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From AI to changes in regulation, here is what the leadership team predict will happen in 2024.

 

Fintech

Does the ‘perfect payment exist? Will innovation ever come to an end?

 

Innovation in payments is unlikely to come to an end. The financial technology landscape is dynamic and influenced by factors such as advancements in technology, shifts in consumer behaviour, and changes in regulatory frameworks. Fintechs are constantly seeking ways to improve security, efficiency, and user experience in payments. As long as these factors are in play, innovation will persist.

 

  • Pete Janes – Group CEO at Shieldpay

 

What do you predict will be the big payments trend of 2024?

 

In 2024, the payments landscape is set to transform profoundly. Payments will fade into the background of our daily lives, becoming seamless and ambient. Fintechs, with their powerful APIs, will be instrumental in making this vision a reality. The big trend of 2024 will be the integration of payments into the fabric of our transactions, where the emphasis shifts from the payment process itself to the outcomes achieved through transactions. With developments in technology, expect transactions to be effortless. A future where payments are virtually invisible and the focus is on the results is upon us - whether it's buying real estate, acquiring businesses, or compensating service providers.

 

  • Pete Janes – Group CEO at Shieldpay

 

Read Pete Jane’s comments on Fintech Opportunities in Payments in The Fintech Times.

 

How can we expect the industry to change in 2024 given the current economic climate?

 

The likelihood that interest rates will remain high in 2024, coupled with escalating geopolitical uncertainty, will keep the bar to raising the capital necessary to invest in growth very high. This means that only the fintechs that are well capitalised or are already profitable, or that have a robust business model and the right team in place to execute a credible strategy, will survive. The other side of this coin is that fintechs that are focused on solving real problems for their customers, and that execute effectively, will have a real opportunity to grow and to thrive.

 

  • Andrew Hawkins – CEO, UK & Europe at Shieldpay

 

What AI solution strategies can we expect from fintechs in 2024?

 

Innovation is what happens when a need is met using novel techniques. The unrelenting pace of progress in technology means that often these novel techniques are enabled by technology - things are possible today that simply weren’t possible yesterday. AI has a role to play in innovation when it is deployed to meet a need. An area that we have a need to sustain constant progress is Cyber and Information security. Standing still means going backwards. We know that AI is already being used by hackers to launch increasingly sophisticated attacks, including the use to Generative AI tools such as ChatGPT and Bing to craft convincing social engineering content. For a FinTech company, the effective use of AI to counter the ever-changing tactics of fraudsters and hackers is essential in addressing an existential threat to their business.

 

  • Andrew Hawkins – CEO, UK & Europe at Shieldpay

Read more of Andrew Hawkins' 2024 predictions in TechRound and Retail Banker International

Payments

How do you see the secure payments segment shaping up in 2024?

In 2024, heightened security will not just be an expectation but a necessity across the industry. A key driver of this is the increasing accessibility of real-time payments across the globe. Although this network is a positive development for speed and convenience, there are concerns around the complications it will surface for combating fraud and money laundering, especially as we are seeing criminal activity becoming more sophisticated and targeted.  

To build on this point, investments in information security, verification solutions, and robust payment ecosystems will be a shared commitment across financial services firms. This will be to ensure that clients can trust in the collective efforts of the industry to stay secure and remain at the forefront of the market. 

 

  • Sophie Condie – Chief Operating Officer at Shieldpay

 

What will be some of the key features that will emerge in the payments space?

There are currently three key features set to redefine the industry. Firstly, expect a robust adoption of biometric and enhanced verification (CDD) to combat financial crime and fraud. Without these measures, the industry risks falling behind bad actors and struggling to meet regulatory changes.  

Secondly, expect a transformation in cross-border payments — more accessible, faster, and cheaper. The traditionally cumbersome and slow international money movement is on the verge of a revolution. With growing demand and the introduction of digital currencies and PSPs offering diverse payment solutions, including ours, the cross-border payments space is set to change through 2024.  

Lastly, anticipate a surge in digital wallet integration and stronger, broader mobile payment solutions. Digital wallets, making daily life transactions seamless, are set to become even more ingrained in our financial ecosystem. Looking ahead, the desire for versatile and convenient mobile payments is expected to drive innovations. Ideally, this trend will not only enhance mobile payment solutions but also contribute to the expansion of budgeting and financial management tools.  


  • Sophie Condie – Chief Operating Officer at Shieldpay

 

Regulatory and Compliance

What are the key focus areas likely to be for regulators in 2024 and beyond?

 

In 2024, the FCA mission per their Business Plan is to become more assertive and proactive. They’re ramping up the use of Own-Initiative Requirements, a tool that allows them to take swift action against firms that are causing market or consumer harm. In 2023, they opened 51 new cases, a significant increase compared to previous years, reflecting their commitment to protect the consumer and markets they regulate. With the FCA laser focused on reducing harm and raising standards, I expect this trend to continue into 2024, with a strong focus on Consumer Duty and Financial Crime.

The FCA is about promoting competition and driving positive change in the financial industry. In their quest to become a data-led regulator, 2024 will see a major upgrade to the FCA’s core regulatory system. The upgrade will enhance their intelligence capabilities through automated analytics tools, enabling them to detect and respond to consumer harms more swiftly. That said, we’re bound to see a more proactive and tech-savvy FCA in the coming year.

 

  • Scott Newby, Head of Compliance & MLRO Officer at Shieldpay

 

 What will the future of AI regulation look like?

 

In the ever-evolving world of finance, technology is taking centre stage. Generative AI (GenAI) is creating a buzz, with financial institutions eager to explore its potential and the risks it brings. Accenture tells us that 55% of banks are already testing GenAI. Risk and Compliance teams are leading the charge, focusing on areas like Financial Crime and Fraud investigation. GenAI is helping these teams analyse beneficial owner info and even craft narratives for alerts and SARs. But it's not just GenAI; Artificial Intelligence (AI) is making waves, especially in the fight against Financial Crime.

We're seeing a shift from rule-based Transaction Monitoring to behaviour-based approaches. Unlike traditional methods, AI can spot patterns and connections in data without predefined rules, which means it's great at uncovering new money laundering typologies within firms. In this AI-powered era, there's a growing understanding that sharing information can help detect a wider range of illicit activities. However, data privacy regulations can be a roadblock to this. Regulators generally support data sharing to catch financial criminals but are calling for clearer guidance on how firms can do it.

 

  • Scott Newby, Head of Compliance & MLRO Officer at Shieldpay

 

Can AI enhance law firms' capabilities to meet the increasing complexity of AML and criminal finance requirements? And if so, how?

 

AI can augment law firms' capabilities, but reducing or even eliminating AML teams might take time due to the technology’s reliability challenges. Currently, AI struggles with false positives, especially in complex situations like sanctions compliance. While the technology is advancing, there's still a need for human judgement. That said, AI's effectiveness in addressing these challenges is only getting better with each day that passes.

 

  • Ed Boal, Head of Legal at Shieldpay

 

 

While AI can automate legal tasks such as processing simple agreements, maintaining the human touch is crucial as it adds value and is vital to understanding clients’ needs. AI can be used to take care of some of the more monotonous tasks, and surface knowledge in areas which aren’t especially context-specific, but society isn’t ready to completely abandon the human element – you only have to look at the pushback against high street banks closing branches when digital banking has been around for more than 20 years.

 

  • Ed Boal, Head of Legal at Shieldpay

 

Read Ed Boal’s 2024 predictions in his comments on AI’s impact on the legal sector in BusinessCloud.

 

LegalTech

Are we expecting to see more law firms take different approaches to how they handle client money and payments?

 

In 2024, we are definitely expecting more law firms to take different approaches when it comes to how they handle client money and payments. While law firms have held client accounts for the best part of a century, the threat landscape has changed dramatically. From increasingly complex anti-money laundering and criminal finance requirements to international sanctions, cybersecurity risks and regulatory actions, it’s no longer as simple as keeping client monies separate from office monies. Law firms exist to advise on agreements, disputes, projects and transactions; payments should be left to purpose-specific service providers.

 

  • Ed Boal, Head of Legal at Shieldpay

 

Next year, we’re set to see several legal tech trends shaping the industry. However, if I had to choose three that will make the most impact, I’d pick:

  • Low / no code solutions will enable law firms to build client-specific solutions whether around document generation, knowledge management / sharing or regulatory compliance
  • An increase in ‘power tools’ that will make day-to-day work easier, whether that’s plug-ins to make contract drafting / document assembly easier or transaction management tools
  • Analytics and work allocation tools, making it easier for firms to ensure that the right people are doing the right work, in the most profitable way

 

  • Ed Boal, Head of Legal at Shieldpay

 

HR

 

1. Employee Experience Trends:
  • Understanding Employee Sentiments: Employers are increasingly mature in understanding the thoughts and feelings of their workforce, utilizing communication platforms and feedback mechanisms.
  • Diversity and Inclusion (D&I): Companies are reporting on gender pay gaps and diversity ratios, creating awareness and fostering diverse and inclusive workplaces. Action, not just intent, is crucial.
  • Career Development: Employers have a greater responsibility to support employees' career progression, driven by open communication. This is essential for retaining high performers and building a strong employer brand.

 

2. Employee Wellbeing Trends:
  • Flexible Working: The debate on the "new normal" includes firms grappling with flexible working policies. The trend is towards offering flexibility as part of benefits packages, with ongoing adjustments based on employee feedback.
  • Mental Health: Employer support for mental health is a growing aspect of wellbeing, with reduced stigma. While there's no set standard, there's an increasing expectation for companies to provide a basic level of mental health support.

 

3. Hiring and Recruiting Trends:
  • Focus on Employer Brand: Talent acquisition and retention emphasize the importance of a strong employer brand. Transparency into company culture and values, as seen on platforms like Glassdoor and LinkedIn, plays a crucial role.
  • Careful Consideration in Recruitment: From recruitment systems to interview processes and onboarding, companies need to ensure each stage represents their brand and engages potential employees. Legacy recruitment systems are being replaced by customizable solutions.

 

4. Data Privacy and Security Trends:
  • Automation in HR: The increased use of automation in HR necessitates a joined-up ecosystem for efficiency and enhanced privacy and security controls.
  • Sensitive Data Management: Designing core infrastructure requires careful consideration of managing sensitive data to ensure cybersecurity and protect employees and prospective talent.
  • In summary, employee experience, wellbeing, recruiting, and data privacy are integral aspects of HR trends in 2024, emphasizing the need for proactive measures, transparency, and adaptability.

 

  • Simon Masters, Director of People and Talent at Shieldpay

 

Read more of Simon’s predictions for 2024 on our careers site.

 

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