In 2023, there were economic difficulties and rising inflation and major banks collapsed. We are in 2024. However, we can expect significant transformations in financial markets.
This year will be a game-changer for the banking industry. Open Banking, Generative AI, CX, and Cloud-based systems will play a pivotal role in its evolution.
In this blog post, we invite you to take an in-depth look at the 3+1 major trends. These trends will shape the financial landscape in 2024.
Streamlined finance: The power of Open Banking
Open Banking is revolutionizing the financial services industry. It allows third-party financial institutions to seamlessly access consumer banking, transactional, and financial data from both banks and non-bank institutions via APIs.
It offers customers several benefits: more visibility and understanding of their finances. They can access this across many banks and financial institutions. It also gives them access to a wider range of financial products and services. This happens by sharing their financial data with third-party providers. It also improves the customer experience. It enables personalized services and efficient payment systems.
Open banking trends are transforming the financial services industry. Its adoption is expected to be highest in Europe by 2024. Statista’s research predicts that the number of open banking users will reach 63.8 million by 2024. They predict that 132.2 million users will use it globally this year.
However, the adoption of open banking in other regions, such as the US, is slower. This is due to new open banking regulations that will not be implemented until 2024.
Open banking extends its impact to optimize the debt collection process. By leveraging open banking, debt collectors can access the financial history and behaviour of delinquent customers, allowing for personalised collection strategies. Also, digital payment agreements implemented through open banking streamline the debt collection process. It offers customers a convenient method of settling their outstanding debts.
Impact of Generative AI
Generative AI is an advanced form of artificial intelligence. It has the potential to transform industries by generating new content, including text, images, and more. This cutting-edge technology has already reshaped industries such as banking and debt collection. AI and automation are not new to the banking industry. Machine- and deep-learning algorithms have been widely used for years to automate processes and enable data-driven decision-making.
Looking ahead to 2024, the impact of generative AI in the banking industry is expected to grow. It will provide a more personalized experience for customers. For example, major financial institutions such as BlackRock, Citigroup and Erste Group have already launched or announced initiatives to use integrated generative AI.
By 2026, generative AI will significantly alter 70% of the design and development effort for new web applications and mobile apps. – Gartner
Generative AI can play an essential role. It can streamline and enhance debt collection processes. This can strengthen customer-focused approaches. For example, creating personalized communications with debtors, such as text messages and emails. By using generative AI, companies develop chatbots. The chatbots can answer customer questions, provide information, and process payments. This way, companies can take the customer experience to the next level.
Changes in Customer Experience
In the ever-changing financial industry, customer experience remains central in 2024. The growing demand for personalised banking experiences has driven customers to seek access to financial information and services. They want them to be customised to their individual preferences and needs. Banks are investing in data analytics and artificial intelligence. They aim to understand their customers more deeply.
Financial institutions need to provide a seamless and personalized experience across online, mobile, and chatbot channels to stay competitive in this hectic era. This is where optichannel communication comes in. Optichannel is the next step in customer engagement. The right platform is strategically chosen based on customer behaviour at the right time and insights from data analytics. By using this knowledge, financial institutions can improve their communication strategies. They can also revolutionise the way they engage with customers.
According to Ernst and Young, AI has a significant role in improving the customer experience. Generative AI has the potential to transform customer interactions by creating more intelligent chatbots. It can also integrate human and digital assistance in innovative ways. This will streamline processes. It will enable financial institutions to provide 24/7 support without compromising service quality.
Cloud excellence: A strategic edge in software solutions
Traditional banks are having challenges adapting their legacy systems to modern environments. To overcome these difficulties, financial institutions are increasingly turning to cloud-first strategies. They aim to transform their technology infrastructure. Banks can improve their data analytics capabilities by implementing cloud-based systems. They can also deliver a seamless experience to their customers. Research conducted by Infosys found that for financial institutions to fully take advantage of the cloud, around 60% of their infrastructure needs to be migrated to cloud platforms.
However, the cloud has already had a powerful impact on the financial sector. It has enabled innovation and increased efficiency. Its transformative impact will continue in 2024, allowing banks to connect to ecosystems:
Cloud-based software remains in high demand. Gartner predicts that 72% of organisations will increase their software spending by 2024. This highlights the crucial role that cloud-based solutions are playing in reshaping the financial industry’s technology landscape this year.
In summary, key trends such as Open Banking, Generative AI, CX, and Cloud-based platforms are shaping the future of the financial industry. These trends will provide unparalleled convenience. They will also drive innovation and ultimately improve the customer experience.
Stay tuned to our bi-weekly blog posts for upcoming market insights and use cases. If you’re interested in exploring the integration of these intelligent solutions, request a consultation with our business experts.
Wishing a joyous New Year and financial stability for all financial service providers and their valued customers!