10 fintech trends that are defining the industry’s future

The fintech industry has gone through periods of tremendous growth followed by trying times, but new trends that look to define fintech’s course for years to come are emerging. These trends are based on research and data from various sources around the fintech world and are meant to help fintech builders and players in the space gain insights they can use. 

Be sure to download our 10 industry-defining fintech trends infographic (below) to get a rich visualization of data points, graphs, and charts that show what’s driving the most important trends in fintech.

10 fintech trends that are defining the industry’s future

1. Consumers will use more fintech apps than ever

After fintech’s pandemic-fueled mass adoption took hold in 2020-2021, fintech apps are becoming a more frequently-used staple of everyday life. As a result, fintech users are downloading more of them to manage their money and guide financial decisions. This increasing reliance is shaping consumer banking expectations—as more expect to be able to easily connect their bank accounts to the fintech apps they rely on every day. Expect to see the number of fintech apps consumers use continue to rise. 

2. Fintech will increasingly act as a bedrock for financial guidance and stability during uncertain times

The economic downturn of 2022 saw fintech step up to help people better deal with financial instability and economic uncertainty. Going forward, consumers will continue to be concerned about their economic circumstances and will increasingly turn to fintech apps to help them get a better grip on their finances—cementing fintech’s role as a supporter of financial health during tumultuous times. 

3. Emerging payment technologies will become as normalized as the credit card

New payment types are growing fast and becoming normalized. It’s predicted that nearly 160 million Americans will make peer-to-peer (P2P) bank account payments in 2023. Also in 2023, the Federal Reserve is planning to release a new, instant pay-by-bank payment rail called FedNow, which will work alongside the Real-Time Payments (RTP) network to provide more consumer choices for real-time bank-to-bank payments. According to Plaid’s Fintech Spotlight report, the compound annual growth rate (CAGR) for real-time payments is expected to increase to 33% by 2032.

4. Credit score alternatives will revolutionize consumer credit

Lack of a traditional credit score excludes 45 million Americans from gaining access to loans; and in some cases housing and employment. This includes recent immigrants, young people, and the underbanked. New methods of determining credit use alternative data to credit scores—such as pay stubs or utility bills—to paint a more complete picture of a borrower’s finances. API-based fintech tools enable lenders to instantly connect to data sources that provide this alternative data, enabling faster and more informed loan decisions. 

→ See the full infographic with rich data visualizations on the most important fintech trends

5. Neobank usage expected to more than double by 2026 

Even before thousands of retail banks closed during the pandemic, consumers were already seeking digital-first banking solutions. Neobanks, also known as ‘fintech banks’, have found success by appealing to the consumers that traditional banks often leave behind. By offering services such as no- and low-fee accounts, overdraft protection, early access to paychecks, and alternative ways to build credit, Neobanks like Chime, Varo, and Revolut have seen rapid growth—a trend that should continue as neobanks become more normalized.

6. Embedded finance revenues expected to triple by 2029

Embedded finance has become one of the fastest growing markets in fintech—attracting sizable VC investments for an industry that’s expected to generate $776B in revenues by 2029—more than three times expected 2022 totals. This is due to the consumer convenience and new revenue streams that adding financial services to traditionally non-financial companies can create, such as interest-free loans at online checkout, one-click payment apps, or branded checking accounts and debit cards for core users. 

7. Financial identity fraud attempts will grow, but identity verification solutions are stepping up to fight it

Synthetic identity fraud—done by combining real identifying information with fraudulent information—has become the top concern of fraud executives and consumers alike. Scammers are going to great lengths to get around banks’ Know Your Customer (KYC) protocols and use stolen social security numbers to access credit and loans. However, robust technologies are coming out to combat these attempts. 

For example, Plaid Identity Verification uses a sophisticated network to quickly verify identity using selfie verification and more than 16,000 identity data sources. The battle between scammers and identity verification systems will continue for years to come. 

8. Long-term fintech growth will remain strong

The fintech industry saw some downturns in 2022, but they seem to only be temporary. On a long-term scale, industry revenue growth is healthy and appears to be on a steady course. A similar trend shows fintech app downloads at a temporary decrease but with a strong growth trend over a five-year period. The enduring strength of fintech shows that it’s solving real consumer needs with improved financial experiences. While investors may look for safer bets in the years to come, expect fintech revenue growth and use to remain its steady increase over the long haul. 

9. More personalization and micro-segmentation will come to fintech

Consumers, especially younger consumers, expect personalization in financial products and services. Research shows that personalized features such as loyalty programs that offer discounts and rewards are among the top benefits that consumers find very important—alongside privacy and trust. Expect to see more personalization and micro-segmentation in fintech.

10. Better crypto connectivity will help consumers navigate web3 technologies

A growing percentage of US adults are using cryptocurrencies across multiple apps, wallets, exchanges, and NFT marketplaces. With that, consumer demand for connecting crypto wallets across browser plugins, mobile apps, in-wallet browsers, hardware wallets, MPC wallets, and more—is rapidly increasing. Connecting the many moving parts of the crypto ecosystem would add value by adding much needed accessibility and usability. 

Plaid is aiming to address this with Wallet Onboard, a new product that can instantly connect crypto wallets across hundreds of platforms and apps, bringing millions of crypto users and assets closer together.

Fintech trends are all about putting consumers first

The real driving force behind all of the industry-defining fintech trends is the consumer. Fintech has grown to where it is today because of its focus on serving consumers in ways that they had never been served before. These trends represent shifting consumer preferences and fintech’s ability to change to meet their needs. 

The best way for fintech companies to stay relevant and find room for growth is to be flexible to meet new consumer needs and to be sure they stay on top of the trends that consumers drive.