The AI Revolution in Fintech – Funding Trends and Industry Developments in 2024

According to a Gartner survey, artificial intelligence (AI) adoption in finance surged in 2024, with 58 percent of finance functions already leveraging AI technologies. This is hardly a surprise given how AI is transforming the financial service industry through the automation of mundane tasks, risk management enhancement, and personalization of customer experiences.

Along with the rise of AI adoption in finance, venture capital (VC) interest in AI-powered financial technology (fintech) solutions similarly soared. While investment in fintech in general fell in 2024 by 20 percent, the funding poured into AI-enhanced fintech rose. VCs are seeing potential in the boom of AI-powered fintech.

The Rise of AI in Fintech

AI is upgrading fintech with notable advancements, particularly in the areas of transaction categorization, fraud detection, and risk assessment. AI makes it possible to rapidly classify financial transactions through automated pattern recognition, the use of Natural Language Processing for text recognition and analysis, context-aware categorization, and personalized transaction classification. It significantly improves fraud detection by enabling real-time anomaly detection, behavior analysis, and user profiling, multi-factor authentication enhancements, fraud ring network analysis, and the reduction of false positives. Meanwhile, when it comes to risk assessment, artificial intelligence enables predictive analytics for market and investment risks, enhanced credit scoring and lending decision-making, real-time risk monitoring, personalized risk management, and automated money laundering risk assessment and regulatory compliance.

Artificial intelligence in fintech results in greater efficiency with the automation and acceleration of various procedures. It also enables the customization of services for specific clients without an agent spending countless hours going over client records and other relevant information. Additionally, AI is a boon for regulatory compliance, making it easier to keep up with the dynamic fields of financial, IT, and cybersecurity regulations.

Still, challenges in AI adoption in fintech remain. Implementing AI solutions can be complex and expensive, requiring significant investment in data infrastructure and technical expertise. Additionally, there are challenges in ensuring algorithmic fairness and transparency to build trust among customers, stakeholders, and regulators. According to American cybersecurity law and financial regulations expert Eyvonne Mallett, legal and ethical concerns continue to pose significant hurdles to AI integration in the banking industry.

Venture Capital’s Growing Interest in AI-Driven Fintech

VC firms have been showing increased investment activity in relation to startups that harness AI for their products. Renowned VC firm Sequoia Capital, for example, was part of a Series C funding round in January 2025 that gave $150 million to digital wallet startup Phantom. The VC firm also invested an undisclosed amount in smart digital wallet platform AIX Wallet in December 2024. Andreessen Horowitz invested $16 million in financial connectivity startup Method Financial and an undisclosed amount to Clutch, a startup that aims to transform credit unions into fintechs.

Fintech startups that attract venture capital funding usually leverage AI to achieve innovations in the areas of process automation, fraud detection, and risk management. They also develop AI-powered fintech solutions to provide personalized financial services.

An SNS Insider report says that AI in the fintech market is expected to quintuple in value over the next ten years. This growth is driven by the demand for AI among fintech companies and financial institutions that are looking for ways to enhance the accuracy and efficiency of their products. They also seek to harness AI to provide better customer experiences.

Fintech Startups That Use AI

Several innovative startups that enhance their products with AI have secured VC funding in 2024. Here are some of the most notable investment recipients.

London-based ANNA Money provides AI-powered business accounts to make it easy for small businesses and freelancers to perform bookkeeping, expense management, and financial analysis. It secured investments from Houghton Lane, Kinetik, and Smart Partnership Capital.

Panax offers a cash management solution that harnesses AI to automate transaction categorization, control cash flow, optimize liquidity, and generate strategic insights. It helps businesses without dedicated treasury teams to efficiently manage their finances. Panax raised $10 million in a Series A funding round in May 2024.

Cleo is a conversational AI chatbot that has a unique approach in personal finance management. It allows users to track income and expenses, create budgets, or ask for personalized financial advice by conversing with an AI chatbot. The startup received funding from Sofina, EQT Ventures, TriplePoint Capital, and Balderton Capital.

Interface.ai provides AI banking solutions designed to improve customer engagement by personalizing banking experiences, recommending relevant financial products, and streamlining the process of onboarding customers. Interface.ai raised $20 million through a Series A funding round in October 2024 and a $10 million debt financing round in the same month.

Moniepoint specializes in payments and banking and focuses on the African market. It seeks to expand financial inclusivity among individuals and broaden financial options for businesses in Africa. The startup raised $110 million in series C funding from Development Partners International in October 2024.

Australian fintech platform Airwallex aims to help businesses simplify their financial operations and global payment processes. The startup has raised hundreds of millions in over 12 rounds from dozens of investors, including Tencent, Hermitage Capital, Salesforce Ventures, Square Peg Capital, HongShan, and Lone Pine Capital.

Outlook – What’s Next for AI in Finance?

In 2025 and the succeeding years, fintech is set to experience the enhanced personalization of products through AI-powered bot financial advisers and tailor-made product offerings. Fintech companies are projected to offer products that embody autonomous finance and AI-driven financial planning. Customer experiences are going to see significant enhancements through omnichannel experiences, wherein all customer touchpoints are integrated under a single consistent and personalized experience. Fraud detection and prevention will also improve further with real-time anomaly detection and behavioral biometrics.

However, all these advancements will require regulatory control to ensure the protection of customers and the reliability of AI fintech products. As an OECD paper proposes, AI regulation will be necessary given how artificial intelligence amplifies existing risks and introduces new threats in financial markets.

Conclusion

AI-driven fintech is poised for even greater innovation, with advancements in autonomous finance, personalized financial planning, and seamless customer experiences. VC firms and other investors appear enthusiastic to fund developments in these areas. However, the evolution of AI in financial services must be accompanied by robust regulatory frameworks to ensure fairness, security, and transparency.

Also Read: AiThority Interview with Jie Yang, Co-founder and CTO of Cybever

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