GBO’s 24 Latest Banking Trends and Ideas for 2024

In 2024, a number of major trends will propel the banking sector’s transformation, which will also be impacted by broader economic advancements. Here is a thorough rundown of the banking industry’s present situation and upcoming trends for 2024, backed up by pertinent data and in-depth analyses of each trend.

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    An Overview of the Banking Sector in General for 2024

    1. Quick Change: The banking industry is changing quickly as a result of shifting consumer expectations, changing regulatory environments, and technology breakthroughs.
    2. Global Economic Difficulties Diverse economic landscapes and a slowing global economy pose new challenges for banks. Global economic growth is expected to reach 3.0% in 2024, according to the IMF, with advanced economies such as the US, the Euro area, Japan, the UK, and Canada anticipating more modest growth of approximately 1.4%.
    3. Trends in Inflation: It is anticipated that worldwide inflation will drop from 8.7% in 2022 to 5.2% in 2024. Most nations’ inflation rates, meanwhile, will probably continue to be higher than target.
    4. Central Bank Policies: Around the world, central banks are modifying their monetary policies, which has an impact on the activities and strategic choices made by the banking sector.
    5. Operational Challenges: Because of shifting regulations and the state of the economy, banks have particular difficulties in controlling expenses and making a profit.

    24 Top Banking Trends in 2024

    The Trend Description
    Open Banking Sharing financial information electronically under customer-approved conditions. Important for innovation and customer choice, implemented through APIs.
    Artificial Intelligence Use of machine learning and chatbots for improved decision-making and customer service. Crucial for operational efficiency, seen in fraud detection and credit scoring.
    Personalized Banking Delivering tailored financial services based on individual needs. Improves customer satisfaction, implemented using data analytics.
    Blockchain Decentralized, secure ledger for transactions. Enhances transparency and security, implemented in secure payments and smart contracts.
    Digital Banking Shift from traditional to online banking services. Meets demand for 24/7 services, implemented via mobile apps and online platforms.
    Banking One Unified banking approach offering a seamless experience across channels. Important for consistent service, implemented by integrating different channels.
    Payment Processing Handling transactions electronically. Essential for secure and efficient payments, seen in digital wallets and online gateways.
    AI Upped Digitalization Enhancing digital banking experiences through AI. Used for personalized services and process automation.
    Big Data Use of large data sets to uncover patterns for informed decision-making. Implemented in marketing and fraud detection.
    Cloud Computing Utilizing cloud technology for data storage and processing. Important for scalability and innovation, seen in CRM and data analytics platforms.
    Cybersecurity Protecting banking systems from digital attacks. Crucial for data security, implemented via firewalls and encryption.
    Enhancing Customer Experience Improving customer interactions with banks. Key for retention and satisfaction, implemented through user-friendly interfaces and efficient service.
    Embedded Finance Expansion Integrating financial services in non-financial environments. Provides seamless experiences, seen in retail website integrations.
    Digital Transformation Status Ongoing transition to digital-first operations. Essential for competitiveness, involves adopting new technologies and digitizing processes.
    Targeted Services by AI AI offering specific and relevant customer services. Improves personalization and efficiency, used in financial advice and predictive service.
    Bank Consolidation Merging of banks for efficiency. Important for market positioning, involves mergers and acquisitions.
    Blockchain and NFTs Using blockchain for NFTs in banking. Significant for financial product innovation, potentially in NFT marketplaces.
    Blockchain Banking Incorporating blockchain in banking operations. Enhances security and efficiency, seen in payment systems and compliance.
    Composable Applications Modular banking applications for flexibility. Important for rapid adaptation, implemented using microservices and APIs.
    Core Banking Platforms Essential systems supporting banking operations. Updating these is crucial for digital transformation, includes modernizing legacy systems.
    DevOps Combining software development and operations for efficiency. Key for agility, involves continuous integration and delivery practices.
    Data and Analytics Leveraging Utilizing data for strategic decisions. Crucial for insights and risk management, implemented with advanced analytics tools.
    Personalization Tailoring banking services to individual needs. Critical for engagement, implemented using AI and analytics.
    Regulatory Expectations Adhering to financial regulations and compliance standards. Essential for legal operation, involves compliance management systems.

    Banking’s Eight Major Trends for 2024

    1. Digital-First Banking While new digital-only banks are opening up, traditional banks are putting more and more effort into improving their digital offerings. The emphasis of this trend is on offering streamlined digital experiences for a range of banking services.
    2. Open Banking and APIs: Regulations that encourage data sharing between financial institutions and outside providers are driving the rise in popularity of open banking. It is anticipated that this will result in cutting-edge financial services and goods that give clients a more comprehensive picture of their finances.
    3. The increasing popularity of cryptocurrencies and the possible introduction of Central Bank Digital Currencies (CBDCs) are anticipated to have a substantial impact on monetary policy and transaction practices.
    4. Artificial Intelligence and Machine Learning: In the banking industry, artificial intelligence and machine learning are being used more and more to improve fraud detection and risk assessment, streamline operations, and improve customer service.
    5. Enhanced Security Measures: To safeguard client information and financial assets in light of the increase in digital transactions, banks are investing in cutting-edge security measures like blockchain technology and biometric authentication.
    6. Integration of sustainability and Environmental, Social, and Governance (ESG) factors: ESG factors are becoming more and more important. These ideas are being incorporated by banks into their business practices and investment products.
    7. Personalized Banking Services: Banks are providing highly personalized services, such as tailored investment portfolios and targeted financial advice, by utilizing data analytics and artificial intelligence.
    8. Financial Inclusion: Banks are concentrating on increasing financial inclusion by using mobile banking and microloans to connect with underserved and unbanked populations.

     

    Extra Industry Statistics and Dynamics

    • Interest Rate Trends: While rising rates have increased net interest income, they have also increased funding costs and put pressure on margins, particularly for banks that are regional and midsize.
    • Loan Growth: Given the current state of the economy, banks are likely to maintain their stringent lending practices, and loan demand is predicted to be moderate.
    • Noninterest Income: In order to make up for the decline in net interest income, banks are trying to increase noninterest income, such as fees.
    • Cost Discipline: With increased pressure on revenue generation and high operating expenses, banks are focusing on cost discipline as a competitive differentiator.
    • Loan Loss Provisions: In anticipation of a rise in loan defaults and a decline in credit quality, banks have raised their provisions for credit losses.
    • Normalization of Credit Quality: As banks continue to maintain robust capital buffers and build reserves, credit quality is returning to pre-pandemic levels.
    • Competitive Dynamics: Bigtechs, fintechs, and digital banks are just a few of the new and established competitors that banks must contend with.
    • Regulatory Environment: With a growing emphasis on consumer protection and industry resilience, disparities in laws and policies among jurisdictions are having an impact on banking operations.
    • Open Banking Regulations: By lowering obstacles to data sharing and providing customers with additional options, open banking regulations are transforming the market.
    • This summary offers a clear, concise, and thorough understanding of the current and projected state of the banking sector as of 2024.

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