Banking/AI Trends to Watch in 2024

Gen AI and proper governance lead the big AI issues for financial institutions this year.

Banks find themselves in rapid AI deployment mode as 2024 opens for business, with 83% of financial institution executives stating they’re “interested” in artificial intelligence tools and applications, according to Finastra’s “2023 State of the Nation Survey”.

Banks see immediate AI uses
for tasks like collecting, processing, and analyzing data for ESG purposes, improving risk management and decision-making processes, generating synthetic data for KYV and credit decisions, and for automating manual or repetitive tasks, among other responsibilities.

They’ll do so in an environment where most executives still have their training wheels on in learning and understanding AI and what it brings to the table for financial services companies in 2024. One big priority is already agreed upon – to use AI in ways that improve the customer banking experience.

“Respondents perceive generative AI as a key means to meet increased customer expectations for tailored, personalized services, with 32% of those interested in the technology saying they will use it in this way,” London-based Finastra reports.

Three Big Issues

The survey, which tracks the thoughts of 956 banking executives across the globe, covers more ground on the issues impacting banks when it comes to deploying technology (especially AI) strategies. These three issues top that list.

Banking as a Service gains support: 48% of financial institutions say they’ve either “deployed BaaS or improved their capabilities” in the past 18 months. “This is a sizeable increase from the 35% recorded in all of 2022, the report notes. “Key use cases globally include buy now pay later schemes, embedded lending and embedded cross-border payments.”
Bullish on technology investments: Approximately 80% of financial executives say the current economic climate has “constrained their investment in technology.” Yet 69% say they “expect their investments to resume in full” before the end of the first quarter of 2024.
Open Finance on the rise: 85% of banking executives surveyed say Open Finance is “having a positive impact on the industry.” What’s more, the vast majority of banking execs surveyed say that “at least a quarter of their customers are using Open Banking-enabled services” while 46% say that “over half of their customers” are using them.

Finastra points out that while global banks have a long way to go before their AI deployments reap big dividends, optimism about the technology abounds in 2024.

“Despite the challenging economic climate, it’s clear from our research that investment in AI, BaaS, and embedded finance remain key priorities for financial services organizations over the next 12 months, particularly as they seek to further enhance and personalize the customer experience,” said Finastra CEO Simon Paris. “We share the industry’s ongoing commitment to ESG initiatives, to collaboration around Open Finance, and excitement in using advanced technologies like AI to help deliver on the opportunities ahead.”

Recent Posts

Leave a Reply

Your email address will not be published. Required fields are marked *