2024 has seen some major trends in the banking sector. Neobanks gained more prominence, digital offerings took centre stage, and cash has taken a back seat as new forms of payment emerged. In this article, we’re looking at the top 5 banking trends of 2024, including insights from industry experts such as Yerbol Orynbayev, independent financial services consultant and Peter Torrente, U.S. Sector Leader for Banking and Capital Markets at KPMG.
1. Bridging the digital divide
The rise of neobanks and FinTechs has shown the sector what’s possible with the implementation of the latest technological advancements. In fact, McKinsey Global Institute has estimated that the global banking sector could see an additional $200-$300 billion of value annually thanks to Gen AI.
As a result, the Big Four banks have been quick to adopt new tech and gen AI – and see the benefits. Industry leaders like Yerbol Orynbayev have urged a sector-wide move towards digitalisation, and regional and community banks have started to answer their calls by dipping their toes into the digital world.
2. Improving customer experience
The way customers interact with their banks has changed dramatically over the past two decades. Before, strong in-branch service was a key offering, but today’s customers prefer a digital experience. Banks, small and large, have had to pivot and master the art of online customer service, utilising apps, online banking and personalised products and services. Streamlined payments and advanced payment platforms have also been a big focus, according to Peter Torrente of KPMG. AI has been crucial in using data to deliver the digital banking experience that customers desire while still providing the personal touch they’ve come to expect.
3. Making banking safe and secure
Identifying risk is a complicated business. When you add AI into the mix, it becomes even more critical. Banks aren’t the only ones leveraging AI – hackers are making use of the same technology.
Banking apps and online banking platforms are susceptible to third-party breaches and cyberattacks. Banks across the globe have fallen victim to cyberattacks, including Bangladesh’s and Russia’s central banks. The fact that technology develops at a rapid pace means this threat is ongoing. That’s why banks will continue to prioritise the issue of cybersecurity, using AI to identify risks before they arise and bolster their security systems in the process.
4. Regulation: the buzzword of the year
The financial services industry is no stranger to regulation. It’s what keeps things functioning smoothly. However, the rise of AI has created a need for targeted legislation that specifically addresses issues around ethics, data protection and sustainability.
As Yerbol Orynbayev, former Governor of the World Bank, points out, regulation is also a key factor in creating an environment that businesses and individuals want to invest in. Finding a balance of regulations that don’t burden banks with unnecessary expense or red tape while still giving regulators what they need has been a major focus for the global banking industry. The European Union made headway with its Artificial Intelligence Act, a first-of-its-kind Act that establishes a common regulatory framework for AI within the EU.
5. The rise of M&A
Rising interest rates and inflation have forced banks into a fight for survival. As a result, mergers have become a lifeline many of them have latched onto. The overall outlook is quite positive, with organisations like Deloitte having projected a rise in the financial sector’s value and volume of deals. KPMG’s Peter Torrente views this rise in M&A activity as a way for banks to drive their growth by making use of the latest technologies and cementing their positions at the front of the curve.
The banks that have managed to master these developments will certainly find themselves at the forefront of customers’ minds. The key to success lies in using AI correctly to ensure it serves banks in a way that drives their growth, development and impact. Implementation backed by a well-thought-out strategy will be the differentiating factor between the banks that stay afloat and those that sink.
