Emerging Tech Trends in Banking and Finance for 2024

Updated on June 6 2024
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In many respects, 2023 has been a year of impending change for finance. On the one hand, AI’s proliferation and creative application have given even the most conservative institutions food for thought. On the other, data ownership and privacy have become crucial as individuals seek to gain insight into and take more control of their digital activities.

What’s in store for the financial sector in 2024? Technologically speaking, a great deal of upheaval and innovation.

Here are just some of the major trends that will likely shape 2024 for FinTech companies, banks, and clients.

AI as a Transformative Driving Force

More than any other development, artificial intelligence is the technology poised to permeate practically every aspect of finance. For instance, generative AI is a boon for creating marketing campaigns or promotional materials.

AI’s role in customer profiling and satisfaction will be even more instrumental. Machine learning algorithms make it possible to automate simple tasks like account creation & client onboarding, leaving employees free to tackle more delicate and complex work like long-term financial planning.

Chatbots will experience a leap in sophistication. They already convincingly mimic human interaction. In the near future, access to big data-driven analytics will also let them recommend investments and help manage clients’ assets. Risk assessments and credit scoring will become more streamlined as well. AI’s ability to scour large datasets for previously hidden patterns is also a boon for fraud detection.

A Surge in Embedded and Open Banking

Embedded banking – the integration of banking services into third-party apps & platforms – isn’t new. However, its adoption will see an even steeper upward trajectory as more people adopt virtual wallets and transition away from cash. The FinTech sector will have its hands full developing streamlined banking integration and promoting banking-as-a-service (BaaS).

Open banking refers to the democratization of banking data. Specifically, users are gaining more agency in accessing, handling, and integrating their accounts and transactions. The concept comes with increased cybersecurity and data privacy concerns. However, advantages like unifying several accounts from different banks into a simpler payment method outweigh the potential risks.

Embedded and open banking fosters competitiveness and innovation. They allow emerging FinTech actors to develop services that change the current landscape and compete with established institutions on a more equal footing.

Blockchain, Crypto, and Digital Currencies

Crypto and digital currency

Even without the rise of alternate currencies, blockchain and its principles hold a pivotal role in reshaping the banking landscape. Blockchain technology doesn’t depend on any one bank’s centralized networking system. Moreover, basing transactions on encrypted digital ledgers means they’re trackable and more transparent.

The adoption of blockchain will provide a more efficient and inclusive way to financial services for people whose banks previously underserved them.

The continued popularity of cryptocurrencies and digital payment growth are prompting governments to consider issuing digital versions of their fiat currencies. These Central Bank Digital Currencies (CBDCs) allow for streamlined payments compared to their traditional counterparts and are especially useful for simplifying cross-border payments.

Most of the world’s countries are in various stages of CBDC development and implementation and are sure to pick the pace up in 2024.

Cybersecurity Challenges

Cybersecurity

Banks have always been a prime cyberattack target since they collect and safeguard so much personal and financial information. Data breaches in the financial industry have far-reaching consequences, but they’re only one among many established and emerging threats. Malicious insiders, inadequate security systems, and human error all exacerbate the challenges.

Going forward, adequate cybersecurity for the financial sector must be multifaceted and tailored to emerging threats and technological breakthroughs. For example, embracing hybrid and remote work requires finance institutions to rethink their network security.

The centralized approach isn’t enough, so they’ll have to invest in alternatives like business VPNs. They’re ideal for use cases where remote and branch office workers need to handle data securely. The encrypted connections a business VPN establishes between all parties ensure anonymity, confidentiality, and security.

Institutions will also need to rethink how they allow access to data. Implementing a Zero-trust policy and network segmentation provides minimal viable access. Additionally, machine learning’s ability to recognize subtle identifiers like one’s typing rhythm or speech patterns will make biometric authentication even more reliable.

Are vpn’s legal? This is a common question among those exploring enhanced cybersecurity measures. For more nuanced discussions and user experiences, you might look into a vpn comparison reddit thread, where real-world feedback and comparisons of different VPN services can be found.

Taking Personalized Banking to New Heights

Customers respond best to personalized experiences, and thanks to data-driven analytics, financial services are at the cusp of being tailor-made to each person. Thanks to IoT integration, they work by leveraging the data people generate through their purchase histories, online interactions, and even biometrics.

The result? Financial products individuals will be far more likely to adopt. Think mortgage rates based on financial decisions and lifestyle choices or credit cards with ideal terms derived from one’s income and spending habits.

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Conclusion

2023 was the year of technological optimism, especially concerning AI’s foray into almost all facets of the digital world. In the year ahead, we’ll see that optimism put to the test as new trends & technologies take hold. The possible applications we outline above suggest we might be in for a more personalized, transparent, and efficient institutional approach to finances that hopefully everyone will benefit from.

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