2024 is a special week for term sheets.
It is a long-standing tradition of this newsletter to ask readers for their thoughts on what the new year will bring for the civilian market. This year he dedicates the entire first week of January to Crystal Ball, and in today’s issue he compiles predictions made by readers regarding data, cybersecurity, fintech, and cryptocurrencies.
What do current interest rates mean for emerging fintech startups? Will US regulators start dabbling in cryptocurrencies?
This is what you had to say.
Note: Many answers have been shortened for clarity and/or brevity. The bargain corner will be back from next week!
Photo illustration: Victoria Ellis.Original photo by Getty Images
data + cyber
It is estimated that there are currently 4,000 venture-backed cybersecurity companies, but the majority of these companies actually offer products or capabilities that cannot be scaled as standalone businesses. Cybersecurity spending will consolidate significantly. The days when security teams used 200-300 different tools will shrink to 20-50 vendors. —Ryan Benevidez, Vice President of Westcap
Democratized access to generative AI tools will be a boon for fraudsters. Financial institutions need to discover new real-time signals to combat the prevalence of difficult-to-detect fraud schemes. — Charles Birnbaum, Partner at Bessemer Venture Partners
In 2024, we expect to see increased transparency and companies making more explicit data requests from their users. However, clear trade-offs are required to demonstrate to users the direct benefits of providing data. —Megh Gautam, Chief Product Officer, Crunchbase
Over the past decade, the scam startup landscape has grown by more than four times its projected market share. Every use case for fraud detection and prevention is evolving, and the ecosystem is a continually moving target. The bad guys have a big window that investors and founders are trying to fill. The reality is that providers have no mechanism to combat new types of fraud. The solutions needed to prevent new types of fraud are still being built and will remain in focus in 2024 and beyond. —Matt Streisfeld, General Partner, Oak HC/FT
2024 will be a milestone year in which the transformative power of large-scale, devastating financial fraud powered by AI will be revealed. AI will further accelerate an already growing trend, with fraud increasing by 30% annually over the past two years. At the same time, AI tools will become increasingly important in automating fraud detection and risk. —Kabir Kumar, Partner, Flourish Venture
fintech
Interest rates are expected to fall in 2024, and the low interest rate environment will increase capital deployment, which will be positive for both the fintech and embedded banking markets. Investors are likely to continue to focus on putting money into profitable growth rather than growth at all costs. The fintech market may also become more consolidated as capital markets become more favorable. —Meghan Ryan, Chief Financial Officer, Treasury Prime
Many fintech companies have rushed into consumer lending, attracted by the attractive economics of high yields and historically low losses. However, delinquencies are increasing and defaults will accelerate in 2024 as the economic slowdown and continued high interest rates squeeze borrowers into losses. Those who took shortcuts in underwriting to get to market quickly are going to feel a lot of pain. —Vince Curotto, Director, Klaros Group
In 2024, cross-border payments will dominate the fintech narrative. Competition between national payment networks and stablecoins to replace his SWIFT will accelerate. India leads the race against UPI and Circle IPO will help accelerate stablecoin adoption, with monthly trading volume expected to exceed $1 trillion by Q4 2024.Seth Rosenberg, Partner at Greylock
Physical branches may be on the decline, but next year could be the year banks start investing in digital real estate again and opening branches in the metaverse. —Pablo Araejos PerezDesignit, Design Director
The worst winter for fintech is over and 2024 will look like 2019 before the pandemic. Fintech transaction volumes will finally stabilize and then increase again (first increase since Q2 2022). And the amount raised will be similar to what it was five years ago. —Nigel Morris, Co-Founder and Managing Partner, QED Investors
cryptography
Cryptography is becoming increasingly important as the amount of AI-generated content increases exponentially, including verification of ownership of AI-generated images as well as distributed training of LLMs to access large amounts of data. revived through specific use cases. —Lindsay Lee, Investor, Bessemer Venture Partners
If you thought tokenization was a hot topic in 2023, just wait until next year, when it will permeate both Wall Street and Main Street finance. Not only will we see more tokenized bank deposits and on-chain funds, but increased tokenization and issuance of real-world assets will increase inclusion into the global financial system and provide the fastest, most cost-effective Efficient and accessible payments and transactions via blockchain. B2B, B2C, and C2C on-chain transactions will become more popular in line with the advances in the use of stablecoins and cryptocurrencies among the world’s unbanked population. —Denelle Dixon, CEO and Executive Director, Stellar Development Foundation
With the Cryptocurrency Market Regulation (MiCA) scheduled to come into force across the European Union in 2024, I am optimistic about the progress of the cryptoassets and blockchain ecosystem globally. —Paul Brody, Global Blockchain Leader, EY
2024 will be the year everyone forgets about Bitcoin again as the surrounding altcoins will reach another level of growth. —Seth Gins, Head of Liquidity Investments and Managing Partner, Coinfund
The first stablecoin as a registered security launches in the US as the government continues to debate CBDC, giving retail investors access to a digital dollar that is registered with the SEC, pays yield and can be held by banks and brokerages. will be provided. Once adoption reaches high levels in 2024, entrepreneurs will begin to use these coins to build payment rails and challenge exchange models. —Mike Cagney, Co-Founder and CEO, Figure Technologies
Triple AAA publishers and classic games are all building Web 3.0 games enabled by blockchain. If it’s a big hit, he’s expected to have a nine-figure user base around the world. —John Wu, President, Ava Labs
An increasing proportion of cryptocurrency derivatives trading volume will move on-chain with improved layer 2 scaling and new app chains. Derivatives DEXs will increase market share by up to 4x and grow to up to 7.5% of concentrated derivatives trading volume. —Matt Kunke, GSR Research Analyst
see you tomorrow,
jessica matthews
twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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