech in general, with many setbacks, such as with Ayden, which lost nearly a quarter of its value, or worse, the catastrophe of Worldline this year.
The end of 2023 is shaping up in a context where the world of finance is adapting, leading all companies towards more resilience and new trends that are emerging.
Trends for Fintech 2024: 4 Major Challenges.
Throughout the different conferences of the day at Finnov’, the topics had strong common themes:
– the surge of Artificial Intelligence,
– the evolution of payments,
– and the necessity of green finance.
Let’s start with the first.
1/ Generative AI
Certainly one of the most anticipated themes, since the appearance of ChatGPT in November 2022 by OpenAI and after a crazy year around this new technology, impacting our lives and our habits.
Two AI experts in the banking field, Joffrey Martinez, Partner Data Consulting at Artefact, and Adrien Vesteghem, Head of the AI Expertise Center at BNP Paribas, led a fascinating conference on generative AI in the banking sector.
According to them, there are three types of AI agents:
– The productive agent: the one that saves us time.
→ For example, in retail banking, classifying customers to obtain the NPS score is a time-consuming operation in terms of data analysis.
“Using this type of AI agent, the productivity gain over 12 months is about 25%.”
The gain is immediate as it saves time daily for the teams in charge.
– The creative agent: the one that allows us to have better ideas.
→ For example, at Artefact, they created an AI MVP with a major bank to better understand their persona. Starting from a data analysis of the bank’s customers, then creating groups of customers with similar profile parameters (clustering), they managed to create an AI-assisted segmentation allowing them to imagine the next marketing actions.
– The conversational agent – the chatbot: the one we communicate with and that provides precise information.
→ Another interesting example: BNP Paribas developed a chatbot created with generative AI, allowing, during in-branch interviews with a client, to have more adapted responses to the client’s problem.
More specifically, the BNP Paribas advisor can use this chatbot during client meetings and have better access to the internal procedures knowledge base. This allows them to respond to the client in a much more precise and pragmatic way than with their own knowledge.
Generative AI is for them a formidable work tool, but does not represent the alpha and omega of all topics for the fields of Banking and Insurance.
Three last points that caught our attention on this subject:
- The market is moving towards specialized AIs for specific uses and not a super-intelligent and generalist AI, capable of meeting all needs. At least, for now.
- The speed of execution of an AI MVP is from a few hours to a few days – Adrien Vesteghem of BNP Paribas noted that the time to create the presentation that convinced internally was more important than the time to develop the AI MVP, which, for him, radically changes the valid working methods until now.
- AI also carries risks: the risk of a cyberattack on the company’s data or on the points used, the risk of hallucinations of the model (model error) which can generate an image risk.
To conclude on this subject, according to these two experts, the AI movement is definitely underway and banks that do not take the turn today will certainly be behind tomorrow.
2/ The Evolution of Payments
On this topic, we had the pleasure of participating in the round table on the next revolution in the payment sector.
The payment industry is marked by a flurry of activities based on several major elements.
→ Regulation: several regulatory texts from PSD1 to PSD3 have marked payment in recent years, particularly strong authentication, which has reduced Internet fraud by 20%.
Regulation has also allowed the advent of Open Banking and the emergence of new players such as orchestrators and payment initiators.
PSD3 will have effects on reducing fraud, increased consumer protection, and data sharing for Open Finance.
→ Consumers have practices that have evolved thanks to Covid, with the development of contactless payment and, in some parts of Europe, the wallet as a means of payment, which is very successful, particularly in Spain and Portugal.
→ Finally, another trend: banking will be consumed more and more by API, in its CRM for a company and in its third-party application for a consumer. This ability for the user to be free and to manage their bank while doing without it, will be one of the trends of 2024.
At SlimPay, as Jean-Claude Deturche, CTPO, pointed out, security remains at the center of our concerns and our technological innovations.
“For us, innovation in payment is revolutionizing the consumer journey, while serving security and reliability.”
He also noted that the credit card is ineffective for recurrence and setting up subscriptions, for example. Today’s and tomorrow’s technology remains for him Open Banking, which solves this problem while providing extremely effective security for consumers.
Moreover, the 2024 trend also emerges from a need for increasingly powerful computing power to satisfy, in particular, the needs of Buy Now Pay Later payment methods. Some voices raised the fact that having this computing power brought another problem: once achieved, what to really do with it for the end customer? New uses will have to be imagined.
In terms of new uses for tomorrow, for Olivier Binet, CEO of Bridge, it’s quite clear. Frictions in the payment system are no longer acceptable, whether for B2B or B2C. For him, there is a real convergence between these two major sectors that requires functional richness on one side and a demand for speed and immediacy on the other.
For his part, Jean-Claude Deturche agreed, explaining how it is no longer acceptable indeed to fill out a mandate by copying one’s IBAN by hand with the inherent error rates and abandonments.
For him, Open Banking is the technology that will be in the new uses of tomorrow, whether on a computer or mobile, with a simplified customer journey for signing a mandate while being highly secure: selecting one’s bank, redirecting to the bank’s app, strong authentication, payment set up and mandate signed, all in a few seconds and without friction.
“It will even be possible to ask to keep one’s banking information to speed up the next payment with SimPay.”
In 2023, payment was one of the subjects at the heart of financial management concerns.
New regulatory texts, such as PSD3, have opened the door to more innovation in the payment sector and particularly in the method of bank transfer for everyday purchases, but also for more strategic purchases for consumers (purchases exceeding credit card limits and requiring another means of payment).
The account-to-account transfer, which includes a number of pieces of information for the merchant, becomes the key to a smooth, easy, and fast purchase.
Bank APIs allowed by PSD2 offer new opportunities and increase benefits for the merchant.
Beyond even the security of transactions, which is an obvious prerequisite, the adoption of this new means of payment is at the heart of today’s payment issues at the end of 2023.
For merchants, there would be no dilemma between the card and Account-to-Account but a desire to use these two means in combo to satisfy consumer needs.
Merchants still have to define the new uses of consumers in their need for speed.
3/ The Necessity of Green Finance
Several conferences took place around the necessity of sustainable and green finance.
Frederick Marchand, CEO of Fruggr, was able to detail this point with the presentation of the Observatory of Digital Decarbonization of Finance Actors.
“One of the figures to remember is that for a financial actor, digital represents 33% of its footprint.”
Knowing that digital represents 4% of the global carbon footprint, the financial sector can play a certain role.
A role that some actors have understood very well and have set as their mission while creating an economic activity with a virtuous model.
It was a question here of a circular economy around consumer goods, both in B2B and B2C, their usage cycles, and the intensification of their uses.
This “trend” is obviously materialized by certain initiatives that we all know well, such as the Vinted app or the reconditioning of products, but also in the new use of rental and subscription of products in order to share ownership and thus monetize the material that was used for the construction of the good in question.
It is worth noting the case of Decathlon, which innovated to prevent an image risk: that of seeing its own bikes in a deplorable state for sale on Leboncoin and at high prices. By developing rental to recover the maximum amount of equipment, repair them, and increase the life cycle of the good, Decathlon avoids an image risk on its own brand.
For all these experts and professionals, it is evident that for both B2B and B2C goods, it is necessary to quickly move from a linear product life cycle to a circular one, from single ownership use to enhanced use through various second lives.
Everyone is waiting for an awareness to be triggered and for regulation to accelerate the process.