The biggest banking and financial trends for 2024
2024 promises to be a pivotal year in the banking and financial sector, marked by significant changes and transformations. AI’s influence will be crucial, permeating every aspect of the industry, from revolutionizing customer service to overhauling financial management tools and streamlining back-office operations. This article offers an insightful look at the key trends likely to drive these changes in the coming year and beyond. These advancements, when effectively leveraged, have the potential to provide more efficient, innovative and cost-effective solutions in banking, investment and insurance. However, they also present challenges that must be addressed to ensure these changes are implemented safely and ethically.
Generative AI in Fintech
Fintech generally refers to technology that gives consumers more power over how they manage, spend and invest their money. The most visible application of generative AI will be in chatbots, as customers increasingly communicate in natural language with banking apps and online money services. Bank of America, Wells Fargo, BlackRock and Citigroup are among the major financial services players that have already launched or announced initiatives around generative AI. Expect to see innovations like personalized financial planning and tailored investment strategies based on customer profiles and behavioral data, all thanks to generative models like those that power ChatGPT.
Sustainable finance
More than ever, we expect the institutions we do business with to prioritize sustainability and ESG factors in their decision-making. In the financial services sector, this means supporting investments in green initiatives such as renewable energy, recycling and reducing the carbon footprint. Sustainable financial products are emerging, allowing customers to ensure that their money is not used to harm the environment or society while it sits in interest in a bank vault.
Digital and cryptocurrencies
Digital currencies and cryptocurrencies will be back on the financial services radar in 2024. More than 130 countries would be affected. investigate use or adoption central bank digital currencies (CBDCs), while Bitcoin’s recovery from its 2021 crash is sparking renewed interest from innovators and investors. Of course, outside of CBDCs, the crypto space is still a Wild West, so we can also expect further progress towards governance and regulation of those doing business there.
Client experience
In 2024, customer experience (CX) will be driven by the emergence of technology to analyze each touchpoint of the customer journey to reduce friction and improve satisfaction. On top of this, new immersive technologies like virtual reality are starting to offer new, more engaging ways to interact and engage. As CX increasingly plays a role major role In purchasing decisions, there is clearly a direct link between customer loyalty and business success, and more financial services companies will prioritize this in 2024.
AI-based insurance
Thanks to AI and its ability to spot patterns in data, we will see more insurers offering personalized products based on an individual’s risk assessment. In theory, more accurate risk assessment will lead to fairer insurance and lower costs. However, the industry will face challenges around privacy and data protection, as well as the risks of AI bias.
Open banking
Open Banking is based on the principle of allowing us to take control of our financial data and how it is used. It allows us to securely share information via APIs with other applications, services or tools that may provide useful services to us. In 2024, this will be a key trend as we become more aware of the importance of understanding who owns our data and what they do with it, as it will also encourage service providers to engage in competitive innovation.
Cybersecurity and fraud detection
The increasing frequency and complexity of cyber threats and the ongoing AI arms race between cybercriminals and organizations mean that cybersecurity will continue to be a key trend. Countering these threats requires strategy and continued investment in tools, infrastructure and skills. This is why Gartner forecasts that global spending on security and risk management will reach $215 billion in 2024, an increase of 14.3% in 2023.
Process automation
Automating manual and repetitive elements of back-office processes will continue to drive efficiency and transformation in 2024. Tasks such as onboarding new clients, processing routine transactions, verifying documents, KYC checks and compliance will increasingly be managed by AI.
Blockchain banking
We haven’t heard much about blockchain in the past year because we’ve all had our heads turned by generative AI. However, distributed ledger technology is becoming increasingly common in financial services. Researchers predict this spending will reach $19 billion in 2024, up from $4.5 billion in 2020. Besides cryptocurrencies and digital currencies (discussed above), we will likely see more blockchain use cases around creating smart contracts, building trust, streamlining payments and authentication. transactions.
Regtech
Regtech refers to the integration of technology into tools designed to help banks and insurers manage compliance and regulation. This includes using tools such as AI, blockchain or cloud computing to carry out compliance tasks. This will become more important in 2024 due to the increasing complexity and volume of regulatory requirements in financial services, particularly regulations regarding personal data and privacy.
These emerging trends in banking and financial services not only promise a transformative journey, but also highlight the critical balance between innovation and accountability, paving the way for a future where finance is not only more efficient and customer-centric, but also more ethical and inclusive.