This year has been amazing from a Technology perspective, the way the usability aspect of Gen AI is discussed in every forum, board room, and at individual level across industries is unparalleled. We can say 2023 is the year of technology belief and confidence in accepting the technology through heavy investments in building an innovation culture is a positive move. The year 2024 is expected to be a pivotal point in the evolution of technology, as the convergence of various groundbreaking innovations ushers in a new era of immersive, intelligent, and decentralized experiences. As a Technology and innovation evangelist, I have analyzed the Business and Technology landscape and identified some key technology trends that will shape the banking and fintech industry in 2024.

Here is my version of the Top Trends that the Banking and Fintech Industry will see in the year 2024 -

1. Intelligent Automation

Automation will continue to reshape the industry, with robotic process automation (RPA) and AI-powered intelligent automation (IA) streamlining back-office operations, reducing costs, and improving efficiency. This will free up human resources to focus on higher-value activities such as customer service and strategic planning

Relatable Applications

Robotic Process Automation (RPA): Banks and fintechs will increasingly automate routine tasks like account opening, KYC/AML verification, and loan processing. 

AI-powered decision-making: AI algorithms will be used to automate credit scoring, fraud detection, and risk assessment, leading to faster and more accurate decisions.

2. AI-powered Advisory and Asset Management

AI will be used to analyze user data and provide personalized financial advice, including investment recommendations and budgeting assistance.

Relatable Applications

Robo-advisors: Robo-advisors will become more sophisticated, offering customized investment portfolios and automated rebalancing based on market conditions

Personalized financial recommendations: AI will tailor investment portfolios and financial plans to individual needs and risk tolerances.

Automated wealth management: AI-powered algorithms will manage investments and generate consistent returns.

Democratization of financial services: AI will make financial advice and wealth management accessible to a broader population.

3. Generative AI in Fintech

Artificial intelligence will play a crucial role in tailoring financial services to individual needs and preferences. AI-powered chatbots will deliver personalized financial advice, robo-advisors will optimize investment portfolios, and dynamic credit scoring will offer fairer and more inclusive access to credit.

Relatable Applications

Chatbots and virtual assistants: Chatbots and virtual assistants powered by generative AI will become more prevalent, providing 24/7 customer service and personalized financial guidance.

Content creation and marketing: Generative AI will be used to create personalized marketing content, such as financial product descriptions and educational articles, videos, Newsletters, and one-to-one connect through Avatars

4. Blockchain Integration

While still in their early stages, blockchain and DLT have the potential to revolutionize various aspects of financial services, from cross-border payments and trade finance to digital identity and anti-money laundering compliance. 2024 will see further experimentation and adoption of these technologies in various use cases

DeFi offers alternative financial services built on blockchain technology, bypassing traditional financial institutions. While regulatory concerns remain, DeFi is expected to see further development and adoption in 2024, particularly in areas such as lending and borrowing

Relatable Applications

Cross-border payments: Blockchain will be used to facilitate faster and cheaper cross-border payments, benefiting both businesses and consumers.

Trade finance: Blockchain-based trade finance platforms will streamline the process of issuing and managing letters of credit, reducing costs and improving efficiency.

Enabling the development of new financial products and services, such as decentralized finance (DeFi).

5. Embedded Financial Solutions

This trend involves the seamless integration of financial services directly into non-financial platforms. Think paying for your Uber ride within the app, or managing your investments within your favorite social media platform. This will further blur the lines between financial and everyday activities, creating an invisible and frictionless user experience

Relatable Applications

Banking-as-a-service (BaaS): Banks will partner with fintechs to offer BaaS solutions, allowing non-financial companies to integrate financial services into their platforms.

Frictionless User Journeys: Creating a more convenient and integrated financial experience for customers

Embedded insurance: Fintechs will develop embedded insurance solutions that are seamlessly integrated into everyday activities, such as travel booking or online shopping.

6. Quantum Computing

Although still in its infancy, quantum computing has the potential to disrupt the financial industry by tackling complex problems in fraud detection, risk management, and portfolio optimization. While mainstream adoption is still years away, 2024 will see increased research and pilot projects exploring the potential of quantum computing in finance

Relatable Applications

Financial modeling and risk assessment: Quantum computing will be used to develop more sophisticated financial models and conduct complex risk assessments, leading to better investment decisions.

Fraud detection: Quantum algorithms will be used to detect fraudulent activity with greater accuracy and speed.

7. Open Banking

Open banking will continue to expand, allowing third-party providers to access financial data and develop innovative financial products and services. This will foster collaboration and competition, leading to a more diverse and dynamic financial landscape

Relatable Applications

Increased API adoption: Banks will continue to open up their data and services through APIs, allowing fintechs to develop innovative new financial products and services.

Open finance: Open banking will evolve into open finance, encompassing a wider range of financial services, including investments, insurance, and wealth management.

8. Cybersecurity

As cyberattacks become more sophisticated, banks and Fintechs will need to invest heavily in cybersecurity measures. This includes adopting zero-trust architecture, implementing advanced threat detection and prevention systems, and educating employees about cyber hygiene practices. We are living in an era where banking is through smartphones and most of the users do not have anti-virus on their phones.

Relatable Applications

Focus on data privacy: With increasing regulations around data privacy, banks and fintechs will need to invest in robust cybersecurity measures to protect customer data.

AI-powered cybersecurity: AI will be used to detect and prevent cyberattacks more effectively.

9. Sustainability aligning Gen AI and ESG with COP28

Aligning Gen AI, ESG and COP28 Goals: by aligning Gen AI and ESG, the banking and fintech industry can unlock a powerful combination for driving positive change. This synergy can not only contribute to achieving COP28 goals but also pave the way for a more sustainable and equitable future for all. 

 Relatable Applications

Green finance: Banks and fintechs will invest in sustainable technologies and develop financial products and services that support the transition to a low-carbon economy.

ESG investing: Environmental, social, and governance (ESG) investing will continue to grow in popularity, and fintechs will develop tools and platforms to help investors make informed ESG investment decisions.

By positioning Gen AI and ESG principles, banks can make significant strides towards achieving COP28 goals:

Financing clean energy projects: Gen AI can analyze data and identify promising renewable energy ventures, enabling banks to direct investments towards clean energy solutions.

Promoting sustainable practices: AI-powered tools can analyze supply chains and identify opportunities for resource efficiency, empowering businesses to adopt more sustainable practices.

Building climate resilience: ML algorithms can analyze weather data and predict extreme weather events, enabling banks to develop financial products and services that help communities prepare for and recover from climate disasters.

10. The Rise of Digital Currencies and Tokenisation

Digital currencies and tokenization are two different concepts within the realm of blockchain technology and finance.

Digital currencies are native assets of a specific blockchain network. They serve as the primary means of payment and transaction within that network.

Digital Currency Examples

Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC).

Central bank digital currencies (CBDCs) are on the rise, which could impact the global financial system. Cryptocurrencies and stablecoins will continue to evolve, posing both opportunities and challenges for the financial industry.

 Tokenization is the process of converting real-world assets or rights into digital tokens on a blockchain. These tokens can then be traded, transferred, or used to access specific services.

Token Examples

Security tokens (representing shares in a company), utility tokens (providing access to a platform or service), asset-backed tokens (representing ownership of real-world assets like real estate or art)

11. Cloud-based Banking

 Cloud migration will continue to accelerate, allowing banks and fintechs to scale their operations, improve agility, and reduce costs. This will also enable greater adoption of innovative technologies that require powerful computing resources

12. Regulatory Technology (RegTech)

RegTech will play a crucial role in helping banks and fintechs comply with ever-evolving regulations. AI-powered compliance solutions will automate tasks, improve data analysis, and identify potential risks, enabling financial institutions to operate efficiently and cost-effectively within the regulatory landscape

13. Big Data and Analytics

Hyper-personalization: Banks and fintechs will leverage big data and analytics to personalize customer experiences, offering products and services tailored to individual needs.

Fraud detection and risk management: Big data analytics will be used to detect fraudulent activity and manage risk more effectively.

14. Seamless Integration of Physical and Digital Worlds

The Internet of Things (IoT) seamlessly integrates physical devices into the digital realm, enabling real-time data collection, analysis, and actuation. Smart homes, connected cities, and autonomous vehicles become commonplace, transforming the way we interact with our surroundings. Same way now is the time for connected banking that means through any of the interactive IoT devices banking can be enabled

15. Metaverse: A Convergent Digital Universe

The Metaverse emerges as a shared virtual world where individuals can interact, collaborate, and socialize across physical and digital boundaries. Businesses establish virtual storefronts, host events, and provide immersive experiences, while education and training move into the Metaverse. The convergence of these technologies will reshape industries, redefine human interactions, and create a world where the boundaries between the physical and digital worlds become indistinguishable.

Actionable Items

• Invest in research and development to stay ahead of the curve.
• Build a culture of innovation and experimentation within your organization.
• Partner with other fintech companies and technology providers to access new technologies.
• Focus on creating a seamless and user-friendly customer experience.
• Prioritize cybersecurity and data protection to ensure the safety of customer information.

These transformative technologies and principles are not just buzzwords; they are shaping the future of the banking industry. By embracing Generative AI, LLMs, ESG, the Circular Economy, Intelligent automation, Metaverse, Digital Currencies, and AI-driven regulations banks can create an efficient, and customer-centric financial system, ensuring a brighter future with an inclusive and sustainable finance approach. These are just some of the key technology trends that will shape the banking and fintech industry in 2024. As a Technology and Innovation Evangelist, it's important to stay ahead of the curve and identify opportunities to leverage these trends to create innovative products and services that serve the needs of your customers.