Top financial services trends of 2024

The beginning of 2024 brings forth many questions as to what we are able to count on within the 12 months forward, particularly within the financial services trade, the place technological advances have skyrocketed and added complexities to an already turbulent panorama. Whereas excessive rates of interest and inflation issues are carrying over into the brand new 12 months, monetary companies traits signal to prepare for main modifications in real-time by staying up-to-date on all monetary services-related issues, together with in banking and capital markets sectors.

This coming 12 months, rising applied sciences, resembling automation and effectivity, are anticipated to come back to the forefront. Whereas the Covid-19 pandemic is generally behind us, the panorama of labor within the monetary companies trade remains to be in a hybrid atmosphere. Due to this fact, organizations have continued to put money into distant and in-person work, and that is persevering with in 2024.

Generative AI is expected to be essentially the most influential development permeating your entire monetary companies sector of 2024. From reshaping the client expertise to bringing forth wealth administration instruments, the monetary companies sector can be on the helm of managing the lasting influence artificial intelligence (AI) may have on organizations and folks. On this weblog we’ll breakdown traits prone to come out of those main technological developments plus different traits together with sustainability, cybersecurity and the return of crypto.

Listen: The Art of AI featuring a Financial Industry perspective with Citigroup

Development: Generative AI

One of many, if not the, greatest technological developments made in 2023 was generative AI. The developments made in tech for the reason that pandemic have boomed and finally modified the monetary sector. That is one thing we’re prone to see extra of this 12 months. Particularly, the affect on fintech and the applying of generative AI on chatbots is predicted to develop this 12 months via banking expertise, resembling apps and different on-line cash companies, which may produce new income streams.

What generative AI has carried out is open a brand new world of improvements that may assist personalize monetary planning and funding administration. One instance of that is in insurance coverage. Since AI has a capability to seek out traits in knowledge, AI helps insurers create customized merchandise which may result in extra correct danger assessments and ease insurance coverage prices for people. This is without doubt one of the key monetary companies traits of the 12 months and can very probably be the driving pressure of change all through the trade.  

Listen: Banking Transformed – How Generative AI will revolutionize Financial Services

Development: Hybrid cloud expertise

New technology could be thrilling, however it brings forth new challenges as properly, particularly with regards to rules and compliance. Instruments resembling cloud computing are prone to be increasingly more in style as we get additional into the 12 months and extra organizations see the advantages of a gaining access to infrastructure, functions, servers and extra on-demand by way of the web. New expertise and the expansion of AI deliver into query private knowledge and privateness issues, which can finally change the regulatory necessities in monetary companies.

Extra organizations will probably be transitioning to hybrid cloud fashions for his or her workloads and to additional handle and conduct compliance duties. It’s essential to acknowledge that hybrid cloud by default is totally different than hybrid cloud by design. Taking place upon a hybrid cloud infrastructure doesn’t imply a corporation is getting the best in effectivity, performance or scalability.  Due to this fact, monetary establishments must keep watch over digital transformations and the integrations wanted to help progress and competitiveness in a curated hybrid cloud atmosphere.

Learn more about hybrid cloud for financial services

Development: Cybersecurity danger administration

AI brings about extra challenges, particularly with regards to cyber dangers. There have been and can probably proceed to be cyber threats which are solely getting increasingly more advanced as technological developments proceed. Mitigation efforts and having the right danger administration instruments can be vitally essential as threats enhance. An funding within the instruments and infrastructure to fight such threats is prone to happen in 2024. The necessity for elevated fraud detection can even be essential to look at within the coming 12 months as increasingly more monetary establishments attempt generative AI.

Development: Sustainability

A key development probably this 12 months is a higher focus by monetary establishments on sustainability efforts and ESG consideration. Organizations throughout the monetary companies trade can be nudged to help the funding in inexperienced initiatives greater than ever earlier than. Renewable sources, recycling and decreasing the carbon footprint are among the many initiatives organizations are anticipated to prioritize.

Individually, suppliers are extra drawn in direction of partnerships with sustainable monetary merchandise as prospects put extra thought into the place their cash is getting used.

Development: Buyer expertise

One true advantage of AI-powered expertise is the customer experience, or CX. Now, buyer expertise can be sometimes called buyer expertise administration (CXM) as methods and applied sciences to enhance enterprise outcomes emerge. An instance is watsonx Assistant, which makes use of pure language processing (NLP) to assist with digital transformation and construct AI-powered chatbots. New expertise can analyze nearly each element of a buyer’s interactions, which might improve buyer loyalty and enhance satisfaction over time. Monetary service suppliers are actually able to growing performance and leveling buyer expectations thanks to those new applied sciences.

Explore how IBM watsonx Assistant helps transform digital banking experiences

Development: Open banking

The premise of open banking is it offers safe entry to a buyer’s monetary knowledge from conventional banks and different monetary establishments utilizing software programming interfaces, also called APIs.

Using open banking is predicted to extend as prospects search to take management of who has entry to their knowledge. APIs might probably develop into the popular methodology to assist banks join applied sciences to their inner programs and streamline processes.

Development: Digital currencies

Generative AI and the hype round it knocked cryptocurrencies out of the limelight, however crypto is predicted to make its return in 2024. The monetary companies sector has seen a serious shift to on-line banking strategies and managing property, like bank cards, all in an internet setting.

Individually, blockchain can be prone to come again into the image. The shared system of document will develop into extra essential to managing confidential data and transactions.

Embracing monetary companies traits with IBM Consulting

Monetary establishments that used to compete based mostly on back-office efficiencies are actually competing based mostly on front-office buyer experiences. IBM Monetary Companies Consulting helps shoppers reply quite than react to this inversion of the normal monetary companies trade enterprise mannequin.

Our experience in modernizing digital core programs for banking has helped our shoppers understand cost-to-income (C/I) ratio enhancements higher than 14% and complete price of operations (TCO) financial savings averaging 20-30%. IBM Consulting’s deep trade and expertise experience generates outcomes essential for wholesome monetary efficiency targeted on three core consumer imperatives: progress, effectivity and compliance.

Important to the modernization of economic companies firms, our world-class IBM Funds Middle offers end-to-end fee options to allow the agility, safety and scalability wanted in an ever-growing, partner-centric fee ecosystem.

Unlock the future of financial services with AI

Explore embedded banking with this interactive experience