Top financial services trends for 2024
The start of 2024 raises many questions about what we can expect in the future, especially in the financial services industry where technological advancements are rapidly increasing and adding complexity to an already turbulent environment. As concerns about high interest rates and inflation continue in the new year, financial service trends are a signal that we need to prepare for big changes by understanding all matters related to financial services, including banking and capital markets, in real time. .
Next year, new technologies such as automation and efficiency are expected to emerge. The COVID-19 pandemic may be largely gone, but the financial services industry’s workplace remains a hybrid environment. Therefore, organizations have continued to invest in remote and in-person work, and this will continue in 2024.
Generative AI is expected to be the most influential trend permeating the entire financial services sector in 2024. From reimagining customer experiences to rolling out wealth management tools, the financial services sector will lead the way in artificial intelligence (AI) management with lasting impact. It will impact organizations and people. In this blog, we will analyze trends that are likely to emerge from these key technological developments and others, including sustainability, cybersecurity, and the return of cryptocurrencies.
listen: The Art of AI Introducing a financial industry perspective with Citigroup.
Trend: Generative AI
One of the biggest technological advancements in 2023 was generative AI. Since the pandemic, technological advancements have boomed and ultimately transformed the financial sector. This is something we may see more of this year. In particular, the influence on fintech and the application of generative AI to chatbots are expected to grow through banking technologies such as apps and other online money services this year, creating new revenue sources.
Generative AI has opened up a world of new innovations that can help personalize financial planning and investment management. One example of this is insurance. AI’s ability to find trends in data can help insurers create customized products that can lead to more accurate risk assessments and alleviate insurance costs for individuals. This is one of the key financial services trends of the year and is likely to be a driving force for change across the industry.
listen: Innovation in Banking – How Generative AI will transform financial services
Trend: Hybrid Cloud Technology
New technologies can be exciting, but they also bring new challenges, especially when it comes to regulation and compliance. Tools such as cloud computing are likely to become more and more popular as the years go by, with more organizations recognizing the benefits of access to infrastructure, applications, servers, and more on-demand access via the Internet. The growth of new technologies and AI is raising concerns about personal data and privacy and will ultimately change regulatory requirements for financial services.
More organizations are likely to move to hybrid cloud models for their workloads and manage and perform additional compliance tasks. It’s important to recognize that hybrid clouds are fundamentally different from hybrid clouds by design. Using a hybrid cloud infrastructure does not guarantee maximum efficiency, functionality, or scalability for your organization. Therefore, financial institutions must keep an eye on the digital transformation and integration needed to support growth and competitiveness in select hybrid cloud environments.
Learn more about hybrid cloud for financial services
Trend: Cybersecurity Risk Management
AI brings more challenges, especially when it comes to cyber risks. As technological advancements continue, there have been, and will likely continue to be, increasingly complex cyber threats. As threats increase, it is critical to have mitigation efforts and appropriate risk management tools in place. Investments in tools and infrastructure to combat these threats are likely to occur in 2024. As more and more financial institutions try generative AI, the need for increased fraud detection will also be important to note.
Trend: Sustainability
A key trend this year is that financial institutions are focusing more on sustainability efforts and ESG considerations. Organizations in the financial services industry will be urged more than ever to support investment in green initiatives. Renewable resources, recycling and reducing carbon emissions are among the initiatives the organization is expected to prioritize.
Separately, as customers become more thoughtful about where their money goes, service providers are becoming more interested in partnering with sustainable financial products.
Trend: Customer Experience
One of the real benefits of AI-based technology is customer experience, or CX. Customer experience is now often referred to as ‘customer experience’. Customer Experience Management (CXM) emerges as a strategy and technology to improve business performance. An example is watsonx Assistant, which uses natural language processing (NLP) to support digital transformation and build AI-based chatbots. New technologies can analyze virtually every detail of customer interactions, helping to increase customer loyalty and satisfaction over time. Financial service providers can now enhance their capabilities and raise customer expectations thanks to these new technologies.
Learn how IBM Watsonx Assistant can help you transform your digital banking experience.
Trend: Open Banking
The premise of open banking is that customer financial data from traditional banks and other financial institutions can be securely accessed using application programming interfaces, also known as APIs.
The use of open banking is expected to increase as customers seek to control who has access to their data. APIs can become the preferred way to help banks connect technology to internal systems and streamline processes.
Trend: Digital Currency
Generative AI and its hype have kept cryptocurrencies out of the limelight, but they are expected to make a comeback in 2024. In the financial services sector, there has been a significant shift to an online environment, with both online banking methods and asset management such as credit cards. environment.
Separately, blockchain is also likely to reemerge. Record-sharing systems will become increasingly important for managing confidential information and transactions.
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Financial institutions that previously competed based on back-office efficiency are now competing based on front-office customer experience. IBM Financial Services Consulting helps clients respond to, rather than react to, this reversal of traditional financial services industry business models.
Our expertise in modernizing digital core systems for banks has helped our clients realize cost-to-income (C/I) ratio improvements of more than 14% and total cost of operations (TCO) savings of an average of 20-30%. IBM Consulting’s deep industry and technology expertise produces results that matter for sound financial performance focused on three key customer challenges: growth, efficiency and compliance.
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