Some experts say a global economic growth slowdown is anticipated for 2024, while others continue to be positive towards Asia Pacific’s (APAC) economic outlook and expect more rapid growth in the region. In this article, David Brady, Enterprise Sales Director, Southeast Asia, Airwallex, explores this outlook further.
If anything, what the last few years have taught us is the unpredictable nature of today’s economy. As we move [further] into the new year, what is certain is that the financial landscape is poised for transformative shifts, driven by disruptive technologies that are revolutionising the way we live, work and interact with money.
Against this backdrop, it is critical that businesses maintain line of sight of what is beyond the horizon. This means being equipped with insights that can provide clarity in terms of what to expect for the upcoming year – including key trends that are set to redefine the way businesses approach finance and technology.
1. Embedded finance is here to stay
Right now, all eyes are on growth: every dollar matters. Top of the agenda for businesses is refining their growth strategy for maximum impact, all while stretching their dollar. In the coming year, we will continue to see a rise in businesses, ranging from small and medium enterprises (SMEs) to larger enterprises, embracing the potential of embedded finance. There is more interest, and a growing understanding of this innovative approach, which promises to not only enhance customer experiences but also unlock new revenue streams. Global providers are set to emerge as indispensable partners for businesses with global ambitions. The success of these partnerships rests on the seamless integration of solutions, requiring them to be straightforward and capable of supporting multiple markets effortlessly.
However, this anticipated momentum in embedded finance is not without its challenges. Regulatory scrutiny is expected to intensify across the region in 2024, requiring an ideal partner who has the right licence and regulatory approvals for companies to address compliance, risk and security comprehensively. Internal compliance teams, fraud screening systems and the integration of Artificial Intelligence (AI)-powered Anti-Money Laundering (AML) solutions will become key in evaluating embedded finance providers. Moreover, the ability to offer comprehensive services that enable end-to-end transaction flows globally will differentiate successful providers in this burgeoning field.
Despite a tougher regulatory environment, the benefits of embedded finance will continue to drive greater adoption. It is not merely a technological innovation that can improve efficiency, but also a new channel for revenue generation.
As we navigate this evolving landscape, considerations also extend to the impact of central digital currencies and the integration of instant payment networks such as PayNow and UPI. While the exact role of these elements in the embedded finance ecosystem remains uncertain, their presence could influence and shape the trajectory of financial technologies in the year ahead.
2. Generative AI: The driving force in FinTech evolution
While AI is not a novel technology, Generative AI is set to elevate the FinTech industry to new heights in the coming year. This technology, capable of analysing extensive datasets and generating text, images, and sounds, is anticipated to advance significantly in complexity and specificity.
In the FinTech and financial services sector, which grapples with stringent regulatory and compliance guidelines, the potential of generative AI is particularly promising. Tasks such as information security, compliance support, know your customer (KYC) onboarding, and transaction monitoring often rely on manual human processes, which are error-prone, time-intensive, and challenging to automate using traditional methods. Generative AI applications look set to revolutionise problem-solving in these domains, offering a more efficient and accurate alternative.
All industries — not just in the FinTech world — are undoubtedly faced with challenges in today’s market. There will always be larger macroeconomic trends at play, whether that is changes in consumer behaviour, new regulations, or climbing interest rates and inflation. As we look ahead, 2024 beckons a promise of innovation, where the convergence of embedded finance and generative AI is set to redraw maps of possibility.
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