Fintech is about to reach a major turning point. Gen AI continues to create new opportunities—and new security risks—as it reshapes financial operations. And with billions of people still unbanked or underbanked globally, the opportunities for disruption are enormous: Experts predict that the fintech market could balloon to a staggering $1.5 trillion in revenue by 2030.
These are just a few of the hot topics at this week’s Money 20/20, where the biggest players in fintech come together each year to discuss the future of money. As IBM wraps up its visit to the annual money megaconference, we caught up with Kamini Belday, Head of Global Payments Solutioning at IBM Cloud, to get her take on the fintech trends to look out for in the year ahead.
Belday: There are many contributing factors. Consumer preferences are changing—we all want digital, easy to use, instant and convenience. Fintech companies that started as disruptors have evolved to meet consumer requirements, effectively allowing them to be positioned as leaders. Over time, they have built brand recognition and trust, making them viable alternatives to traditional banks. PayPal and Square, which is now Block, Inc., are a couple of notable examples.
Looking at it from the regulatory side, many fintech companies that have adapted and invested in compliance have been able to sustain growth. They’ve built trust with consumers. Compare that to other fintech companies operating in relatively unregulated environments.
These companies are also focusing on collaborating with banks. They are offering white-label solutions so they can access larger markets and provide more integrated solutions. This makes them front-runners for venture capital, which, in turn, helps them scale rapidly for incumbency.
Belday: UPI and Pix have seen great success for many reasons, starting with government support, which lends credibility and encourages adoption. Both real-time payment solutions have been built on robust tech infrastructures that can handle large transaction volumes securely and scale efficiently, with cloud-first principles. The design is personalized and user-friendly—anyone using a mobile phone can enable instant payments, and that is crucial in countries with high mobile penetration but lower banking infrastructure. On top of that, public awareness campaigns educating users about digital payments and building a business solely through their mobile phones have encouraged wider adoption.
The Federal Reserve's FedNow service, which aims to provide real-time payment solutions in the US, faced some challenges initially, but adoption is accelerating. There are a few key contributing factors here. Market readiness is one issue. Another is that Tier 1 banks need more time to upgrade and fully integrate with FedNow because they already have established electronic payments systems that are deeply entrenched in mission-critical workloads around the world. Banks are also cautious about adopting new technologies due to regulatory compliance mandates, as well as transaction costs, where they need to weigh the costs of adoption versus keeping the lights on.
Belday: It’s evolving now and will continue to evolve significantly over the next three to five years. I think it will be driven by changing consumer preferences, regulatory development, a greater focus on privacy and security, financial inclusion and technology advancements like DeFi [decentralized finance], CBDC [central bank digital currency] and digital assets. As these trends unfold, businesses and financial institutions will need to remain agile to navigate the complexities of the new money movement landscape.
Belday: It starts with foundational principles to promote AI algorithmic transparency. The purpose of AI is to augment human intelligence, not to replace it or operate independently. It reminds me of a quote from Thomas Watson Jr., IBM’s second president: “Our machines should be nothing more than tools for extending the powers of the human beings who use them.” At IBM, we continue to stand by this point of view today.
Second, data and insights belong to their creator. AI systems must prioritize and safeguard users’ privacy and data rights all the time! And third, technology must be transparent and explainable. Companies must be clear about who trains their AI systems, what data is used in training and, most importantly, what goes into their algorithms’ recommendations.
AI has the potential to significantly enhance customer trust when it is used responsibly and ethically. By prioritizing transparency, security, fairness and customer engagement, companies can build strong relationships with their customers while ensuring that data is handled with care. This includes having clear policies on data usage, regular audits and a commitment to ethical practices. Being accountable fosters a culture of trust and encourages customers to engage with the brand.
Belday: As payment systems become increasingly complex and interconnected, leveraging AI to enhance security will be crucial. Enforcing multi-factor authentication [MFA] methods like fingerprints, facial recognition and voice recognition to verify user identities will add a layer of security. Having AI algorithms analyze transaction patterns in real time will establish normal user activity. Any deviation from these patterns can trigger alerts, additional verification steps or both, which can be automated through AI to prevent fraud. And generative AI can add another layer of security by creating synthetic datasets that simulate fraudulent transactions.
Lastly, predictive AI can be used to analyze historical data and make real-time predictions about the likelihood of fraud with risk-scoring models that can include extended data elements from payment processors as well as banks. This means that as fraudsters develop new tactics, AI can adjust its algorithms to counteract methods effectively, through continuous learning and adaption.
Looking for more fintech trends and analysis? Browse the latest whitepapers from the IBM Institute for Business Value, IBM's thought leadership think tank: