18
Dec
In 2024, the financial services industry is prepped for a transformative journey, marked by technological advancements, evolving customer expectations, and regulatory shifts. In this article, we aggregate insights from reputable sources to present a comprehensive overview of the key predictions for the financial services sector in the coming year.
Technology
In 2024, the financial services industry is on the brink of a technological revolution, where digital transformation will continue to reign as a top priority. Generative AI is set to redefine customer interactions, with major players investing in chatbots that enable customers to engage with banking apps using natural language. This integration holds the promise of personalised financial planning and bespoke investment strategies based on customer profiles and behavioural data. Simultaneously, blockchain technology, often overshadowed by generative AI, is gaining prominence in financial services. Predicted to experience a significant increase in spending, from $4.5 billion in 2020 to $19 billion in 2024, blockchain is expanding beyond cryptocurrencies. Financial institutions are actively exploring blockchain’s potential for creating smart contracts, establishing trust, streamlining payments, and authenticating transactions. Amidst these advancements, digital transformation remains at the forefront of the industry’s agenda, shaping a future where technology continues to drive innovation and redefine the landscape of financial services.
Compliance
In 2024, financial institutions are ready to navigate a landscape dominated by ESG (Environmental, Social, and Governance) considerations, driven by heightened consumer expectations for sustainability. As a result, compliance strategies will pivot towards integrating ESG factors into investment decisions and broader business practices to meet these evolving demands. Simultaneously, the industry will witness increased government regulations surrounding ESG, compelling organisations to address these mandates rigorously. Open Banking will reinforce data privacy, offering consumers control over their financial information through secure APIs. Additionally, Regtech will play a pivotal role, leveraging technologies like AI, blockchain, and cloud computing to streamline compliance processes amidst escalating regulatory intricacies, particularly those related to personal data and privacy. Deloitte’s report underlines the industry’s need to balance innovation with compliance, ensuring consumer protection, data privacy, and overall financial stability.
Economy
Sustainability takes centre stage in the financial sector in 2024, with consumers prioritising investments in green initiatives. Financial institutions are expected to offer sustainable financial products aligning with environmental, social, and governance (ESG) factors. The rise of sustainable finance reflects a global shift towards responsible investing, ensuring that customers’ money contributes positively to the environment and society. Simultaneously, the resurgence of digital currencies and cryptocurrencies is reshaping the economic landscape of financial services. Over 130 countries are exploring the adoption of central bank digital currencies (CBDCs), signalling a continued evolution in the crypto space and a shift towards governance and regulation for businesses involved in digital financial assets.
Risk
AI’s integration into insurance is poised to transform risk assessments and product offerings. AI’s ability to spot patterns in data will lead to more personalised insurance products based on individual risk assessments. While promising fairer insurance and potentially lower costs, challenges around privacy, data protection, and AI bias will need to be addressed. Cybersecurity is a paramount concern in 2024 due to the escalating frequency and complexity of cyber threats. The ongoing AI arms race between cybercriminals and organisations necessitates strategic investments in tools, infrastructure, and skills. With worldwide spending on security and risk management projected to reach $215 billion, the industry must proactively address cybersecurity challenges. Deloitte’s insights align with this, emphasising the increasing risks of fraud and cyber threats in the industry.
Competitiveness
Collaboration and competitiveness will shape the financial landscape in 2024. More than eight in 10 small business owners are seeking faster and easier access to capital loans, leading to increased collaboration between traditional financial institutions and fintech companies. This collaboration will result in innovative products and services, enabling customers to have better control over their financial data. The industry will need to adapt to the changing demands of consumers, focusing on providing personalised and tailored solutions to stay competitive in a dynamic market. Deloitte’s insights underscore the need for increased agility in the industry, aligning with the article’s focus on collaboration and competitiveness shaping the financial landscape in 2024. The report suggests that firms need to be more agile than ever, creating new strategic options to navigate the prevailing trends and uncertainties.
Customer Experience
In 2024, customer experience (CX) is set to be revolutionised through advanced technologies. From analysing every touchpoint of the customer journey to reducing friction and improving satisfaction, technology will play a pivotal role. The emergence of immersive technologies like virtual reality (VR) will offer new, engaging ways for customers to interact with financial services. As CX increasingly influences buying decisions, financial service businesses are expected to prioritise leveraging technology to enhance customer satisfaction and loyalty. This heightened focus on CX will differentiate financial institutions, creating a more engaging and personalised experience for customers navigating the financial landscape.
In conclusion, the financial services industry in 2024 undergoes a tech revolution, with AI and blockchain reshaping interactions. Sustainability and compliance, especially ESG, redefine strategies amidst increased regulations. Risks like AI in insurance and cybersecurity demand attention. Collaboration and competitiveness surge, driven by a thirst for faster capital access. Deloitte warns of technological turbulence, urging agility. Choices made now set the stage for a competitive decade, highlighting the delicate dance between innovation and responsibility.
At Atlafy, a pure-play ServiceNow partner, we are uniquely positioned to assist financial services companies in addressing compliance, managing risks, and enhancing customer experiences. Our tailored solutions offer a comprehensive approach to meet the industry’s evolving demands.