Fintech leaders 2024

Table of Figures

Figure A.

Figure B.

Figure C.

Figure D.

Figure E.

Figure F.

Figure G.

Figure H.

Figure I.

Figure J.

Figure K.

Figure L.

Figure M.

Figure N.

Figure O.

Figure P.

Figure Q.

Figure R.

Figure S.

What sector do you work in?

Key geographies summarized

Definitions of fintech

Predicted key fintech opportunities for 2024

Predicted key fintech opportunities for 2029

Are CBDCs inevitable?

Potential practical and applicable areas for AI in financial services and beyond

What would you consider to be the primary reason to invest in AI within your institution?

Suggested departments to manage AI risk

Most important fintech investment areas for 2024

Most important regtech investment areas for 2024

Obstacles to the successful adoption of fintech

Benefits that fintech brings to organizations

Important fintech benefits for incumbent/established banks in the next 5 years

The important obstacles to successful adoption of fintech

Most important fintech investment area - Cybersecurity

The most important fintech opportunity for financial services

Most important fintech investment area - Artificial

About CeFPro®

The Center for Financial Professionals (CeFPro®) is an international research, events, and media company. CeFPro® is the focal point for all risk, technology, and regulatory professionals, and is advancing the profession through renowned thought leadership, knowledge sharing, unparalleled networking opportunities, industry solutions, and lead generation. CeFPro® is driven by, and dedicated to, high-quality and reliable primary market research. This market research allows us to provide a range of services, from our excellent portfolio of peer-to-peer conferences, live interactive webinars, and international surveys, to a host of industry-led content, iNFRont magazine, and a membership area for industry figures to connect.

As the revolution of financial technology in financial services increases and gathers pace, CeFPro® strives to provide insights, support, and benchmarks for organizations through its Fintech Leaders Report. Supported by more than 60 industry professionals from various sectors, positions, and backgrounds, the Fintech Leaders Advisory Board provides guidance, direction, support, commercial insight, and knowledge to the industry.

The research objective is to provide a comprehensive report that examines the fintech industry’s opportunities, investment priorities, key obstacles, and main benefits. Findings are based predominantly on the results of the Fintech Leaders’ extensive international survey and the advice of the Fintech Leaders Advisory Board. CeFPro’s analysts and senior management have reviewed the results to ensure the integrity of the methodology and data used in the final report.

The final Fintech Leaders report can be viewed as ‘the voice of the industry’, assisting all relevant parties with a comprehensive understanding of, and insight into, risk, technology advances, governance and regulatory compliance, and other aspects of the fintech industry. Moreover, Fintech Leaders will assist all readers interested in the advances in fintech to make informed decisions on technology and business-related matters, with in-depth analysis of, and insight into, all fintech solutions and providers.

CeFPro® is solely focused on risk, regulation, and technology, drawing on a decade of experience and expertise in the industry to provide a standard of excellence distinct from that of generic market research companies that cover multiple sectors. Now in its sixth year, Fintech Leaders is increasingly recognized as the go-to resource, delivering unparalleled research and knowledge through the Advisory Board, CeFPro’s analysts, and other industry professionals.

Visit www.cefpro.com for more information. Join our global fintech community and receive complimentary updates, e-newsletters, webinars, and more: www.fintech-leaders.com.

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Fintech Leaders Advisory Board

Hugo Assagra, Group Head of Credit Risk Strategy, OSB Group

Alethea Avatara, SVP, Product Management Director, Wells Fargo

Tibor Bartels, Head of Transaction Services Americas, ING Bank Representative Office

Enrico Cacciatore, Senior Quantitative Trader, Head of Market Structure & Trading Analytics, Voya Investment Management

Stefano Canossa, Global Head of Operational Risk & Head of Risk Luxembourg, GAM

Branan Cooper, TPRM Consultant

Hakan Danis, Head of Macro Scenario Design, Citi

Dipanjan Das, VP, Credit Cards, SoFi

Brandon Davies, Board Director, RFIF CIC

Chris Ekonomidis, Director, BNY Mellon

Alessia Falsarone, Executive in Residence, Adjunct Faculty, Circular Economy and Sustainable Business, University of Chicago

Vivien Foetz, Head of Financial Risk, Gulf International Bank

Clare Fortune, Executive Director - Global Liquidity Solutions, J.P. Morgan

Sunil Gangwani, Co-Founder, Plootus

Seth Giovanetti, Head of Global Operational Risk, Cross River Bank

Maya Goethals, Director, Bank of America

Aleksi Grym, Head of Fintech, Bank of Finalnd

Sergio Guirreri, Senior Manager Capital Markets, Reply S.p.A

Emma Hagan, Chief Risk and Compliance Officer, ClearBank

Seyhun Hepdogan, Director of Analytics, Fifth Third Bank

Jason Hill, Head of Banking and Asset Management, PA Consulting

Imtiaz Hussain, Managing Director and Deputy Chief Auditor, BNY Mellon

Alpa Inamdar, Senior Managing Director Transformation Leader, AIG

Ange Johnson de Wet, Director, Head of Engineering, NatWest Group

Noah Kessler, Managing Director, Protiviti

Armel Kouassi, SVP, Global Head of Asset Liability Management, Northern Trust Corporation

Kim LaBarbiera, Director and Counsel, American Express

Sabeena Ahmed Liconte, Chief Compliance Officer, ICBC Standard Bank

Deepthi Machavaram, Global Head of Digital Financial Crimes Compliance Advisory, Morgan Stanley

Sandeep Maira, CTO/Founder, Raven Risk AI

Armel Massimina, Operational Risk Lead, National Bank of Kuwait (International)

Michael Middleton, Head of Program Management, Markov Processes International

Frank Morisano, Senior Managing Director, Treliant

Paul Mullins, Managing Director, Independent Advisor

Joe Posavec, Executive Vice President, Newmark BCRS

Curt Queyrouze, President, Coastal Community Bank & Coastal Financial Corp

Allan Reid, Group Head of Anti-Financial Crime, Baillie Gifford

Oscar Rogg, MD, Head of Treasury, Credit Agricole

Gurraj Sangha, Managing Member, SAZZ Consulting Group

Andreas Simou, Managing Director, CeFPro

Peter Smith, UK FinTech Ambassador, TISAtech and FinTechReguLab

Craig Spielmann, CEO, RiskTao LLC

Venkat Vedam, Head of Data Science Engineering, Manulife Investment

Stan Yakoff, Law Professor & RegTech Adviser,

Xiaoling Yu, Head of Financial Crime Modeling & Analytics, KeyBank

Research methodology and demographics

The Fintech Leaders survey for 2024 ran from September 11, 2023, until November 24, 2023, and received 2,470 responses from global respondents. CeFPro® subsequently undertook an additional research study with key advisory board members through one-to-one research calls to provide real-world examples and case studies. This report features insight from the consolidated findings of the global research study, in addition to the views and perspectives of members of the advisory board.

The respondents for the 2024 survey were from a diverse range of sectors and geographies. Figure A outlines the key sectors surveyed. A total of 20% of respondents were from the retail banking sector; of the 18% that stated ‘other’, the majority fell into the following categories:

• Risk management

• Auto leasing

• Regulator/government agency

• Commercial banking/lending

• Fintech.

The key geographies surveyed comprised of the United Kingdom of Great Britain and Northern Ireland, the United States of America and Canada, and Europe (Figure B). Almost 10% of respondents represented Asia-Pacific (APAC), though the wider majority were from the US and Canada (38.2%).

The views of the demographics, alongside those of the Fintech Leaders Advisory Board, were collated and analyzed by CeFPro’s team to provide a comprehensive overview of the status, trends, opportunities, and investment priorities within the fintech industry.

Figure A. What sector do you work in?

Figure B. Key geographies summarized

United Kingdom of Great Britain and Northern Ireland

Overview and critical considerations

2023 saw another turbulent year for global financial markets, with inflation soaring and subsequent curbing measures causing a wave of negative impacts on customers. Due to economic volatility, interest rate-driven markets slowed considerably, including the real estate and mortgage industries. As many geographies continue to hover on the brink of recession, what impact could these advances have on the development of the fintech industry and collaboration with incumbents?

Alongside economic volatility, geopolitical risk and global tensions both increased throughout the year. The war in Ukraine continued, and hostilities grew in the Middle East. Tensions also escalated between China and Taiwan, as their uncertain future raised global concerns regarding potential impacts on supply chain and business.

Challenges in the global environment—both economic and geopolitical—cause tension and uncertainty across the industry, which result in further drives for efficiency, cost reduction, and changes in global investment and business decisions. In contrast to the findings of the 2023 report, COVID-19 and changes to working environments no longer seem to drive the decision-making process. While many still operate in a remote or hybrid work environment, they now do so in a ‘Business as usual’ (BAU) environment.

Cybersecurity expected to continue its reign in 2024

2023 saw several high-profile cybersecurity breaches and ransomware attacks, both within financial services and non-financial institutions. As customer trust and the protection of reputation are vital to the stability and success of an organization and its customer retention, security continues to be a critical factor to success. However, while cybersecurity retains its top position across the range of opportunities and investment considerations for 2024, it looks set to fall further down the rankings over the next few years, as artificial intelligence (AI) rises in importance and focus.

The continued prominence of cybersecurity, among other factors, is reviewed in greater detail later in this report. As technology continues to evolve, so does the threat; organizations must stay ahead of innovation and leverage technology to advance security protocols. As one advisory board member succinctly described it, financial institutions must fight a continuous war against cyber criminals; institutions have to be successful every time, while criminals only need to be successful once. As the industry moves towards an increased focus on business continuity and

resilience, it is unsurprising that cybersecurity remains critical, and though potentially falling from the top spot, is likely to remain high on the agenda for the next 5 years.

Defining fintech

As the forms of fintech collaboration and utilization have expanded, CeFPro® wanted to provide a definition of ‘fintech’ to ensure the final report was clear and grounded in the correct context. In doing so, the results uncovered some divergence in the interpretation of the term ‘fintech’ (Figure C).

48% of respondents would describe fintech as: ‘the technology implemented in financial institutions’. A further 27% described it as ‘an industry’, and an additional 25% stated that the two definitions were the same.

They are the same

Financial technology refers to technology implemented in financial institutions

CeFPro’s research team explored this further, and asked advisory board members what they understood as the definition of ‘fintech’ to be; this step was conducted to provide some consensus and a working definition for the purposes of this report. All Fintech Leaders Advisory Board members agreed that the phrase ‘fintech’, in the context of the Fintech Leaders 2024 survey and report, was defined as ‘the industry’, rather than any specific technology, regardless of its implementation. Fintech was described as an ‘umbrella category’ for the industry, rather than a specific technology. One such example, Google, while not classified as a fintech, has entities within it’s organization that operate as a payments platform, and leverage technology to provide financial services or banking products. There is often an assumption that ‘fintech’ would refer to a startup or disruptive technology company; this was rebuked by the advisory board, who instead put forward that an organization or entity can be considered a fintech, regardless of its legacy or business years, as long as they are leveraging technology to aide in the provision, directly or indirectly, of financial service products or services.

Figure C. Definitions of fintech

Fintech refers to an industry (inclusive of bigtech)

Opportunities on the horizon

Cybersecurity remains top

In its research study, CeFPro® also looked to examine where the industry viewed the key opportunities for fintech within financial services firms, in the near and short term, with a view of 2024 and 2029. Figure D outlines where the key opportunities are expected to be for 2024. Cybersecurity tops the list by some margin. 50% of respondents rated cybersecurity as the ‘Most significant’ opportunity, with an additional 38% rating it as ‘Very important’.

Historically, cybersecurity consistently ranks top in the Fintech Leaders report; advisory board members put this down to the level of risk associated with cybersecurity and the implications if it is not maintained and prioritized. Of late, the industry has seen some large-scale cybersecurity incidents, mainly through ransomware attacks, all of which have been heavily publicized and had long-term implications for the target organization, on top of any losses or ransom paid. As much as cybersecurity is not directly an opportunity, leveraging fintech opportunities to advance and strengthen cybersecurity defenses is a huge prospect for organizations globally. Having assurances

D. Predicted key fintech opportunities for 2024

and the technology to support security capabilities allows organizations to develop products faster and stay agile in a fast-changing environment. Given the fast-paced nature of technology and the evolution of cybersecurity threats, manual intervention is not effective. Therefore, leveraging advanced systems and technology is an opportunity for security advances, cost efficiencies, and the generation of new business. All aspects of cybersecurity rely on trust, particularly in money movement; one advisory board member outlined that: ‘Trust is critical. Money movement relies on trust mechanisms. Security and trust are key for digitization’.

Cybersecurity is often a key area featured in risk profiles and risk reporting, where it is often highlighted as the most significant risk facing financial services and other critical infrastructure. As global tensions escalate and global economic volatility increases, the risk of a nation-state or organized group threatening the security of critical infrastructure has become increasingly likely.

Figure

Customer experience rises in the ranks

Customer experience came second in the list of opportunities, with 75% of respondents ranking it as either ‘Very important’, or ‘Most significant’ (Figure D). Although not a substantial rise in the rankings, moving from third to second place, the percentage of those ranking ‘Very important’, or ‘Most significant’ rose from 63%, with over 10% more respondents prioritizing customer experience for 2024. It was highlighted that customer experience could be seen as more of a measure of success than an outright opportunity, due to its association with cybersecurity, AI, payments, anti-fraud, and mobile and digital services. Advisory board members were also unsurprised to see customer experience so high in the rankings, given the increased regulatory scrutiny being used to protect the customer, and the evolving competitive landscape. Enhancing customer experience opens a deeper opportunity to develop and drive more personalized experiences for customers through marketing channels and mobile apps. Incumbent banks are historically slow to market for new product launches due to legacy infrastructure and limited agility for fast change. Leveraging fintech to advance customer experience allows organizations to keep up in a competitive market, which is vital.

In the wake of the COVID-19 pandemic, a new wave of customers have been expecting services to be increasingly digital, and include more responsive capabilities. With branches closing, many companies continue to be forced towards digital products; in some cases, the expectations on technology outweigh the quality of the product. If an organization offers a unique product, but their user interface (UI), or user experience (UX) is lacking, the product can be undermined. Advisory board members stressed this aspect as being highly significant, citing call centers as a key example. The experience of calling a call center is often a fairly negative one. Technology, such as automated machine learning, can be used to enhance experiences with call centers, for tasks as simple as resetting passwords. Digital organizations can offer video services, whereby the customer submits a recording of themselves for ID verification through an automated machine-learning tool. After their successful identification, the password is released, alleviating the need for laborious call centers where customers often incur significant waits and security challenges.

It was also highlighted as surprising to see such a gap between customer experience, and digital and mobile banking, with many seeing the two as intertwined. Mobile and digital services ranked in eleventh place, being voted as the ‘Most significant’ by only 16% of respondents, and ‘Very important’ by 41% (Figure D). Although, as outlined above, customer experience was seen as the measure, rather than the means. In most cases, improving the customer’s experience makes an organization easier to do business with, and enhances how customers view an organization and their loyalty towards it.

Customer experience continues to evolve as tools, technology, software, applications, and customer expectations continue to develop. Organizations should leverage the opportunity to enhance experiences, but also to gain additional insight into customer habits, including spending, as more customers transact through digital services. The opportunities are there for both customers and businesses to gain more, deepen business relationships, and tailor greater product offerings.

Payments continue to rise

Payments rose in the ranks this year, moving up to sixth place as a key fintech opportunity for 2024, with 22% of respondents voting it as the ‘Most significant’, and 43% voting it as ‘Very important’ (Figure D); last year, this was 33% and 17% respectively, indicating a significant change. Payments now sits just outside the top 5 opportunities for the coming year. Interestingly, this trend does not look set to continue, as the outlook for the next 5 years sees it falling to tenth place (Figure E).

While the opportunities for payments continue to evolve globally, they do so across different jurisdictions and stages. The UK and EU, often seen to have more advanced payment rails and systems, continue to see an influx in opportunities. In the UK, JPMorgan Chase & Co has entered as a digital bank/fintech. Leveraging a reduced cost base but remaining mobile-orientated, Chase Bank was able to offer customers products and prices that many other more traditional UK banks could not compete with. Across Europe, there is a sharp rise in the uses of applications for split payments and digital wallets, offering a huge opportunity to develop new products in payments.

In Europe, the digital bank Nickel has seen exponential growth over the last year due to its flexibility and innovative offerings. As with Chase Bank, Nickel offers low costs and fast service. With a high volume of transactions, it can be seen as a fast-evolving fintech in the European market.

Open banking also advanced payment networks and systems in Europe, making domestic payments and crossborder payments faster and more efficient. A greater e-commerce business model across jurisdictions has increased the need to evolve payment technology, and has opened opportunities for a broader customer base when providing digital banking or payment-facilitation services. As older technology is modernized, the pace of emerging startups increases. These new businesses, such as Venmo, develop new ways to move money, and are becoming increasingly accepted across the US as a way to conduct a range of transactions. Individuals are leveraging applications like Venmo to conduct transactions that would have typically been done in cash, such as tips for street performers and musicians.

Given the significant global disparities in approaches and progress, the development of payment systems could reflect the geographies they exist within; for example, the US still accepts checks as a payment form, which have long since been wound down use in the UK. Real-time payments in the US remain a challenge, whereas across much of Europe, they are now an expectation. As a payments market, China has evolved rapidly, moving from a society heavily reliant on cash, to relying heavily on digital wallets. Payment innovation also offers huge potential for emerging markets, and for those who are under or unbanked. Fintech payment solutions have created a host of new approaches to service consumers and businesses across more diverse demographics. The approaches to moving, holding, and accepting money have evolved rapidly and are likely to continue to do so. Less advanced geographical regions may have greater opportunity in this aspect than their more advanced counterparts.

Digital currencies remain low on the agenda

National and private digital currencies remain at the bottom of the priority list, with only 13% of respondents rating them as ‘Very important’ or ‘Most significant’. 42% rated private digital currencies as ‘Not important’. Digital currencies, or cryptocurrencies, have received a host of media scrutiny over the last few years, with fluctuations around Bitcoin and the bankruptcy of cryptocurrency exchange FTX being heavily publicized. Could negative media attention and continued uncertainty link to the low ranking?

Given the stature and scope of other items within the priority ranking for 2024, digital currencies could be seen as a less pressing matter to address. With continued uncertainty around regulation and expectations, the development of digital currencies could be limited by organizations looking to see where the industry is moving. Digital currencies in the traditional banking space remain a relatively unknown quantity, which creates uncertainty as to their potential. Often, they are perceived as a more niche area, reserved for specialist exchanges and private enterprise. One advisory board member outlined that unless a ledger can meet the cross-border payment requirements of every country, crypto or digital currencies are unlikely to take off on a national level. Some advisory board members were surprised to see digital currencies being ranked so low, but agreed that it could be a matter of priorities.

However, governments and organizations are, albeit in a limited way, turning their attention to the possibilities presented by digital currencies. In the week of writing this report alone, Société Générale announced the launch of their own Euro Stablecoin.

Figure F provides an interesting insight into the potential future of national-backed digital currencies, with 45% of respondents stating that they see their existence as inevitable by 2029. Although the benefits or opportunities of digital currencies, either public or private, do not look set to be realized by 2024, it appears that they may have their moment, as many see variation as the future of financial services.

How does the outlook change over 5 years?

CeFPro® also looked to explore how respondents saw the industry evolving over the next 5 years, and how priorities may change by 2029 as fintech opportunities develop. Respondents to the survey thought that AI presented the most amount of opportunities, with 63% rating it as the ‘Most significant’ and 25% as ‘Very important’ (Figure E). When compared to 2024, AI has risen from fourth in the rankings to first, suggesting that investment in AI opportunities may be a longer-term initiative.

AI is an area that has evolved over the last few years, as organizations explore potential use cases within financial institutions, specifically within risk teams. Much alike the digitalization and customer experience opportunities outlined for 2024, AI may well be an area that becomes vital to remain competitive. AI can act as a support to many

E. Predicted key fintech opportunities for 2029

areas outlined in the ranking, and can underpin customer experience and many security concerns, including cyber, anti-fraud, and anti-money laundering (AML). AI is increasingly used in customer experience functions, such as chatbots, though they again pose a customer experience risk, if customers should have a negative experience. If AI can be implemented in an intelligent way, it has the potential to automate business processes and reduce operating expenses. It also has the potential to strengthen the customer and employee experience, by automating processes and creating a more consistent experience. However, AI also requires a significant investment for each use case, as it could be potentially implemented across all teams. Organizations must determine where to prioritize uses and identify areas with the largest potentials for cost reduction and increased efficiency.

The Fintech Leaders Advisory Board expected AI to remain the highest ranked opportunity for 2029, outlining that it had a diverse potential, though businesses need to better identify both risks and opportunities in order to develop longer-term strategies. With

rapidly, companies run the risk of investing, only to find that the tech has become outdated before it has been implemented. One advisory board member highlighted that for future research, AI and large language models should potentially be divided. AI, for many, is now a way of

Figure

life, with the introduction of ChatGPT and other generative technologies. While AI and machine-learning tools typically require the management of highly skilled experts, large language models can be used by non-technical personnel. However, as uses increase, more risks are identified, and organizations are grappling with developing internal policies to control the use of such models.

Currently, AI is not directly regulated; there are few controls directly relating to the use of AI in any form, though some regulations, including GDPR, indirectly impact its uses. Regulations are not yet prescriptive, which may indicate the rise in focus over the next few years, as the industry gets to grips with risks and opportunities. However, it is important to note that 5 years is not a sufficient development time period for such a vast technology. Regulators are not currently engaging across the board with the industry on AI challenges. Therefore, the release and implementation of any regulatory guidelines within 5 years is unlikely to be robust enough to justify investment.

As outlined, AI links to many other areas on the rankings, including cybersecurity. Criminals are increasingly using advanced technologies, such as AI, to develop their strategies to infiltrate organizations. Fighting AI with AI could serve as an effective security mechanism. It also reduces manual tasks and monitors patterns humans may not identify within payments and anti-fraud processes. However, as outlined by members of the advisory board, a coherent and detailed data strategy is required to successfully develop such AI programs. A large portion of respondents also rated ‘Advanced data and analytics’ as a top opportunity over the next 5 years (Figure E). Data should be at the forefront, starting with collection, quality and governance, and how it can impact the outputs of any AI program. Linking back to the old adage ‘garbage in, garbage out’, data is more important than ever, with the continued use of technology requiring new data to feed outputs.

While it was knocked off the top spot, cybersecurity is predicted to remain an important fintech opportunity in 2029, with 50% of respondents ranking it as the ‘Most significant’. When reviewing the reason for the drop, advisory board members detailed the potential of AI to serve as a cybersecurity tool. Cybersecurity will always remain important, and feeds into critical risk reporting as organizations face significant harm from reputation damage. It was also raised that vulnerabilities arise from the high level of merger and acquisition (M&A) activity seen over the last few years; 2023 saw a number of high-profile collapses and some organizations acquired by others. Organizations merging, particularly on a global scale, will operate in a variety of different systems. Integration of systems takes time, as legacy systems may not support the transition. This can result in a number of disparate and disconnected systems, which opens vulnerabilities in corporate infrastructure. The high-profile nature of some mergers, including that of UBS and Credit Suisse, could make organizations more susceptible to attacks, as criminals look to exploit vulnerabilities. While cybersecurity may not retain its top spot as a key opportunity beyond 2024, it does however remain critical, and highly ranked across the industry.

Regulation sits in the top 5

Regulation and compliance was a new entrant for 2024, coming in fifth place as a key opportunity for both 2024 (Figure E) and 2029 (Figure F). Again, pointing to the

interconnected nature of the industry, AI was also viewed as an area to assist with compliance through report generation and compliance tracking. AI in itself is expected to be increasingly regulated over the next 5 years. Regulation and compliance were also closely linked to customer experience, with the Consumer Duty rules in the UK aiming to prioritize customers and protect their interests. Advisory board members were surprised that regulation and compliance did not rank higher, given their broad scope and applicability. It was speculated that this could be due to specific regulatory expectations being packaged in specific individual areas.

The future of payments

While many of the 2029 fintech opportunities ranked similarly to how they did in 2024, payments fell from sixth place to tenth. As outlined previously, the payments industry is rapidly evolving, with an increasing number of technologydriven applications being adopted by stakeholders. Although payments remain a critical focus, they are fairly narrow in scope, which could explain why they have not ranked as high over a 5-year period. Many niche players have emerged within the payments sector, with payment functions and products at their core; could this be viewed as a potentially over-saturated market in 5 years? Is there much room for advances beyond real-time payments and customer-driven efficiencies in that period?

Many technology-driven areas towards the bottom of Figure F, particularly blockchain and quantum computing, are potentially unrealized opportunities due to their advanced nature, and a lack of industry understanding and use cases. While blockchain has been critiqued by some as being too caught up within cryptocurrency and having limited use beyond digital currencies, industries outside of financial services have realized great potential in the use of blockchain and distributed ledger technologies. Blockchain has the potential to support important supply chain tracking, and has been realized in many distribution industries, with organizations such as Walmart leveraging its uses for tracking and monitoring. Blockchain initially emerged as a distributed ledger technology to support cryptocurrencies; therefore, it is possible that the negative press associated with cryptocurrencies has diminished its perceived value and its potential in secure transactions.

The future of national-backed digital currency

When exploring the future of national-backed digital currencies, or central bank digital currencies (CBDC), 45% of respondents saw their implementation as inevitable at some point in the future (Figure F). A level of uncertainty remained, with 14% saying they were ‘Uncertain’ and another 25% voting that it was ‘Too soon to say’. Only 16% of respondents did not see a future in national-backed digital currencies. CeFPro’s advisory board agreed with the sentiment, with all the interviewed members agreeing that it was inevitable in the future. There are few clear use cases at this point, though many geographies are exploring the possibilities, with Argentina, El Salvador, and China all progressing in, and even launching, CBDC. Governments are reviewing opportunities to move towards digital currencies, with the ultimate objective to make its use as seamless as cash. The advisory board questioned why state governments would allow for, and even enhance the prominence of, apps such as Venmo, and not digitize themselves in a similar manner. Despite the limited use cases and lack of current central bank backing and

investment, it is difficult to see how it is not the future.

Given the lack of opportunity seen in national or private cryptocurrencies, there will need to be a substantial amount of work invested into increasing industry and customer confidence before progress can be viable. With the focus on several initiatives, including AI and the future of regulation across several key areas, the future of digital currencies, centrally backed or otherwise, for the near term remains uncertain. However, in the longer term, the consensus seems to be that will inevitably be introduced.

Respondents were asked to elaborate on their views; below is a sample of some of the responses, including key objections and jurisdictional variations:

‘As Europe has no central government, a reference domestic digital currency may emerge before the EU begins to implement a currency.’

‘Central banks seem sold on the idea, but a clear customer-centric use case is still unclear.’

‘Digital currency is inevitable to ensure the robustness of the financial system, and to act as a counter to the unregulated world of Bitcoin, etc.’

‘It will enable a cashless transaction, yet through tokenization, will retain privacy.’

‘National-backed digital currencies pose too big a risk to democracy and freedom. Private digital assets provide a better solution.’

‘Now that even India has a digital currency, it is inevitable that the UK will also have its own.’

‘The US does not have the infrastructure or trust in government institutions to embrace CBDC.’

‘So many central governments are developing CBDCs, and many banks are developing their own tokens (stablecoins, tokenized assets, etc); it is only a matter of time until we have a national digital currency.’

‘Will be needed to compete and keep up with the velocity of payments and money movement.’

Figure F. Are CBDCs inevitable?

Exploring AI

Respondents were then asked as to where they see the top three practical and applicable areas for AI in financial services, or within their specific business unit, in the future. Some of the top answers are included in Figure G.

Figure G. Potential practical and applicable areas for AI in financial services and beyond

Alternative and big data Customer experience and service

The use of AI to advance customer experience continues to be the highest-ranked opportunity, and is seen as being both practical and applicable in the future. This was closely followed by alternative and big data, with many commenting that the analysis and use of alternative data sources, and the analytic capabilities of big data, were an opportunity to be leveraged in conjunction with AI. What this question did serve to highlight was the diversity of opportunity within AI, and, ultimately, the daunting task institutions face in adoption over the coming years. Opportunities range from a host of risk management

disciplines, including anti-fraud, AML, third-party risk management, cybersecurity, and payments, through to AML, product development, insurance and underwriting, and contract language.

When looking at the primary reasons to invest in AI, the focus shifts towards process optimization and costeffectiveness (Figure H). Many commented on the power

of AI to reduce manual workloads, which could, in turn, make teams more efficient. Another key reason to invest is competitive advantage. Many organizations are innovating and adopting the use of AI and other advanced technologies. It is no longer an if, but a when and how they will be adopted. One respondent described the implementation of AI as: ‘There is no one primary reason for investment; it is as fundamental as email access’.

Figure H. What would you consider to be the primary reason to invest in AI within your institution?

Cost-effectiveness/ process optimization

Customer experience/service Stay competitive

A final exploration into the evolving use of AI looked to explore how organizations are structuring the use of AI, and allocating responsibility for assessing and managing its risks. With AI being relatively immature in terms of use cases and practical or embedded use cases, risk management practices were divergent across organizations (Figure I). The results demonstrated uncertainty, with 24% of respondents stating that the responsibility for assessing AI

risks fell within IT, and 20% stating that it fell within model risk. It is worth noting here that respondents were only given the option to choose one primary answer. It emerged in the follow-up research that there appears to be no single source of responsibility, as represented by the 19% of respondents who stated ‘Other’. When prompted to expand on their views, respondents primarily responded with: ‘All of the above’, or a combination of the areas listed in Figure I.

Figure I. Suggested departments to manage AI risk

An advisory board member offered their insight, and said that management of AI risks should originate and be led by operational risk, so as to identify very clear definitions from the beginning. IT and CISO offices are enablers of the technology, coming in once the model is ready, to ensure it stays secure and that the integrity is maintained. Another agreed that AI should be overseen by operational risk, as there is the risk of potential bias in data sets, and the data used to train models and control outputs. Others suggested that as the user of the AI in each specific context was the owner (with model risk involved from a risk perspective), the user had to own the level of risk. It was also mentioned that model risk, to a large extent, typically falls within the remit of operational risk. Operational risk has scenario analysis capabilities and, if something goes wrong, can leverage risk control and self-assessment to mitigate current risk and identify any residuals. As AI is early on in development, and much of its internal work and governance processes are still emerging, it could be too early to identify clear guidelines.

‘Clearly defined fairness criteria and proper impact analysis.’

‘Do not use demographic variables, and make sure to use explainer tools to understand the variables being used to make a prediction. With this, we will be able to identify bias.’

Bias is a key risk and concern when using AI. CeFPro® asked respondents, in an open-text format, whether they had any examples of some key mitigation practices to manage bias in AI-based tools and products. Some of the text responses are outlined below, though responses were diverse in nature and suggest that, at this stage, the industry has limited best practice cases.

Many responses focused on human intervention, assuring teams that humans are still vital, and cross-referencing human expectations with AI results to monitor and benchmark outputs. Many also mention how best practice is grounded in building models based on evidence-based parameters and not social or political parameters, which, by default, can add bias to a data set.

Fintech Leaders [will] provide direct insights into what’s happening in the industry, and large lenders, retail, and commercials will be able to see untapped profitable segments… Portfolio acquisitions, footprint expansion and potential new models, data acquisitions, or analytics pipelines can be guided by or directly around the information provided from [the report].

Seyhun Hepdogan, Director of Analytics, Fifth Third Bank, Fintech Advisory Board Member, CeFPro

‘Communicate to resources that they will not be replaced, but will evolve to work in conjunction with AI.’

‘Continual review and validations of model outputs.’

‘Comparison of historical patterns versus anticipated performance.’

‘It depends on the use case; models must be validated, data and methodology must be tested for bias, and the purpose of the AI validated. If the AI is making a prediction, then test the prediction with statistical testing. If an AI chatbot is being used, then test the effectiveness through structured conversation/solution scenario testing.’

‘It is paramount to analyze the actual data that goes into any technology application. Whether that data is complete (or missing anything), whether that data is representative in size and scope (to minimize sample bias), whether that data is continuously populated (as real-time as possible, or as historical as can be), or whether that data is properly formatted (so as to enable effective analytics).’

‘Preventative measures: ensure the models are trained on data that is without bias. Develop techniques that identify and remove biased data before the models are used. Reactive measures: ensure the model outputs are monitored for bias. Design KPIs and monitoring that track and compare the performance of the model on different populations.’

Fintech investment in 2024

In addition to what opportunities and detailed use cases within fintech are predicted to develop, CeFPro® also wanted to explore where investment was being made over the next year. Often, the view from the industry as to where the opportunity lies is not always aligned with where investment is going. However, 2024 appears to buck this trend.

Cybersecurity remains a top investment priority for 2024, with 55% of respondents voting it as ‘Most significant’, and 33% as ‘Very important’. Only 13% voted it as ‘Not important’ or just ‘Important’ (Figure J). Given the prominence of cybersecurity throughout this report, it is unsurprising to see it as a continued area of investment moving into 2024. As technology continues to evolve, vulnerabilities and cybersecurity become more important. Ensuring that cybersecurity defenses are keeping up with advances in technology and criminal approaches is paramount.

Organizations recognize the impact that a cyber attack can have on their reputation, as well as the costs associated with regulatory fines and ransom payments. Spending is being allocated to preventative measures, such as cybersecurity initiatives, to ensure that security remains a top priority as innovation and digitalization continue to advance. There has been a recent shift in the regulatory approach towards security incidents, with a growing acceptance of their inevitability. While organizations are remaining proactive in mitigating all attempts possible, they are also exploring how to best improve their recovery time and minimize damage in the event of a breach.

From an investment perspective, regulation and compliance are seen as an important area of investment; they appear in the top 5 of both the 2024 opportunities and 2024 investment responses. With continued industry

Figure J. Most important fintech investment areas for 2024

changes and significant shifts in European markets—following the implementation of, and work towards, the new Digital Operational Resilience Act (DORA)—resilience is seen as a key focus to support mitigation approaches. DORA seeks to provide a deeper level of regulation over fintech by bringing fintech organizations within its remit. By focusing on the entire financial ecosystem and not just traditional platers, DORA looks to strengthen resilience and minimize the impacts of disruption across the entire ecosystem, including fintech and third parties. The move poses a risk to fintech companies, who are often smaller organizations, startups, or entities within larger organizations. Many do not have the experience or budget to implement the level of regulatory scrutiny expected under DORA. Therefore, it is surprising to see that regulation and compliance investment are not higher in the list of priorities, considering this is DORA’s transition year. DORA recognizes IT risks across all sizes of organizations, whether directly regulated or not. Therefore, strengthening IT and cybersecurity will remain key for incumbents and fintechs alike across Europe.

With the same view of strengthening resilience, comes the focus on cloud computing, as seen in Figure J. While cloud computing was rated as ‘Most significant’ by only 23% of respondents, an additional 43% recognized it as a ‘Very important’ investment area. This was highlighted as somewhat of a surprise by the Fintech Leaders Advisory Board members. Although a large portion of the work towards cloud storage has been carried out, and the industry is far more comfortable and aware of the risks and controls required for effective cloud management, more work needs to be done. Even with the increased focus on AI, cloud computing continues to be listed as a top 5 investment area. This is likely because cloud services are required to drive AI programs, and for AI and machine-learning computational capacity. As organizations have recently been prioritizing the movement of data centers, cloud services may receive lower levels of investment moving forwards. However, cloud services continue to be relevant to the industry, as they have greater storage capacity. Organizations are increasingly focusing on resilience, business continuity, and disaster recovery, to which cloud services are providing a range of solutions. In addition, cloud services can help restore services remotely and quickly, which is of particular relevance to organizations seeking to explore workarounds to restore systems and mitigate impact to customers. However, cloud services do have an associated risk. With continued concentration in key providers, organizations must identify and understand the concentration and develop plans to respond in the event of a supplier failure or outage. The potential, however, is there, and many view it as not yet having been realized. Cloud services offer flexibility and opportunity in the volume and types of business organizations are able to process.

Cryptocurrency, both private and national, remains the lowest in terms of investment for 2024, which further emphasizes the slow pace of development for any national-backed digital currencies in the near term. As outlined in Figure F, although much of the response base saw a national-backed digital currency as inevitable, the investment is not yet there, for the next year at least. With the above-outlined investment opportunities and continued geopolitical tensions, the use of national-backed digital currencies remains a when, rather than an if; however, key commitments are taking priority in the near term, with changes unlikely to materialize on a large scale in the next 5 years. As more use cases come out globally, countries may jump into the opportunity, in order to not be left behind.

Regtech investment for 2024

The survey also sought to explore the opportunities and investments within regtech. Regtech is featured as a top 5 investment area for 2024, as well as a top 5 opportunity in both 2024 and 2029. When exploring the most important regtech investment areas for 2024, cybersecurity is (once again) voted in first place, with 55% of respondents rating it as ‘Most significant’, and 34% as ‘Very important’ (Figure K). This may be due, in part, to the extensive list of regulations that focus on developing resilience and enhancing security relating to cyber and information security. Opportunities to enhance efficiency in cybersecurity and automating security came out on top as a key regtech investment area.

Fraud risk management came in second place, with 79% of respondents rating it as either ‘Most significant’ or ‘Very important’. In previous rankings, anti-fraud was voted just outside the top 5 on opportunities for 2024 and 2029. It also fell to eighth place as a key investment area for 2024, so these results serve as an interesting contrast. As technology continues to advance at a rapid pace, fraud tactics are also evolving. As increased digitalization comes with increased risk of fraudulent activity, organizations must invest in security programs to monitor, detect and mitigate the potentially increased risk. As AI looks to advance practices, and digital and mobile services are increasingly an expectation, authentication has become increasingly complex. Customer expectations have become accustomed to instant access, with limited steps for authentication or access to accounts; therefore, some authentication and technology investments could be

contributing to the rise in fraud risk management as a regtech opportunity.

One advisory board member highlighted that model risk was not an area voted higher as a regtech opportunity. Model risk has a key role to play in the implementation of AI technology and decision-making tools. Figure I outlines how 20% of respondents would allocate the primary responsibility of AI risks to model risk. Assumptions of models must be documented and understood to mitigate risk and remain compliant. With the increased use of AI and ChatGPT, model risk is more prominent as a risk silo. Considering the high likelihood of regulation of technology and AI uses in the future, model risk should be explored as a regtech opportunity and investment area.

Synergies across many areas were also highlighted. Although operational risk fell further down the rankings in terms of investment, areas within operational risk, such as cybersecurity, fraud risk, and AML/KYC, broke out and ranked higher. There is an increased focus from global regulators on third parties, with most jurisdictions releasing operational resilience requirements and updated treatment of vendors and third parties. It was a surprise to many that operational risk was not rated higher. Environmental, social, and governance (ESG) was ranked the lowest in terms of investment priorities for 2024. Only 16% of respondents rated ESG as ‘Most significant’. ESG is an area that continues to receive a lot of attention globally, both from a financial services perspective, and a broader political perspective. As organizations look to set ESG targets, plans, and goals, the increase in political debate has made ESG a more challenging topic. Regulators continue to review their approaches and expectations, with an increased focus being placed on greenwashing as a key concern, though other aspects also remain somewhat unclear or undefined. The Fintech Leaders Advisory Board hypothesized that the low rating could be a combination of the immaturity of the ESG lifecycle, the volatility of political view, or the uncertainty around regulatory expectations and future plans. Cost benefits from a regtech perspective are not yet realized, and expectations remain uncertain. With a range of nuances across jurisdictions, evolving customer expectations for green products, and uncertainty as to the future, it is unsurprising to see that ESG, for the short term, remains a low investment priority.

Figure K. Most important regtech investment areas for 2024

Obstacles in adoption

Alongside the key investment priorities and opportunities, CeFPro® wanted to explore how some of the important obstacles towards the successful adoption of fintech were ranked. Figure L details the results, with cybersecurity once again coming in at the top of the rankings, closely followed by data integrity/quality. Cybersecurity was ranked by 45% of the respondents as the ‘Most significant’ obstacle, while 41% ranked it as ‘Very important’. The advisory board agreed that as much as there are huge opportunities to advance cybersecurity, and investment is being spent across 2024 and beyond, it remains an obstacle due to the continued regulatory focus. When reviewing cybersecurity regulations, some organizations were subject to over 20 different regulations relating to cybersecurity, all of which

have slightly different formats, nuances, and expectations. This has a fundamental impact on the productivity and efficiency of said organizations. With so much time focused on ticking boxes to ensure regulatory compliance and jurisdictional variations, less time can be spent on maturing processes. As cybersecurity views have now evolved to a ‘when, not if’ mindset, focus is no longer focused solely on protective measures, but increasingly on strengthening and reinforcing responses and recovery plans. Regulators are focusing on third parties and vendors, and the vulnerabilities they may expose organizations to. As a result, exit plans are required across a swathe of fintech companies and third parties, many of which are yet unregulated.

The second highest obstacle, closely following cybersecurity, was data integrity and quality. As outlined throughout this report, technology is advancing at a rapid pace. Organizations must ensure that data feeding models are scrutinized to maintain integrity and quality, limiting bias in increasingly automated processes. In some instances, the technology is overtaking the data. With the introduction of generative AI and large language models, vast volumes of data are required. This raises questions around data security and privacy, which is currently debated across organizations, with many banning the use of public large language models like ChatGPT until the associated risks are better understood. Concerns over

customer data restrictions, regulations, and requirements also ranked highly in third place, with 71% of respondents ranking customer data restrictions as either a ‘Very important’, or the ‘Most significant’, obstacle facing fintech.

Aligned with the previously mentioned data quality and integrity issues, cross-border data sharing remains a challenge, especially with the development of new products and the emergence of generative models. Regulations across geographies, much like some of the cybersecurity and third-party regulations, are not aligned across jurisdictions.

Figure L. Obstacles to the successful adoption of fintech

Access to funding and constraints on resources is ranked fifth in the list of key obstacles inhibiting the successful adoption of fintech, jumping 5 places from tenth place in last year’s 2023 list. Budgets continue to be a cause of limitation within financial institutions. With the current global economic and political environment going through a state of flux, the question can be asked: is innovation taking a back seat to managing volatility? Organizations have faced a turbulent year, with dramatic changes in working habits, customer expectations, and technology advances. With global economic volatility and uncertainty remaining on the horizon, as inflation surges globally and inflation rates across many jurisdictions look set to remain high, are we edging towards a more cautious financial services landscape? The Fintech Leaders Advisory Board thought not, and that innovation will continue as the industry continues to recognize the benefits and opportunities within fintech to further strengthen practices and product offerings.

Although the role of technological subject matter experts ranked in the middle of this year’s list, it was expected to have ranked higher, due to the ongoing lack of expertise in the industry. This was a much more prominent obstacle in 2023, where it was ranked in third place. As the industry progresses and more is understood about the opportunities and technologies being implemented, subject matter experts are developing in terms of their insight and knowledge. However, advisory board members felt that this was not a significant enough change to justify the fall in the rankings, with a lack of resources and subject matter still being a key concern for many.

Application and benefits

Figure M. Benefits that fintech brings to organizations

Reports such as [Fintech Leaders] enable the industry to have a detailed view of the current risk landscape across financial services, including emerging trends… enabling constructive discussions within organizations and externally. Armel Massimina, Operational Risk Lead, National Bank of Kuwait (International), Fintech Advisory Board Member, CeFPro

Despite a backdrop of heightened and continued global volatility, innovation and progress in fintech remain consistent. Disruption and uncertainty are being felt on a global scale, and all aspects of the industry have been impacted by the ongoing economic instability, legacy of COVID-19, and rising geopolitical tensions.

Cybersecurity remains a primary area of focus and prioritization, although AI is predicted to rise to the number one opportunity over the next 5 years. When reviewing where the most important benefits lie for organizations in adopting fintech, speed and cost efficiencies ranked the highest and second highest (Figure M). Automation and speed remain a top benefit for 2024, with 84% of respondents ranking them as the ‘Most significant’, or ‘Very important’. Against such uncertainty, making processes more efficient remains a top focus. Doing more with less reduces costs, and ensures teams operate as efficiently as possible. Improving cost efficiencies rose from fourth to third place for the 2024 rankings, further demonstrating the drive for increased efficiency.

Customer experience also ranks highly, coming in third place. Surprisingly, opportunities to expand new business areas and revenue streams ranked in seventh place, further outlining the benefits of successful adoption centering around efficiency and cost reduction. The lowest ranked opportunity was seen as leveraging fintech to decrease fines and regulatory investigations, with only 41% of respondents ranking it as ‘Most significant’ or ‘Very important’. This was surprising, given that increased automation could drive more timely and accurate reports, which aligns with cost efficiencies and automation—the highest ranked priority.

The most important fintech-related benefits for incumbent/established banks over the next 5 years closely aligned with that of the perceived overall benefits of fintech as a whole. 85% of respondents saw AI, machine learning and advanced analytics as the ‘Most significant’ or ‘Very important’ benefit for established organizations (Figure N). Uses of AI, machine learning and advanced analytics serve to support the cost and efficiency priorities outlined in Figure M. Opportunities remain to reduce human labor and manual processes, therefore reducing costs and increasing efficiencies. However, education pieces are required for humans working alongside technology. Concerns remain as to the future and security of jobs, particularly within risk silos, where humans remain critical to the implementation and ongoing management of technology. As part of the successful adoption, understanding the uses and ongoing management of AI, machine learning, and automation are critical. The use of automation was also ranked highly as an important opportunity within incumbent organizations over the next 5 years. It was highlighted that without AI or machine learning, there is little opportunity for automation, which explains its ranking in third place. The use of automation as a tool to aid decision-making by automating reports and data generation is a key driver for automation development and implementation.

Data sources and usage were highlighted as the cornerstone of the top three ranked benefits (AI, machine learning and advanced analytics; cost reduction; and automation); enhancing data quality and lineage is vital to successful automation and technology implementation. Organizations have seen heavy investment in data lineage and quality as a starting point for investment in AI, machine learning, and automation. Ensuring highquality inputs directly impact outputs.

It was no surprise that data sources and uses fell slightly in favor of more advanced technology and automation due to data investment.

ESG opportunities were not ranked highly by a large portion of respondents, with almost 50% rating them as ‘Not important’ or just ‘Important’. ESG opportunities are an area rising in focus and consideration across global organizations, due to the potentially significant impacts and wide-reaching repercussions they can have.

However, ESG has recently lost momentum as a result of political pushback. With the geopolitical backdrop in mind, ESG posed challenges to developing industry-wide expectations and goals. The Fintech Leaders Advisory Board also did not view ESG as a fintech opportunity, outlining that there was little linkage between fintech and ESG at this stage of development. They did, however, outline that once industry standards are further established, technology can be leveraged as a tool to enhance processes and implementation.

A final area for review was that of distributed ledger technology (blockchain). The uses of distributed ledgers have been extensively researched and discussed across financial services, with financial institutions attempting to leverage them as an opportunity to settle financial transactions and remove the need for the middle office. While there are a limited number of successful use cases, opportunities remain, with other sectors successfully leveraging its uses, particularly in supply chain management and tracking.

Figure N. Important fintech benefits for incumbent/established banks in the next 5 years

AI and Cybersecurity Dominance of Fintech Leaders

Cybersecurity here to stay

One constant throughout the time of CeFPro’s Fintech Leaders surveys and reports has been the ever-present themes of Cybersecurity and AI. Both are generic terms, with wider ramifications and challenges; respondents were clear that dependent on department and use, their definition was open to interpretation and importance. However, for the purpose of CeFPro’s Fintech Leaders survey and report, these were left in their generic form to provide an overview of the challenges, opportunities and investment priority.

Cybersecurity has remained a constant as an obstacle to the implementation of fintech in financial services for years. In this year’s report this was ranked first, with 38% stating it to be ‘Very important’ and 50% ‘Most significant’, meaning nearly 9 in 10 respondents clearly viewed the on-going, and ever increasing cyber threat as the key challenge to maximizing and fulfilling potential. (See Figure O)

Interestingly, the ranking has remained the same, with the combined percentages of those ranking ‘Very important’ or ‘Most significant’ being within 10% of this year’s votes; as far back as pre-pandemic 2019 this was 90%, while during the pandemic (2020) this was 89%. Even last year this was the number one hurdle with 86%. for more information.

Demand for ever more secure, yet fast, reliable and immediate access to transactions and accounts creates constant challenges for financial institutions. There are increasing numbers of bad actors, some private and some state-sponsored, and the challenges grow exponentially for financial institutions where clients’ requests, along with shareholder demands for controlled costs and enhanced profits, are ever increasing. All the while, the post-Covid world has expectations of improving customer experience through enhanced mobile and digital services.

Seen through a historical lens, there is an understanding of why Cybersecurity has consistently been ranked first as the investment priority in Fintech Leaders. This year’s report had 88% of respondents rank Cybersecurity as the key investment priority; a review of the last two years shows this percentage was 89% last year, and 85% in 2022. In each year, though, Cybersecurity was ranked first as the key investment priority (See Figure P). Moreover, it has consistently been one of the few areas to have more than 50% of votes cast as ‘Most significant’. With the fintech industry expanding and growing at its current rate, more mobile and digital services available, an uncertain geopolitical arena creating greater division, increasing organized crime – some state sponsored, the need for enhanced cybersecurity and protection is clear.

Figure O: The important obstacles to successful adoption of fintech

Figure P: Most important fintech investment area

AI takes center stage

AI has also been highly ranked throughout CeFPro’s Fintech Leaders reports, though with not as much consistency or breadth of coverage as Cybersecurity. In this year’s report, AI was ranked first place as the fintech opportunity, with 88% stating this was ‘Very important’ or ‘Most significant’; interestingly, 63% ranked AI as ‘Most significant’. Even prepandemic, in the 2019 Fintech Leaders report, AI was ranked second as an opportunity, with 74% stating that AI was ‘Very important’ or ‘Most significant’; an interesting observation is that the 2019 report asked respondents to address what they saw as a five year outlook, where AI received 76% responses as ‘Very important’ or ‘Most significant’, with an equal split of 38% for each. Fast forward five years to this year’s report and the ‘Very important’ and ‘Most significant’ votes made up 88%, with 63% stating it as ‘Most significant’. Obviously, AI has been propelled into the public limelight in 2023 with the high profile launch of ChatGPT. However, there is a stark change from 2019 (38%) to 2024 (63%) of those that ranked AI as the ‘Most significant’ fintech opportunity. (See Figure Q).

Just two years ago, in Fintech Leaders 2022, AI held sixth position, with 57% stating this was ‘Very important’ or ‘Most significant’; also interesting in this report was that AI was ranked ‘Most significant’ by just 16% of respondents, and fell behind themes such as Cybersecurity, Advanced Data and Analytics, Customer Experience, Mobile, Digital Services and Cloud. One should add that the survey for the 2022 Fintech Leaders report was conducted toward the end of 2021, still in the height of the pandemic, with much uncertainty ahead for financial services and mobile and remote systems in place. A ‘needs must’ attitude, prioritizing business and operations, was in place many financial institutions. Also interesting, though, was that despite the relative low ranking and votes, respondents did state that the five year outlook would increase the importance of AI significantly, moving it to third place behind Cybersecurity and Advanced Data and Analytics.

When we review AI growth and investment within incumbent financial institutions, the picture is less dramatic. AI, along with machine learning and advanced analytics, held the top spot as an investment priority in both 2022 and 2024. (See Figure R) In 2022, 51% of respondents stated AI was ‘Very important’ and 28% as ‘Most significant’, totaling 79%. For 2024, the number stating that AI was ‘Very important’ was 32%, while ‘Most significant’ was 53%, totaling 85%. This is a significant shift in mindset and outlook by the industry, specifically among those within established financial institutions; it was only in last year’s 2023 Fintech Leaders report, when asked what the five year outlook was for AI, that only 34% thought it would be ‘Most significant’ in 2028! The transition in one year reflects the race to the top, with high profile and well publicized examples of AI use (and potential). To be clear, the use of AI is not only in financial institutions, of course, with all industries and sectors facing significant shifts with the evergrowing AI.

An overarching observation, and one beyond the scope of Fintech Leaders, is to prepare the ground for a much more detailed appraisal of AI as it evolves in both the immediate and distant future. What systems, services, products will be most affected? On what features of generative AI will thed focus be? The breadth and depth of the potential is unknown - or certainly limited - compared to the potential AI offers; transationaly security with pattern recognition or identification through biometrics are just some examples, while large language models can reveal hidden patterns and generate usable data. The opportunities created may vary in different parts of a business, maybe requiring prioritizing becoming an issueis superfluous reasons.

This creates other internal and external challenges for already highly regulated financial institutions. Internally, a strong governance structure needs to be in place, with ‘approvers’ and ‘overseers’ positioned at each stage of the process. Externally, how regulators create appropriate regulation that balances the needs of the business and key safeguards will be an interesting development to keep track of. Regulators do not speak with one voice, or in one geography, which adds a different dimension to the discussion. Data, for example, is an area that is highly regulated, and AI can create opportunities that have not been previously available, but which create challenges around privacy, competitive reasons, need for audit

Figure Q: The most important fintech opportunity for financial services

trail and so on, which will make it difficult for financial institutions when using ‘open’ or ‘private’ models. None of this means there is no regulation in place at present. There is consumer credit and protection, data privacy and other applications; but the key is that AI may evolve faster than the current regulations in place.

Knowledgeable and skilled AI experts will be required; the debacle with the Microsoft head of AI showed how valued industry experience is in 2023. Moreover, as AI develops, there will be rapid growth in the number of companies providing products that do not require AI-specific experts. However, the evolution of AI is a defining turning point for financial institutions. There is no doubt AI can increase productivity and research, and this can have far reaching benefits. Yet many questions remain unanswered, whether they are around regulations, job displacement (or enhancement), unintended bias or other as yet unknowns. As one Advisory Board member observed, the risks are unknown: risk professionals discuss the benefits and opportunities without necessarily being fully aware of the scenarios, controls or threats.

To view past Fintech Leaders reports, please visit www.fintech-leaders.com

Figure R: Most important fintech investment area

Concluding thoughts

As the fintech industry continues to advance, its associated benefits, opportunities, and investment areas evolve. Although cybersecurity remains a top consideration across all categories, AI is set to knock it off the top spot over the coming years, as its possibilities become reality. Much hesitation remains around investment in AI, as regulations remain uncertain, data continues to cause limitations, and human concerns grow for job security in a technologicallyadvanced industry. What remains unquestioned, however, is the opportunity on the horizon. This survey serves to demonstrate that opportunities and investments are abundant in equal measure. Organizations are seizing the opportunity to develop processes, implement new technologies, digitize services, and keep up with, or even stay ahead, of the competition.

Figure S demonstrates how the industry’s understanding of fintech is continuing to grow, with 50% of respondents viewing the status of the industry as ‘Just right’—an 18% increase from last year. The level of respondents rating the status as either ‘Overhyped’ or ‘Overstated’ also fell slightly for 2024, although ‘Overstated’ was the second highest ranked response, with 25% of respondents citing it.

Fintech Leaders Advisory Board members also agreed that fintech was getting the right amount of coverage, with investment, discussions and news coverage being on the rise. The industry has reached a point where it is ubiquitous, with a diverse range of players and huge opportunities; they did not believe that all opportunities had been utilized, with much more to come as the likes of AI and automation continue to evolve. As regulators move more towards the adoption and incorporation of fintech within their view, alongside the continuation of encouraging adoption of fintech solutions, more focus will be drawn to the opportunities and investment to ensure compliance. There is, as with most areas, room for greater awareness and for greater testing of capabilities, to sort what can be construed as ‘hype’ from practical applications and use cases. Greater industry collaboration across organizations, regulators, and between fintech and incumbents is required to further advance the industry and increase opportunities to further serve customers, diversify products, and tighten security.

[Fintech Leaders] allows us to go deeper and get specific insights from individuals about things that are happening under the surface… [Reports like Fintech Leaders] inform our strategy; are we moving in sync… and what things are we missing?

Curt Queyrouze, President, Coastal Community Bank & Coastal Financial Corp, Fintech Advisory Board Member, CeFPro

Figure S. Views of the fintech industry

Survey, ranking & methodology

CeFPro’s Fintech Leaders Report is unlike other fintech studies and reports, which tend to focus on capital investment, technology rankings, or the expert opinions of analysts. Instead, CeFPro® has devised a painstaking methodology that reflects the views and opinions of the sector: ‘the voice of the industry’. The Fintech Leaders report is the most comprehensive study of its kind, examining the business requirements and status of financial technology in financial services, and the key solution providers.

Initial work on the survey and report began in May 2023, followed by several rounds of one-to-one and group calls with the members of Fintech Leaders Advisory Board. This was further supplemented by CeFPro’s research team, who gathered the opinions of independent industry professionals and past respondents. The online survey went live on September 11, 2023 closing on November 24, 2023. Anyone with an interest in financial technology within financial services was invited to participate, although votes for rankings were only selected from end-users, any responses from those with potential conflicts of interest were discarded. In addition, all shortlisted companies, including last year’s winners, were invited to participate and to provide additional supporting data.

The rankings in the report reflect the views, opinions, and experiences of industry professionals, specifically the end-users of solutions and services. In addition, CeFPro® undertakes extensive research, gathering the insight and opinions of the 60+ Fintech Leaders Advisory Board members, whose votes and opinions are both incorporated within the overall ecosystem, and used as a benchmark and validation process. In addition, CeFPro’s research and analysis team also undertakes an extensive review of all votes, data, and report drafting. The best options in each category are determined by eligible votes cast on a ‘first past the post’ voting system. Rankings of the overall Fintech Leaders ecosystem are taken predominantly from the collated weighted scores of each of the categories, plus the open-text responses within the survey, and ranked accordingly.

CeFPro® aims to continuously refine the process and methodology each year, to develop, define, and ensure that the most accurate end-user rankings report is delivered. In short, CeFPro validates the data and report through several stages of independent verification.

[The Fintech Leaders report enables us to] move high quality data and insights into more inclusive and better designed services. It also helps us prepare for what is ahead, in the context of building resilience of our own infrastructure, and the domains we choose to invest in.

Alessia Falsarone, Executive in Residence, Adjunct Faculty, Circular Economy and Sustainable Business, University of Chicago, Fintech Advisory Board Member, CeFPro

Key stages of CeFPro’s Fintech Leaders research and methodology

Extensive research with past respondents of Fintech Leaders, industry professionals, and key Fintech Leaders Advisory Board members.

One-to-one and group discussions with Fintech Leaders Advisory Board members to define the survey scope, market participants, and key industry categories.

Sign-off of the final survey by CeFPro’s research team and members of the Advisory Board.

‘Push survey’ campaign to industry professionals, as well as members of the Fintech Leaders Advisory Board, gathering more than 2,470 eligible votes.

50 individual interviews with Fintech Leaders Advisory Board members, based on findings of the survey results and key themes in the industry.

Review of data provided by vendors and consultants, including case studies, insights, and interviews.

Hundreds of independent reference checks by CeFPro analysts to validate data.

Fintech Leaders 2024: Top 20

Moody’s Analytics holds top spot as solution provider.

Less volatility than past years, though shifts anticipated over coming years.

LSEG have made significant strides in multiple areas and continue to rise rankings.

Importance of AI and Cybersecurity in Fintech Leaders reflective of key companies in ranking.

Upward movements for IBM, Oracle, Microsoft and Google, highlighting shifts in industry.

Movement from 2023 Report Rankings

Same position as 2023

Ranked higher than 2023

Ranked Lower than 2023

New in the top 20 ranking

Wolters Kluwer

Fintech Leaders 2024: Category rankings

[Fintech Leaders] is a publication that really [is] able to gage and understand the way the industry is evolving and trends that are emerging. Authored by the industry, and representing [their voice], it is a true and accurate representation of trends that are out there.

Sabeena Ahmed Liconte, Chief Compliance Officer, ICBC Standard Bank, Fintech Advisory Board Member, CeFPro

CeFPro® research and services

Market placement, positioning and promotion

CeFPro’s clients include consultancies, vendors, financial institutions, and regulatory bodies. Our positioning is unique, guided by advisory boards made up of industry professionals from a variety of backgrounds across the world. CeFPro® can offer a greater insight into the marketplace, using our clear understanding of the industry and technical knowledge to provide tailored and bespoke analysis of specific challenges being faced by our clients.

In addition to placement in a dynamic and competitive marketplace, CeFPro® offers compelling, robust, and independent research. Research can be co-branded, targeting critical business needs, industry sectors, and geographies. We assist clients by delivering a greater understanding of their position in the marketplace, as well as supporting them to better position their solutions. We can offer a clear differentiator in a crowded sector, assisting in the enhancement of clients’ branding and awareness.

All CeFPro’s research papers are based on a partnership, with direct business applications to end-users that are current and relevant. Our understanding of the marketplace and knowledge of institutions also enables us to assist with competitor analysis, helping our clients gain a greater understanding of their competition and their relative positioning, and assisting in their strategy to pursue a better market position for increased success.

Research and reports

Our co-branded projects provide insight into businesscritical challenges. All co-branded research and reports are bespoke, tailored to the needs and requirements of each individual client, from mass online surveys to bespoke qualitative approaches, such as one-onone interviews with industry professionals. Our deep and widespread expertise allows for a blend of differing approaches.

To view our full collection of reports visit. www.cefpro.com/connect

Roundtables and events

CeFPro’s international events are established as world leading, allowing us to host targeted roundtable discussions or bespoke events, with research and market challenges at the center of the discussion.

Media and promotion

CeFPro® offers members a complimentary bi-monthly magazine, weekly e-newsletter, and online membership area, allowing our research partners the opportunity to leverage their products and services across multiple channels to maximize outreach, awareness, and branding.

iNFRont Magazine

A bespoke, bi-monthly magazine created by the industry, for the industry, iNFRont provides insight and thought leadership-driven content from industry experts across all areas of non-financial risk. Aiming to provide clarity on key challenges, benchmark approaches with industry peers, and spark ideas for future development, iNFRont is a leading resource for all non-financial risk silos.

To view our latest issue of iNFRont Magazine visit www.cefpro.com/connect

© Copyright Center for Financial Professionals Limited, CeFPro®, 2024-2025. All Rights Reserved.

No part of the Fintech Leaders publication, or other material associated with CeFPro® or the Fintech Leaders report, may be reproduced, adapted, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of Centre for Financial Professionals Limited, or as trading as the Center forFinancial Professionals or CeFPro®.

The facts of the Fintech Leaders report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions and recommendations that CeFPro® delivers will be based on information gathered in good faith, whose accuracy we cannot guarantee.

CeFPro® acknowledges the guidance and input from the Advisory Board, though all views expressed are those of the Center for Financial Professionals, and CeFPro® accepts no liability whatsoever for actions taken based on any information that may subsequently prove to be incorrect or errors in our analysis. For further information, contact CeFPro®.

CeFPro®, Fintech Leaders™ and Non-Financial Risk Leaders™ are either Registered or Trade Marks of the Centre for Financial Professionals Limited.

Unauthorized use of the Center for Financial Professionals Limited, or CeFPro®, name and trademarks is strictly prohibited and subject to legal penalties.