Eight Bold Predictions for 2024
Head of Citi Ventures
Every year, Citi Ventures puts out a list of trends we’re following in finance, tech and innovation. Last year, we predicted that 2023 would be “the year of contradictions” — and we had no idea how right we would be. While the market downturn that began in 2022 has continued as expected through 2023, the generative AI (GenAI) revolution has ramped up even faster than we thought it would, dominating the landscape and driving tens of billions of investment dollars into now-household names like OpenAI and Anthropic.
Heading into 2024, we predict much of the same: high interest rates and the threat of a recession will likely keep the public and private markets around pre-COVID levels at least through the first half of the year, and GenAI’s impact on business and society should only grow. Prompted in part by these trends, we believe that innovation and adoption will accelerate in areas ranging from “vertical fintech” to cybersecurity — areas that we have been examining closely as we consider our investment priorities for 2024.
If you or your company are building products in these spaces, we want to hear from you! Contact our VP of Platform, Sunita Rao, at sunita.rao@citi.com to connect with us.
Here are our top eight predictions for 2024.
FinTech Predictions
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More Americans than ever will turn to digital tools to manage, consolidate and refinance their debt — as will the financial services firms that underwrite that debt.
Amid record-high levels of consumer debt (over $17 trillion, including $1 trillion in credit card debt), multi-decade high interest rates and the end of the student loan repayment moratorium in the U.S., we expect to see many Americans consolidate and/or refinance their debt in order to reduce their interest payments and improve their financial situations.
Fortunately, startups such as Spinwheel, Method and Payitoffl are building solutions to help people view and manage their debt all in one place. We believe that consumers — and the financial institutions that serve them — will adopt these tools at a rapid pace next year. Several banks and credit unions have in fact already begun to do so, including U.S. Bank, which recently partnered with Payitoff to help its customers manage their student loan debt.
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An increasing number of employers will offer digital financial wellness tools as an employee perk.
In this time of economic uncertainty, firms of all sizes are increasingly partnering with financial services companies to offer financial planning and wellness products to their employees. FinTechs like Vestwell and Trust & Will offer “point solutions” for retirement planning, estate planning, tax prep and more, while many financial institutions provide more holistic employee financial wellness solutions — often by integrating point solutions from fintechs into their product suites. Citi Global Wealth at Work, for example, partners with law firms, professional services groups, asset managers and large enterprises to offer high-touch wealth management services to their employees.
Whether for point solutions or holistic offerings, we believe that demand for employer-based financial wellness tools will skyrocket in 2024 as companies strive to better support their employees’ financial journeys.
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A new crop of “vertical fintech” unicorns will emerge.
With the fintech market flush with “horizontal” solutions (e.g., Stripe and Square) that address the basic needs of a wide range of customers, several “vertical fintechs” — industry-aligned software-as-a-service (SaaS) companies with embedded lending and payments modules — are now arising to better serve the specialized financial needs and pain points of specific industries. Several such companies, including Toast (in the restaurant industry) and Flywire (in education) have already gone public, demonstrating the vast growth potential for vertical fintechs in other large industries like healthcare (e.g., Paytient, Level and Adonis) and trucking (e.g., Coast and Mudflap).
For investors seeking startups that balance innovation and growth with profitability amid the market downturn, vertical fintechs could become prime targets in 2024: their profitability is often boosted by blending a software offering with a financial services offering, and once they establish themselves in their respective domains they offer sustainable business models and strong moats. Thus, we would not be surprised to see several new vertical fintech unicorns emerge next year!
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The “creator economy” will further converge with “social commerce,” spawning the next generation of e-commerce offerings and strategies.
The ongoing quest to meet modern consumers where they are is bringing together two multi-billion-dollar consumer trends: “social commerce” — the buying and selling of goods and services through social media apps — and the “creator economy,” the ecosystem of businesses centered on independent digital content creators and social media influencers.
As creators become increasingly important marketing channels for consumer brands, brands are looking for new ways to collaborate with them — both by embedding their products in creators’ content (e.g., TikTok videos) and by embedding creator content into their e-commerce platforms. For example, Buywith enables creators to host live virtual shopping events during which viewers can purchase the items they’re reviewing, while Walmart allows sellers on its platform to add influencer-generated content to their product pages.
Meanwhile, many creators are also looking to sell their own branded merchandise via personal online stores, social media and other e-commerce sites. Startups like Pietra and KOMI allow creators to design and source product lines, develop online stores and access additional sales channels — helping them build their audiences, reduce their dependence on major social media platforms and further accelerate the growth of social commerce.
In 2024, we expect to see this trend pick up steam, leading to new opportunities for brand-creator collaborations such as co-branded and special edition products.
For more of our insights into the creator economy, read our article.
Enterprise Tech Predictions
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The “generative enterprise” will emerge at scale, prompting a surge in demand for employees with the skills to work with generative AI tools.
The generative AI (GenAI) revolution is entering a new phase as enterprises begin embedding large language model (LLM)-based tools such as chatbots and co-pilots throughout their organizations — giving birth to the age of the “generative enterprise.”
In 2024, we expect to see a proliferation of GenAI tools that will help employees in various roles, from tech to marketing, legal and finance. This should in turn transform enterprises’ human capital needs: the role of software developers will change (leading to the rise of the “AI engineer”), employees will increasingly need to oversee and test GenAI systems and non-technical business stakeholders will need to learn the emerging art of “prompt engineering” in order to get the desired results from their AI assistants.
At Citi Ventures, we believe that this transformation will create a significant opportunity for startups to not only sell GenAI tools to enterprises but also to help them upskill their workforces so they can use those tools as effectively as possible.
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As “human in the loop” AI systems move into production, enterprises will shift their experimentation efforts toward fully autonomous AI agents.
The AI tools currently being implemented within companies are largely so-called “human in the loop” (HIL) systems that require human input and/or monitoring (e.g., a customer service agent confirming that an AI-generated email is ready to send to a customer).
As companies integrate and begin to use these systems, we expect them to start experimenting more with fully autonomous AI agents that have defined roles and perform particular tasks. These agents could one day operate independently and even interact with other AI agents, helping companies reach unprecedented levels of productivity by further augmenting human labor and enabling people to focus on more conceptual tasks. We have been following the emergence of several such agents within the AI ecosystem and look forward to investing in them as they mature.
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Cyber attackers will increasingly seek to exploit LLM vulnerabilities — and enterprises will adopt new tools and practices to stop them.
For all their potential upsides, the LLM-based tools now entering production also present new cybersecurity concerns. Not only do they offer new attack surfaces and vulnerabilities for attackers to exploit (e.g., “prompt injection,” “data leakage” and “hallucinations”), but bad actors can also use them to stage large-scale, sophisticated attacks such as deepfakes and reverse engineering. As LLM use ramps up across the business landscape, we expect to see LLM-based attacks increase as well.
Fortunately, enterprises are far from defenseless against such attacks: new tools are emerging to help them protect both the “build-time” (i.e., the core model and data) and the “run-time” (i.e., the prompts, inputs and outputs) of their LLMs, and we believe that enterprises will adopt these tools at scale in 2024. Furthermore, just as hackers can use LLMs to improve their attacks, so too can cybersecurity companies use them to improve their defenses. Next year, we expect that numerous cybersecurity firms will incorporate LLMs into their solutions — including several companies in our security portfolio.
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More organizations will look to consolidate their cybersecurity stacks within their web browsers.
The rise of cloud technology and transition to hybrid work environments has transformed how enterprises and their employees store, manage and access their data and IT applications — shifting many work systems from data centers to web-based applications accessed through a browser. This change is having a dramatic impact on how enterprises protect their data: as the browser becomes the “new operating system” for many applications, it is also becoming a key security layer.
As a result, a growing number of enterprises are turning to secure browsers that enable them to implement data loss prevention protocols, access controls, multi-factor authentication and more all within the browser. In fact, two of the leading secure browsers, Island and Talon, both announced major growth milestones recently: in October, Island raised $100 million at a $1.5 billion valuation; in November, Palo Alto Networks acquired Talon for over $600 million.
With tailwinds behind it, we expect this trend to accelerate in 2024 as hybrid/remote work becomes the norm and the shift toward cloud continues.
All in all, we at Citi Ventures foresee another year of economic recovery and fast-paced innovation ahead. As consumers and businesses alike adjust to this evolving reality, new opportunities will arise for entrepreneurs to build and scale the category-defining software companies of the future. We look forward to supporting them in their journeys, backed by the power and scale of Citi.
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