2024, in all possibilities, looks to be a landmark year when it comes to banking and finance, marked by major changes as well as transformations. The fact is that the significance of AI is going to be pivotal, getting into every aspect of the sector, right from revolutionizing customer service to making sure to reshape financial management tools and also streamlining back-office operations. The fact is that advancements, when harnessed effectively happen to have the capacity to deliver more efficient, innovative, as well as cost-effective solutions when it comes to banking, investment, and insurance. But they also go on to present challenges that have to be addressed just to make sure that these changes are safely and ethically executed.
Generative AI when it comes to Fintech
Fintech mostly refers to technology that goes on to offer consumers more power over how they manage, spend, as well as invest their money. The most visible application when it comes to generative AI happens to be chatbots, with customers increasingly communicating with banking apps as well as online money services in natural language. It is well to be noted that Bank of America, BlackRock, Wells Fargo, and Citigroup happen to be among the major financial services players that have already gone on to launch or have announced initiatives that circle around generative AI. No wonder, one can expect to witness innovations like financial planning that’s personalised as well as bespoke investment strategies that happen to be based on customer profiles and also behavioural data, all thanks to generative models such as those that are powering ChatGPT.
More than ever before, one expects the institutions with which the business is done to prioritize sustainability along with ESG factors when it comes to their decision-making. In the financial services domain, this means going ahead with supporting investment across green initiatives like renewable energy, recycling as well as carbon footprint dip. Sustainable financial products happen to be emerging, thereby enabling customers to make sure that their money is not being used to create harm to the environment or society while it is accumulating interest in a bank vault.
Digital & Cryptocurrencies
Digital currencies as well as cryptocurrencies are back on the radar when it comes to financial services in 2024. More than 130 countries are reported to be taking a stern look at their use or adoption of central bank digital currencies- CBDCs whereas Bitcoin’s recovery from its 2021 crash is going ahead with attracting renewed interest from innovators as well as investors. Besides CBDCs, the crypto-space still happens to be a wild west, so one can indeed also expect more movement when it comes to the governance and regulation of those who happen to do business there.
In 2024, customer experience- CX is going to be driven by the technology emergence that helps every touchpoint when it comes to the customer’s journey be evaluated so as to reduce friction and at the same time enhance satisfaction. On top of that, new as well as immersive technologies such as VR are going ahead with providing new as well as more engaging ways to interact as well as engage. With CX playing a significant role in terms of buying decisions, there is clearly a direct connection that takes place between customer loyalty and business success, and the fact is that more financial service businesses will go on to prioritize leveraging this in 2024.
Insurance that’s AI-Powered
Because of AI as well as its ability to spot patterns across data, one will go on to see more insurers giving out customized products that are based on an evaluation of an individual’s risk. A more precise risk assessment will go on to lead to insurance that’s fairer and lowers costs. But the industry will face issues regarding privacy and data protection, and also risks of AI bias.
Open Banking happens to be based on the principle of enabling people to take control of their financial data and how it can be used. It makes it very much possible to share information in a secured way by way of APIs with other applications, services, or even tools that can go on to provide useful services. In 2024, it is indeed going to be a key trend as one goes on to become more aware of the significance of understanding who has the data and what is happening with it, as it also pushes service providers to get engaged in competitive innovation.
Cyber-Security And Fraud Detection
It is worth noting that the escalating frequency as well as complexity of cyber threats and the current AI arms race, which is between cybercriminals and organizations, mean cybersecurity will go on to be a major trend. Countering these issues requires strategy as well as ongoing investment in tools, infrastructure, and skills. This is the reason Gartner forecasts that international spending on security as well as risk management is going to reach $215 billion this year, which is an increase of 14.3% from 2023.
Automating manual as well as repetitive elements when it comes to back-office processes is going to continue to push efficiency as well as transformation in 2024. Tasks like onboarding new customers, processing transactions that are routine, verification of documents, KYC checks, along with compliance will growingly be managed by AI.
One has not heard too much about blockchain recently, as the heads turned mostly towards generative AI. But noticeably, distributed ledger technology happens to becoming increasingly commonplace when it comes to financial services. Researchers anticipate that spending is, in all likelihood, going to touch $19 billion in 2024, which is an increase from $4.5 billion in 2020. Apart from cryptocurrencies and digital currencies, there is a likelihood to witness more use cases in terms of blockchain by way of creating smart contracts, trust, streamlining payments, as well as authenticating transactions.
Regtech is the integration of technology into tools that are designed to aid banks and insurers in dealing with compliance as well as regulation. It has in it making use of tools such as AI, blockchain, or cloud computing so as to conduct compliance tasks. It will become more prevalent in 2024 because of the growing complexity as well as volume of regulatory requirements in terms of financial services, especially regulations that involve personal data and privacy.
These emerging trends within banking and financial services not only make sure of a journey that’s transforming but also underscore the crucial balance between innovation as well as responsibility, thereby setting the stage for a future in which finance is not just more efficient and customer-centric but, along with that, more ethical as well as inclusive.