Now that the end of 2023 is getting closer, it’s time to look ahead to 2024 and see what the financial industry might be like. There have been a lot of changes in FI over the past few years, with the rise of digital banking and fintech shaking things up and safety and sustainability becoming more important. So, what can we expect in the year to come?
- Increased Use of Artificial Intelligence
Although artificial intelligence (AI) has long been a part of the financial industry, 2024 is expected to be the year when it begins to branch off into unexplored heights. AI can help financial institutions make better decisions and improve customer service by analyzing vast amounts of data and identifying patterns that humans might miss.
AI is already making a big impact in fraud detection. AI can help banks and other financial institutions detect and prevent fraudulent activity in real-time by analyzing transaction data and identifying patterns that indicate fraud. In 2024, more banks and other financial firms will invest in AI technology to improve their fraud detection capabilities.
- Continued Growth of Cryptocurrency
People have been discussing cryptocurrency a lot in recent years, and it is likely that this trend will continue in 2024. We can expect increased adoption and use as more people become familiar with digital currencies like Bitcoin and Ethereum. Some experts predict that cryptocurrencies will mainstream payment method within the next few years.
The increasing popularity of decentralized finance (DeFi) is driving the growth of cryptocurrency. Users can access financial services without intermediaries like banks through DeFi, which is a blockchain-based financial system. DeFi platforms can offer users lower fees, faster transactions, and greater transparency by using cryptocurrency as a means of exchange.
Mainstream financial institutions will increase their adoption of cryptocurrencies, and the DeFi space will continue to experience growth in 2024. However, governments may also face regulatory challenges as they seek to regulate this new and rapidly evolving industry.
- More Emphasis on Cybersecurity
In 2024, financial institutions will increase their investment in cybersecurity measures to protect their customers’ data. We may include new technologies like biometric authentication and blockchain-based security solutions.
Mobile banking requires particular attention to cybersecurity. The risk of cyberattacks increases as more people use their smartphones to access financial services. Banks are investing in new security measures like biometric authentication (e.g., fingerprint or facial recognition) to keep mobile banking safe and secure in response.
Cybersecurity experts are increasingly concerned about the growing threat in the realm of cloud computing. As financial institutions move their operations to the cloud, they must ensure that they secure their data from cyber threats. Banks will seek to protect their data from hackers by increasing investment in cloud security solutions in 2024.
- Greater Focus on Sustainability
Consumers are increasingly recognizing sustainability as an important issue, and the financial industry is acknowledging this. In the coming year, banks and other financial firms will prioritize sustainability in their operations. Investments in renewable energy, sustainable infrastructure, and environmentally friendly products may be included.
Sustainability is particularly important in the realm of green bonds. Companies issue green bonds to fund environmentally friendly projects such as renewable energy or sustainable infrastructure. Investors will seek out socially responsible investment opportunities, leading to increased investment in green bonds in 2024.
ESG (environmental, social, and governance) investing is another area where sustainability is growing as a concern. When making investment decisions, ESG investing considers factors such as a company’s environmental impact, social responsibility, and corporate governance. Investors will seek out companies that align with their values, leading to increased adoption of ESG investing strategies in 2024.
- Continued Evolution of Fintech
Fintech has disrupted the financial industry for years, and it is unlikely that this trend will slow down in 2024. Continued innovation in areas like mobile banking, peer-to-peer lending, and digital wallets is expected. Traditional financial institutions may face more partnerships and collaborations as fintech companies continue to challenge them.
Fintech is making a big impact in the realm of financial inclusion. Fintech companies can offer financial services to underserved populations who might not otherwise have access to traditional banking services by leveraging mobile technology and innovative business models.
In 2024, fintech innovation will continue to grow, and fintech companies will collaborate more with traditional financial institutions. However, governments may also face regulatory challenges as they seek to balance innovation with consumer protection.
Overall, the financial industry looks forward to an exciting year in 2024, with plenty of opportunities for growth and innovation. Companies must always stay ahead of the curve and adapt to changing trends and technologies. Financial institutions that stay ahead of the curve will be well-positioned for success in the years to come, whether through investments in AI technology or a greater focus on sustainability.