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Nowadays, it’s not uncommon to use Venmo to split the dinner bill or Apple Pay to buy a coffee, but that wasn’t always the case.

Ten years ago, most of us pulled cash out of our wallets or handed over our credit cards to make a purchase, not pulled out our phones to pay at the register.

“When Google Pay and Apple Pay were just starting out, it took a long time for them to take off,” he said Mohit Kansal, senior vice president of global payments and payments services at Flywire, a global payments software and services company based in Boston. “But it really came to fruition.”

Now the payments industry is under pressure to take digital payment methods and a number of other innovations to the next level.

To the recent 2024 MIT Sloan Fintech Conferencewhere Kansal, MBA ’14, was the keynote speakersaid the financial technology sector is equal parts challenging (think increased regulatory scrutiny) and exciting (endless innovation).

Here are Kansal’s top predictions for fintech in 2024.

Expect more scrutiny and regulation

Fintechs are no different from large financial institutions in that they also must comply with complex regulations. And it gets even more complicated for fintechs operating in different jurisdictions: they have to comply with the rules of each country in which they operate.

Fintechs won’t succeed if they don’t understand how to make regulation work in their favor.

Mohit Kansal
Senior Vice President, Global Payments and Payer Services, Flywire

“Fintechs won’t be successful if they don’t pay attention to regulation and understand how to make it work in their favor and make it a strategic advantage,” Kansal said.

Given these trends, job prospects are bright for candidates with dual business and regulatory backgrounds, he noted.

But rather than suggesting that companies hire “an overly tough compliance person,” Kansal said organizations need the kind of person “who can find the right balance of how to resist regulation and do things in a way that ensures the success of the company. ”

Security and compliance will remain a challenge

Ensuring secure and compliant transactions is critical for companies like Flywire, which handles large and complex payment transactions in industries such as global education, healthcare, travel and business-to-business.

All businesses must safeguard their customers’ personal data, such as addresses and passwords, and the stakes are higher for fintechs, which often store valuable financial information, such as credit card or bank account details, and move securities high-value, high-stakes payments around the world.

To be a successful fintech company and gain the trust of your customers, you must have the highest levels of data security and privacy certifications, adhere to global laws and regulations, and ensure your organization complies with regulations across sub-sectors specific you serve, Kansal said.

This is amidst a security landscape he has seen data breaches peak in 2023partly due to cloud misconfigurations, new types of ransomware attacks, and increased exploitation of vendor systems.

“Security and compliance are important aspects for any business, anywhere,” Kansal said. “The downside of a breach is very high and it is becoming increasingly difficult to understand how to prevent these breaches.”

Cross-border payments will attract attention

Kansal highlighted that the digitalisation of payments is becoming increasingly widespread internationally. In India and Singapore, for example, “regulators are also in the midst of innovation in the payments industry and that, to me, makes it extremely exciting, because everyone is aligned to move forward,” he said.

Indeed, Flywire is partnerships with India’s largest public sector bank, State Bank of India, to digitize cross-border payments from India to higher education institutions across the world, thereby providing Indian students with a fully digital payment experience.

“I see so much innovation in payments around the world: in the United States, in Latin America, in Europe, in Asia, in every part of the world,” Kansal said.

“There was a time when innovation only happened and was carried out by smaller companies, small tech companies trying new things [and] I really didn’t have much to lose,” he said. “Now we see banks innovating and larger financial services companies innovating.”

Fintechs will look to expand consumer success to other functions

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“Much of the digitalization happening today is around consumers and e-commerce payments, but less so about invoice-based payments,” Kansal said.

In many cases, contractors are still accustomed to receiving paper checks in the mail from their clients. Sometimes that happens because businesses don’t feel confident making payments online, and when you add cross-border complexity, “it gets really, really complex,” Kansal said.

Having the right type of invoicing software can help simplify complicated situations like selling a product in Europe, invoicing in euros, receiving money in dollars, and making sure the exchange rate is correct.

“This isn’t just solved by the movement of money,” Kansal said. “Software and bundled payments are how the magic happens.”

Artificial intelligence holds a lot of promise

Like most other industries, Kansal expects AI to drive efficiency in fintech, and in many cases this is already happening behind the scenes.

“Flywire already has a lot of applications of AI,” Kansal said. “For example, our personalization engine leverages our data and applies artificial intelligence and machine learning to match the payment preferences of our customers’ customers with the right payment options.”

Additionally, the company uses machine learning and artificial intelligence as part of its fraud risk detection engine.

For all its progress, fintech is still a young and developing discipline, Kansal said. “In fintech we have not yet seen a revolutionary change that has had a significant impact, but if you look at the promise of the technology, something will happen,” she said. “I think it will change the world for the better.”

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