About a quarter century ago, the banking industry leaped into the realm of digitalization and it has transformed the understanding, operations, and the whole system of banking since then. Similarly, the quickly evolving and maturating field of artificial intelligence (AI), along with the new cloud computing and data processing technologies, is expected to transform the banks and banking industry again affecting all the stakeholders of the industry. As the banking business is experienced and saturated enough in the digital aspect, the opportunities the AI gen promises hold great potential to advance the functional and structural abilities of the banks. In line with the improvements in AI technology and its adoption into the banking system, the top banking trends of 2024 are shaped around this crucial development.

1. Beginning of a new era: AI Gen

Implementations of artificial intelligence (AI) into the banking systems started in 2023 as most of the banks wanted to try and see the effects of this new technological development. Banks that put extra effort and focus on digital and technological solutions to enhance their services, seek to renovate their whole organization by putting AI in the center of their foundation.

AI is expected to increase the levels of productivity in the banking industry by up to 30%. Also, a successful cooperation of AI with sales, marketing, and customer care units will benefit the banks in terms of an important amount of revenue boost which is another indicator of the fact that gen AI might prove more useful for the banks than any other industries.

Rather than going fully digital and ignoring human interaction, a prospering AI strategy that will bring growth should be created by placing the workforce at its center. Banks need to acknowledge the fact that efficient use of AI will require people with unique skills and alterations in the way people operate.

2. Improving the consumer experience

Putting the biggest focus on the digital customer experience in the last 25 years, banks managed to achieve a perfectly functioning service system while losing the emotional and physical touchpoints with the customers. AI might solve this problem by effectively using the user information stored by them and providing a personalized approach to the customers.  With the conversational abilities of AI technology, banks can benefit from the individualistic approach and experience for their customers as they did back in the pre-digitalization age.

3. Higher focus on the invisible risks

Risk management in the financial industry is a critical topic that is always under the spotlight in theory; however, in practice, it’s highly challenging for financial institutions to detect and prevent the risks. Therefore, in 2024, the banking world is likely to focus on these risk-related points:

• With the introduction of AI technology in the financial industry, banks might focus more on the fortification of their cybersecurity efforts rather than prevention.
• Zero rates in the real estate market will likely reflect some consequences in 2024, so banks might want to be prepared for this comeback.
• During the global crisis in 2008, banks minimized their risks as a precaution and as a result, non-bank financial institutions acquired and moved about 60% of the global assets in the private sector.

4. Collaboration of regulators and banks

The regulatory landscape has been evolving at an unstoppable pace since the financial crisis in 2008. The number of regulations that financial institutions must keep up with and remain compliant with is increasing every day and accelerating with the addition of new digital advancements that need to be regulated. New and most recent legislation focuses on regulating AI and sustainability in the financial industry. Banks are faced with the challenge of offering the most seamless service for their customers while complying with all the regulatory requirements. In 2024, a balance between regulators and banks needs to be addressed which can be achieved with close cooperation and data sharing between banks and regulators.

5. Cloud technology becoming a priority

Integration and operation of AI in the banking system require a different kind of computing and data management which could not be supported with the already-built systems therefore, the adoption of cloud computing technology will become a priority for the banks in 2024.

A cloud-first approach will be highly appreciated by both the engineers and the business leaders as it proves to be perfectly efficient for the new system. Migration to a full-fledged cloud system by integrating it into their on-premise operation and transferring to an open operating system, banks will ensure a smoother connection between cloud and on-prem as it will enable a simpler process for transferring the applications.

6. Reshaping the roles in the banking industry

With the new trends such as AI, cloud tech, and composable apps becoming a top focus in banking technology in 2024, the change in the functions of the IT departments is in question. It is undoubtedly very probable that IT engineers will gain higher positions including bank leadership roles in the near future as their main responsibilities will become more about invention, scoping, and building new products than merely managing the infrastructure. It is also likely that non-technical employees will need to work on their technical skills to learn AI-based tools in order to satisfy the needs of customers and develop products to support them.

2024 in a nutshell: AI in banking

2024 will be marked as the year of change in the financial industry as the speed of the adoption of gen AI is going at an unstoppable rate in comparison to the previous transformative moments like digitalization and mobile banking. What is different in the case of AI is that rather than the technology itself, the way it is used and adopted is a crucial point that considers human interaction. The banks and financial institutions that manage to understand AI deeply and build their strategy wisely will be the triumphs of the financial industry in 2024.

Gökçe Gence, Solution & Project Director