The year 2024 will be one of significant change and transformation in the banking and finance sector. AI will have a substantial impact on the banking and finance sector, affecting all aspects of it. From transforming customer service to changing financial management tools and streamlining operations in back offices, AI’s influence is going to be profound.
This article provides an overview of banking key investment banking trends that will drive these changes in the next year and beyond. These advancements are used to create more innovative and efficient solutions in banking, investment, and insurance.They also pose challenges to be overcome in order for these changes to be implemented ethically and safely.
The Biggest Trends in Banking and Financial Services
Here are some of the most extensive banking and financial services trends anticipated for 2024:
1. AI-Powered Insurance
AI enables insurers to provide personalized products based on individual risk assessments. It could result in lower insurance costs and fairer policies, but privacy issues, data security, and AI bias are still significant concerns.
2. Generative Artificial Intelligence in Fintech
Fintech is a term that refers to technologies that give consumers greater control over their finances. Chatbots will be the most visible application of generative AI, as customers communicate with online money services and banking apps in natural language. Bank of America and Wells Fargo are just a few of the financial service providers that have already announced or launched initiatives in relation to generative AI.
3. Customer Experience
In 2024, customer experience (CX), driven by technologies that analyze each touchpoint in the customer journey, will be at the forefront. This analysis is designed to improve satisfaction and reduce friction. Immersive technologies such as Virtual Reality (VR), which offer engaging ways for customers to interact, are also gaining popularity. Financial service companies are prioritizing strategies that leverage CX, as it is becoming a critical factor in buying decisions.
4. Blockchain Banking
The use of blockchain technology in financial services is increasing. Spending on the technology will reach $19 billion by 2024. Regtech is the integration of technology into tools to manage compliance and regulations in banking and insurance. The increasing complexity of rules and the volume, particularly those that involve personal data and privacy, makes it essential.
5. Sustainable Finance
Institutions are expected to do business and give more weight than ever before to sustainability and ESG in their decision-making. This means that the financial sector supports green initiatives like renewable energy, recycling, and carbon footprint reduction. There are new sustainable finance products that allow customers to be sure their money won’t harm the environment or society as it gathers interest in a vault.
6. Digital And Cryptocurrencies
In 2024, digital and cryptocurrency will regain prominence. Over 130 countries have begun exploring central bank-issued digital currencies, while Bitcoin’s recent resurgence has sparked renewed interest. Outside of CBDCs, the crypto-space is still unregulated. However, more regulation and governance are expected in the future.
By 2024, CX analyses based on technology will reduce friction while improving satisfaction at all customer touchpoints. VR is introducing new ways to interact and engage with financial services. Financial service companies will use these technologies more as CX is becoming a critical factor in buying decisions.
7. Cyber Security And Fraud Detection
Cyber threats are becoming more complex and frequent, requiring continued investment in cybersecurity infrastructure and tools. Gartner estimates that global spending on risk management and security will increase by 14.3 percent to $215 billion by 2024.
AI will continue automating repetitive back-office tasks, improving efficiency and transformation. These include customer onboarding and transaction processing, document verification, KYC checks, and compliance.
8. Open Banking
Open Banking is built on the idea that it will control financial data and how they are used. Open Banking allows us to securely share data through APIs with other services, applications, or tools that can provide us with helpful service. It will be a significant trend in 2024and people become more aware that it is essential to know who has access to data and what they are doing with it. This also encourages the service providers to innovate competitively.
9. Hybrid Cloud Technologies
It is a new technology that can be exciting but also brings with it challenges, particularly when it comes down to regulation and compliance. Cloud computing is likely to become more prevalent in the coming months as more companies realize the advantages of having infrastructure, applications, and servers available on demand via the Internet. The new technology and growth of AI raise privacy and personal data concerns. This will change the regulatory requirements for financial services.
In the future, more organizations will transition to hybrid cloud models to manage their workloads as well as to conduct compliance tasks. A hybrid cloud infrastructure does not guarantee that an organization will achieve the highest level of efficiency, functionality, or scalability. Financial institutions should be aware of digital transformations and integrate the necessary integrations to ensure growth and competitiveness within a hybrid cloud environment.
Conclusion
These trends are not only a sign of a transformational journey for banking and finance, but they also highlight the need to strike a balance between responsibility and innovation. The future of AI in finance will be more customer-centric, ethical, and inclusive.
