Top 5 of Global Fintech Megatrends in 2024 – Which can be Strongly Developed in Vietnam?

@finfanio Top 5 Global Fintech Megatrends in 2024 #fintech #trends #megatrend #finfan #finfanio ♬ พี่ชอบหนูที่สุดเลย (I Like You The Most) Feat.VARINZ - Speed Up Version - PONCHET

Among the top five fintech megatrends for 2024, which trends have the potential to develop strongly in Vietnam? Let’s analyze this issue with FinFan.

Top 5 of Global Fintech Megatrends in 2024

The First Trend of Fintech has been Really Popular Recent Years: Sustainable or Green Finance

As you may know, the financial sector consumes a significant amount of energy and resources to operate smoothly.

This sector involves the exchange and trading of currency, which requires a substantial amount of wood resources to produce paper money.

Additionally, printing facilities must operate at full capacity to ensure a consistent supply for the market.

In the digital age, it was believed that the consumption of resources and impact on natural resources would be reduced.

However, the rise of cryptocurrency mining has emerged, significantly affecting the environment due to the high electricity consumption from powerful mining CPUs running daily. This also contributes to global climate change and exacerbates the greenhouse effect.

• As of 2022, bitcoin mining is estimated to have generated 0.19% of the world's greenhouse gas emissions and accounted for 0.38% of global electricity consumption.

• Bitcoin is mined using specialized computer hardware with a short lifespan, leading to an increase in electronic waste.

According to the report of Alex de Vries, the researcher at the School of Business and Economics at the Vrije Universiteit Amsterdam,

Therefore, the Net-Zero Banking Alliance has been established, comprising 142 banks from 44 countries committed to reaching net-zero greenhouse gas emissions from their lending and investment activities by 2050.

At the same time, startups with projects related to Sustainable or Green Finance are attracting significant investor interest and funding, especially those involved in the voluntary carbon market (VCM).

VCM allows entities to purchase carbon credits to offset greenhouse gas emissions and was valued at US$2 billion in 2021.

The market is projected to grow to US$40 billion by 2030, with sectors such as banking, oil and gas, and airlines expected to be key adopters of VCM.

Technological solutions that enhance market transparency and efficiency through automated verification and predictive analytics are anticipated to gain traction in this sector.

The Second Trend of Fintech: Generative AI integration and RPA

It can be said that AI and robotics are currently leading trends in the transition from the 4th industrial revolution to the 5th, as their applications span across various sectors of life—from factories to customer service personnel, and from tools like Google or OpenAI in assisting humans with information retrieval and acting as virtual assistants.

Fintech is also deeply involved in the realm of AI technology, as its inception aims to optimize and integrate technology into the financial sector.

In the article “AI for Cross-Border Payments – Why Not?”, FinFan discussed the application of AI for cross-border payments to make transactions “Faster, Safer, and more Cost-effective”.

The reason why AI can significantly support the financial industry is due to advancements in machine learning, which have enabled the creation of virtual trading agents or bots capable of handling large volumes of transactions in the market.

This capability allows businesses to potentially save substantial costs by reducing the need to hire human personnel to manage these tasks.

The Third One is Integrating Multi-platform Financial APIs and B2B Fintech.

In the rapidly evolving landscape of financial technology (fintech), the integration of multi-platform financial APIs and the rise of business-to-business (B2B) fintech solutions are shaping the future of financial services.

Financial APIs (Application Programming Interfaces) serve as crucial connectors in the fintech ecosystem, enabling seamless integration and data exchange between diverse financial services and platforms.

These APIs allow different applications and systems to communicate with each other, facilitating functionalities such as payments, transactions, account information, and more across various digital platforms.

For example, in a B2B enterprise, each department has its own tools and platforms to manage their work and necessary budgets.

For instance, the Business Development (BD) department needs a budget for international business trips, the marketing department requires funds for an advertising campaign for new products and services, and the HR department needs a budget for recruitment and talent acquisition.

In such cases, the Chief Financial Officer (CFO) of the company faces challenges in storing all the necessary documents for these emerging needs.

A platform or application that can help manage the budgets of various departments and integrate with other management platforms such as ERP systems, marketing tools, etc., would be an invaluable asset for them.

Recognizing this problem, fintech companies leverage APIs to innovate and customize their offerings. They can rapidly deploy new features and services by integrating with specialized fintech solutions to their B2B clients, thereby staying competitive and meeting market demands effectively.

APIs facilitate scalability by allowing fintech startups and established institutions alike to expand their services without the complexity of building everything from scratch. This scalability supports their clients' business growth and market reach, fostering a dynamic fintech ecosystem.

Furthermore, APIs democratize access to financial services, making them more accessible to businesses of all sizes and consumers worldwide.

Next is Tokenization, Alternative Assets among Top Wealthtech Trends

*In the wealthtech segment, asset tokenization is expected to gain traction this year owing to the technology’s potential to enhance liquidity, simplify trading, and open up new investment opportunities.

This trend will be driven by increased adoption among banking incumbents like JP Morgan and ABN AMRO which are developing infrastructure to support the trend. Plutoneo, a German-based blockchain consulting firm, projects that the European security token market will grow 81% annually over the next five years and reach EUR 918 billion by 2026.

The democratization of alternative assets is another major trend to look out for in 2024 and beyond.

These assets, which include private equity funds, luxury goods, art and real estate, offer diversification and new investment opportunities for both institutional and retail investors. Fintech companies are driving this trend by making private banking accessible to a broader audience.

Finally, indexing is poised to be a hot trend in fintech in 2024 driven by the rapid growth and needs of the exchange-traded fund (ETF) market.

Many asset managers lack the sophisticated in-house capabilities required for index development and benchmarking, a gap which creates opportunities for innovative indexing fintech startups to provide the necessary infrastructure for designing and maintaining these custom indices.

Their services will be particularly crucial for the growing segment of thematic ETFs, which require specialized and dynamic indexing solutions.*

*Source: fintechnews.ch

Aligning with the fintech news site Fintech News Switzerland, FinFan also published an article related to the tokenization of digital investment assets following the official recognition of the first Bitcoin ETF by the SEC. This development was accompanied by a series of actions from various European countries regarding their Bitcoin ETFs.

For details of the article read more:

. European: First Spot Bitcoin ETF Launched – Is this a good opportunity for investors to access Bitcoin?

. The first Bitcoin ETF in the US is approved. What information is worth noting for cryptocurrency enthusiasts?

And the Last Trend of Fintech: Next-generation Compliance Tools

For a company in the financial sector, legal compliance is of utmost importance because this industry directly impacts the budgets of one or multiple interconnected countries around the world.

However, issues related to legal compliance remain a significant gap, especially as financial crimes like fraud and money laundering have become increasingly sophisticated in bypassing these legal mechanisms using modern technology.

For this reason, technology companies continually develop applications related to KYC (Know Your Customer), integrating AI technology with fingerprint or facial biometrics to accurately record the information of payers. This helps prevent cases where identical names might lead to information being easily confused.

**Plug and Play predicts that a new wave of regtech startups will emerge. These startups will spearhead the “compliance 2.0 wave”, leveraging technologies like gen AI models to discern intricate fraudulent schemes.

They will focus on bringing know-your-customer (KYC), know-your-business (KYB), and anti-money laundering (AML) capabilities within one platform.

This integration will facilitate continuous customer monitoring, streamline the onboarding process and ensure ongoing anti-fraud controls.

EY estimates that the annual cost of money laundering and associated crimes ranges from US$1.4 trillion to US$3.5 trillion.**

**Source: Fintech News Switzerland

Which of the Top 5 Fintech Megatrends can be Strongly Developed in Vietnam?

Among the top five global fintech trends, FinFan identifies three with significant potential for robust development in Vietnam's future: the integration of generative AI and RPA, the integration of multi-platform financial APIs and B2B fintech, and next-generation compliance tools.

The remaining two trends still face considerable debates regarding legal frameworks and issues related to the development of fintech infrastructure.

The Reasons Behind the Above Assessment of FinFan about the Top Five Global Fintech Megatrends

The Integration of Generative AI and RPA

Currently, the AI industry in Vietnam is experiencing robust growth, serving various sectors such as chatbots for e-commerce channels, AI cameras for shop surveillance, AI-powered attendance systems, and more. Additionally, Viettel's successful development of the AI robot Vian has elevated Vietnam's reputation in this industry globally.

Therefore, the ability of Vietnamese AI engineers to develop an automated trading bot is entirely feasible and greatly supports the digitization of payment transactions, not only domestically but also across borders.

However, the challenge lies in creating automated trading bots that are both intelligent and compliant with domestic and international payment regulations, which is not an easy task.

Engineers must integrate data from various sources into AI systems to ensure they provide the most accurate results, aiming to enhance user convenience while adhering to strict legal regulations of countries with diverse state-level payment laws, such as the United States, the United Kingdom, and several European countries.

The Integration of Multi-Platform Financial APIs and B2B Fintech

For a long time, integrating payment APIs into businesses has been effectively executed by fintech companies through various payment methods.

These include direct bank transfers via international or domestic credit and debit cards, direct payments through e-wallets like MoMo and ZaloPay, and through payment gateways directly connected to business e-commerce websites or electronic marketplaces, delivery apps, and more.

FinFan itself has also published articles on this development, focusing not only on domestic payment issues but also on cross-border payments through international e-commerce platforms.

Read more:

. Top 10 Payment Gateway for E-Commerce in Vietnam - Part 1

. Top 10 Payment Gateway for E-commerce in Vietnam - Part 2

FinFan itself is a player in the fintech arena, partnering directly with numerous businesses to provide cross-border payment solutions such as MoneyGram, Remitly, Sendwave, Paysend, Ria Money Transfer, and others.

Additionally, FinFan collaborates with major domestic payment solutions like NAPAS, MoMo, ZaloPay, VNPay, facilitating remittance services for overseas Vietnamese to Vietnam from countries including the US, UK, Australia, Germany, Japan, India, South Korea, Taiwan, and others.

Next-Generation Compliance Tools

Compliance with legal regulations is a perennial issue in the fintech industry. As FinFan mentioned earlier, fraudsters and money launderers frequently update their sophisticated technologies to exploit unsuspecting citizens.

Instances such as people being scammed out of their money by gambling syndicates in Cambodia and Thailand, as well as impersonation of police officers using AI for personal gain, are notable examples.

All these issues stem from the fact that many Vietnamese people still have limited understanding of technology. Additionally, fraudsters have exploited the gaps in strict compliance with AML (Anti-Money Laundering) and KYC (Know Your Customer) regulations to carry out fraudulent and deceptive activities.

Therefore, updating technology for legal compliance by developing KYC apps is crucial for individuals and businesses in Vietnam. This is essential not only for domestic transactions but also for expanding into the global payment landscape.

Sustainable or Green Finance

For a long time, the Vietnamese government has shown a strong interest in green technology within the financial sector and has implemented various measures to develop this area.

Evidence of this interest is seen in Vietnam's largest economics university, which has launched training courses in the field of “Sustainable Finance”.

Their vision is “To spread knowledge and motivation for practices of sustainable finance through the building and implementation of training programs, consulting activities, and research projects in an inspirational, open, and cohesive work environment of like-minded people”.

However, everything related to this technology sector in Vietnam is still in its infancy, and it will take considerable time for startups specializing in 'Sustainable Finance' to achieve significant results.

This is similar to how MoMo had to build its brand over nearly a decade to help Vietnamese people understand and regularly use e-wallets for payments.

Although it requires significant capital and time, the future of payment systems in Vietnam cannot diverge from the new global payment trends.

For this reason, startups in this field continue to receive strong support from the Vietnamese startup community.

Evidence of this support is seen in the annual conferences that introduce startups offering green financial solutions.

New technologies such as big data, artificial intelligence (AI), blockchain, cloud computing, and the Internet of Things (IoT) are being applied to various green financial services, including:

• Environmental, social, and governance (ESG),
• Reporting and analysis,
• Environmental risk management and environmental benefit measurement,
• Green credit,
• Carbon finance, green bonds, energy business,
• Digital investment, insurance technology, and robo-advisory services.

Tokenization, Alternative Assets among Top Wealthtech Trends

To date, the cryptocurrency market in Vietnam is considered very vibrant and highly promising.

Vietnam consistently ranks among the top countries with the highest number of cryptocurrency holders, ranks third globally in profits earned from crypto investments, and held the top position in the global cryptocurrency acceptance index in 2022.

Read more:

. Surprise about Cryptocurrency Adoption and Transactions of Vietnamese People

. Vietnam Leads Globally in Cryptocurrency Adoption

. Reviewing Some Impressive Numbers about the Cryptocurrency Market in Vietnam

Therefore, it is entirely feasible for Vietnam to create tokenized investment products. In fact, Vietnamese developers in Singapore created one of the first and largest token-based games in the world, Axie Infinity.

However, the two biggest challenges the Vietnamese market faces are the lack of widespread knowledge about financial tokenization and cryptocurrencies, and the absence of legal acceptance or any regulatory framework regarding payments with cryptocurrencies or the use of tokenized assets in daily transactions and trade.

Therefore, startups in this market often spend a lot of time educating the market and waiting for new legal regulations from the government for this relatively new industry.

Conclusion Regarding Global Megatrends of Fintech and these applications in Vietnam

While the integration of Generative AI and RPA, Multi-Platform Financial APIs and B2B Fintech, and Next-Generation Compliance tools show great promise for development in Vietnam, the other two trends Sustainable and Green Finance, and Tokenization, Alternative Assets face more significant challenges related to legal frameworks and infrastructure.

By addressing these challenges and leveraging the potential of promising trends, Vietnam can enhance its fintech landscape and drive innovation in the financial sector.

This article was curated and authored by FinFan's market research and development team, alongside our marketing department.

About FinFan

FinFan is a cross-border embedded financial services company that focuses on mass disbursement, fund collection, card processing, IBAN, and digital APMs solutions, which can provide valuable input and integration on and for the same.

FinFan is already integrated with almost the world's well-known MTOs, PSPs, switch, and core fintech platforms such as Money Gram, Thunes, Qiwi, Remitly, World Remit, Bancore, PaySend, Terrapay, Ria Money Transfer (Euronet), Dlocal, Ripple, TripleA, FoMo Pay, Wings, etc.

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