Reshaping finance beyond boundaries: Strategic shifts in fintech in 2024

As we sit back and collate our thoughts on the topsy-turvy journey of fintech in 2023, navigating a landscape of ups and downs, we anticipate a surge of positive tailwinds launching the industry forward in the coming year.

Despite determined efforts in both public and private sectors to reshape the fintech landscape and the shift towards embedded financial services, 2023 posed significant challenges.

A global funding slowdown, coupled with a stringent regulatory approach, created a tough environment. The Reserve Bank of India's cautious stance, while aimed at the greater good, heightened the difficulties, leading various industry segments to reconsider their trajectory, underscoring the need for adaptability and strategic evolution.

Yet, challenges often spark innovation, and this tough year presents opportunities that could catalyse future breakthroughs in the industry.

Entering 2024, we eagerly anticipate transformative fintech trends, focusing on financial infrastructure evolution, holistic solutions, the 'China + 1' export theory, and sustainability in climate fintech—a year poised for groundbreaking innovation and industry redefinition.

The surge for building a robust financial infrastructure

Public infrastructure, driven by a robust digital foundation, simplifies user interactions and enables seamless access to financial services for Indian internet users.

Simultaneously, enterprises and startups are venturing into building infrastructure companies, encouraging connectivity and innovating beyond traditional financial offerings, with other digital platforms seamlessly integrating services like credit, wealth, and insurance products.

This trend holds promise, presenting a landscape where embedded solutions and cross-functional financial services become commonplace. The goal is clear—bring sophisticated financial services to digital platforms with wide-reaching distribution, ensuring seamless integration into the spaces where users habitually engage.

As we look ahead, this transformative journey sparks anticipation for a financial future, streamlined, remarkably accessible, and user-centric.

Tailored holistic solutions for modern markets

As the fintech landscape evolves, there is a notable shift towards holistic solutions that comprehensively address the diverse needs of specific segments, surpassing the limitations of mere point solutions. The emphasis is no longer solely on financing but spans the entire value chain—from buyer discovery to invoicing and payments. 

The key insight here is that in the current generation, providing isolated-point solutions falls short of meeting evolving customer and market demands. The era of point solutions is waning, making way for tailored, sector-specific holistic solutions that address a substantial spectrum of customer needs.

What's truly exciting is how diverse fintech services are converging, creating comprehensive solutions, and offering users game-changing options in fintech.

Overhauling export dynamics with innovative solutions

Stepping into 2024, a transformative wave sweeps across the export landscape. In 2023, China's export-to-GDP ratio dipped below 20%, unlocking new horizons for Indian, Mexican, and Southeast Asian exporters. This decline in Chinese exports signifies a unique moment for emerging markets to take charge.

As the export terrain evolves, an upsurge of solutions supporting exporters across various dimensions—from payments and financing to buyer discovery and commerce—promises to redefine the global trade landscape.

Looking forward, cross-border finance solutions are poised to revolutionise the dynamics of the global supply chain. Exports—estimated at roughly $450 billion and expected to grow by 10% in 2024—have significantly shifted in the last year.

This transformative evolution in global trade sets the stage for the ascent of innovative solutions that will carve the future of international commerce.

Crafting fintech for a sustainable tomorrow

Amid a resounding governmental push for sustainability, there's a significant mobilisation of capital towards climate-focused businesses. This surge is paving the way for the emergence of new value chains dedicated to climate tech across EV, carbon, and solar. With the birth of these value chains, a ripple effect ensues, giving rise to innovative commerce and financing use cases within the fintech landscape.

Opportunities in this space flourish, especially in catering to the evolving value chains. Notably, the years from 2021 to 2023 witnessed a marked increase in investments flowing into clean energy.

As these new value chains take shape, we anticipate the rise of solutions exclusively tailored to meet the demands of these sustainability-focused domains. This trend is illustrated by platforms like Turno, an EV commerce and financing platform in India, showcasing the ability to integrate third-party services strategically. 

Innovate, adapt, thrive: Fintech's evolution continues

As we step into 2024, the fintech landscape is set for a transformative journey. Key themes such as strengthening financial infrastructure, adopting holistic solutions, reshaping global exports, and prioritising sustainability will drive us into a dynamic and impactful future.

This year holds the promise of innovation, adaptability, and a sustainable financial landscape, shaping the fintech narrative in exciting ways. Brace yourself for a thrilling journey, where the industry's resilience opens the door to a new era of global financial solutions.

Ganesh Rengaswamy is the Co-founder and Managing Partner at Quona Capital. Varun Malhotra is a Partner at Quona Capital.