What can we expect from European fintech in 2024?

This year was challenging for the financial technology, or fintech, sector. Interest rates rose and funding fell, continuing the shift in focus from growth to profitability.  

But what does 2024 have in store? Will AI revolutionise the industry? Will funding pick up? What sectors will thrive? What’s the outlook for the Dutch market?  

We spoke to five experts on what to look out for in 2024.  

Few new startups but regtech will go “through the roof”  
Don Ginsel is the CEO and Founder of Holland FinTech, an independent ecosystem connecting people and organisations in the financial value chain. 

“Generative AI was the story of 2023 but it wasn’t the action of the year. It had limited impact on fintech and on actual business processes. In 2024, we’ll see some first use cases for generative AI. In the coming years we’ll also see the impact of the AI Act, and how companies comply with that. 

This compliance part is also a theme, as many companies are busy complying with regulations, avoiding risks, and that means many ventures will not be undertaken. Next year I expect very few new fintech startups because of legislation, limited capital, and low unemployment. But on the other side of things, I think regtech [regulatory technology] will go through the roof, due to regulatory requirements.  

Venture capital investment will pick up later in the year. For the Netherlands specifically, the environment will also remain tough for fintech, especially around talent. I do, though, hope that banks become more open minded and ready to work with various parties in the market to create a more vivid ecosystem.”   

Keeping an eye on tokenization 
Jason Mikula is the publisher of Fintech Business Weekly, which provides in-depth analysis on trends and stories in banking, fintech, and crypto. 

“It’s borderline cliche to say at this point, but the return of financial discipline was overdue and is washing out unsustainable business models that were dependent on cheap capital. A positive side effect of layoffs is freeing up high-calibre talent that can be re-allocated to more productive enterprises or to new startup formation.  

As far as specific themes for 2024, I’m keeping an eye on “tokenization,” the latest incarnation of crypto, as well as the topic on everyone’s mind: AI. While AI tech in banking and financial services isn’t new, the latest generation of generativeAI does offer truly novel capabilities, which pose both opportunities and risks for financial institutions.”  

If companies can’t tackle talent…  
Angelique Schouten is the founder of 10x.Team, a members-only fractional and leadership platform. She sees 2024 as a year where fintech company leaders and startup founders will need to ask themselves “existential questions” around talent. 

“Despite the AI push, there weren’t any groundbreaking developments and/or solutions moving the needle. I hope 2024 is the year fintech begins to move from third-class Saturday football to Champions League level, and really kickstart a transformational change. Not only with AI, but also how we run and build businesses.  

With the talent crunch on top of funding normalising, executives and founders face existential questions: How can I organise my business to reach and play at Champions League-level? How can we truly embed diversity in thinking? How can we better work with colleagues who have different career expectations, and build the best team?  

If companies can’t tackle the talent part, which is a mindset shift, they can’t move to the type of transformation that will better serve society for the next 20 years.

Skill-based hiring, having people who proactively think about how they can extract value and better support businesses and consumers’ financial health, will decide whether or not they win the cup.”  

AI expectations will “come down to earth”  
Jeroen de Bel is the founder of fintech consultancy group Fincog. He believes that 2024 will remain difficult for the sector — and that the realisation will dawn that AI is not an answer to everything. 

“The industry has gone from hype to hype, the most recent of which is AI. Just a few years ago, we were trying to help AI startups raise money and very few investors saw value in it. Now that it’s been made tangible by OpenAI, the hype has started.  

2024 may be the year expectations come back down to earth and the market realises that it’s not an answer to everything. As we begin to understand its strengths and weaknesses, we can develop a more nuanced view of its potential for tangible fintech solutions. In the Netherlands, it will also be difficult for fintechs.  

However, I expect payments to continue to be strong. Backend, middle layer, and core digital transformation solutions that service incumbent financial institutions like asset and wealth managers and banks, will also remain robust.” 

Funding will go to B2B supporting the business community
Conny Dorrestijn is a trusted fintech advisor and Non-Executive Director at UK listed fintech VC Augmentum. She sees a new norm for fintech investment that will be adapting to changing market conditions. 

“This requires prudent and patient investing which, while not very thrilling, in the end will pay off for investors, founders, their teams, and their customers. The market is still out there, in fact it grows every year as costs rise and going digital becomes truly inevitable. 

Many incumbents have tried and failed to innovate on their own. Direct investments are often hard to manage for the same, cultural, reason. But increasingly, M&A and partnerships with skillful onboarding, as in vendor-style relationships, are a great way forward for both the incumbent player and a solid ‘learn and grow’ strategy for young fintechs. 

So, I’m stubbornly hanging on to my view that anything B2B supporting the business community and increasing efficiency or decision-making with right-sized (AI) tools and building alternative payment rails is super relevant and attractive in 2024.”