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4 Banking Technology & Automation Trends 2024
Year after year, you've likely encountered the same buzzwords echoing through the vaults of the banking industry: the future of banking, open banking, embedded finance, platform banking or banking-as-a-service.
Although these terms may feel overused and borderline cliché, the recent technological leaps have reinvigorated the industry with a new wave of excitement. In 2024, banking automation possibilities are nothing short of incredible.
Let’s go through our top four technology trends and predictions in the retail banking space with additional insights from SS&C Blue Prism.
#1: Gen AI
2024 prediction: Banks will look for fast but safe ways to gain competitive advantage through generative AI.
Key takeaways: Gen AI
- Banks will continue to focus on driving out process inefficiencies.
- Banks will focus on using gen AI to enhance existing investments, especially around customer interactions.
- Gen AI compliance, security and regulation must be considered, extending this responsibility to software providers. Banks will do their due diligence here.
Insight: Gen AI
We predict that retail banks will move at pace in 2024 to explore how gen AI can be used to drive these inefficiencies out of their business and improve the customer experience. For example, by applying gen AI to tasks such as instantly alerting new loan applicants of missing, inconsistent or incomplete data, they will reduce customer dropout rates, boost turnaround times and improve operational efficiency. Coupled with lending restrictions tightening and interest rates uncertainty, the competition for eligible customers will intensify. Any investments that enable banks to get a competitive edge, such as faster loan processing, will likely be money well spent.
Gen AI could add the equivalent of $2.6 trillion to $4.4 trillion annually in value across the 63 use cases [McKinsey Global Institute] analyzed. Among industry sectors, banking is expected to have one of the largest opportunities: an annual potential of $200 billion to $340 billion (equivalent to 9 to 15 percent of operating profits), largely from increased productivity."
, The economic potential of generative AI: The next productivity frontier
Generative AI is a high priority for leaders: 33% of AI decision-makers say they’re expanding its use at their company, while 29% say they’re experimenting with it. "
However, as gen AI ethics, compliance and security are still hot topics for debate, consumer banks will instead focus on enhancing existing technology, such as banking automation, rather than enter newer areas such as gen AI-powered advisory. For example, making chatbots more sophisticated for better customer support or deepening personalization in campaigns and product offerings.
We also believe banks will cherry-pick low-risk programs that can quickly improve the customer experience to drive growth and save on costs. At the same time, this will improve productivity as it allows employees to carry out higher-value work and provides support to help make more informed decisions.
Regulatory taskforces are already out in force to ensure that consumer protection laws are being adhered to and we’ll continue to see more of this well into 2024. Leading banks will closely monitor how gen AI is being deployed at both individual and departmental levels. Banks will also need to be confident that the software providers racing to embed gen AI in their technology are conducting the required due diligence. By combining strong governance and oversight, automation will play a key role in monitoring and accessing gen AI tools – everything from tracking individual logins and monitoring usage to reporting and archiving data outputs.”
Senior industry marketing manager, SS&C Blue Prism, LinkedIn
#2: Data Democratization
2024 prediction: We’ll see great strides taken in data democratization.
Key takeaways: Data Democratization
- Legacy systems are still hampering the progress banks are making on their digital journey.
- Data democratization will be beneficial for banks and customers alike.
- Intelligent automation will be important to solve data challenges and support more personalized financial services.
Insight: Data Democratization
Banks need the right data for emerging technologies to bring real business value. Equally importantly, they need to be able to access data sources that traditionally sit in different formats across departments and non-interoperable systems. Only then will they be able to build new partnerships, generate new value and create personalized products and services. But legacy systems and organizational siloes continue to hamper the progress banks are making on their digital transformation journey.
At the same time, the democratization of data also applies to customers’ data. It gives them a single view of all the financial services and financial institutions they choose to entrust their money with or borrow from. Open banking is set to finally become mainstream in 2024, especially with regulatory hurdles due to be cleared in the U.S.; and with embedded finance growing at pace, retail customers need a clear line of sight into their ever-more complex financial arrangements.
As a result, we’re now seeing an escalation in the use of intelligent automation (IA) — a complementary combination of robotic process automation (RPA), artificial intelligence (AI), machine learning (ML) and other cognitive technologies — as one of the tools to solve data silos, legacy systems and inconsistent data types. As banks become more mature and confident in their deployment of automation, we believe that, driven by the move to open banking, IA will be used to digitize and structure customer data so that it can be accessed, organized and analyzed to serve both banking organizations and customers.
CIOs have already been laying the foundation for democratized digital delivery with technologies such as low-code platforms, which 64% of CIOs said they have deployed or plan to deploy in the next 24 months.”
Making data democratization a reality will allow customers across different segments to benefit from data by receiving highly personalized offers and making better investment decisions. With appropriate governance and guardrails, banks can also use this data to better understand their customers and make informed decisions.
There's a growing trend towards empowering individual departments or teams. By allowing them to create and oversee their own automation solutions, businesses bypass the traditional reliance on centralized IT, leading to faster deployments and tailored solutions.”
Head of competitive intelligence , LinkedIn
IT systems are silos of automation, and we are using humans to interact with and move data from one siloed system to another. This, while labor costs continue to skyrocket, and overall service and knowledge worker productivity needs to increase.”
VP of product management, LinkedIn
#3: Customer Focus
2024 prediction: It will be the breakthrough year to improve customer experiences.
Key takeaways: Customer Focus
- 2024 will be the year of the customer for banks. The focus on improving journeys will be a top priority and extend beyond just improving onboarding.
- In 2024, we identify three key factors marking a pivotal moment for customer journeys: a transfer of niche customer segment knowledge to traditional banks, an increase in customer switching and the emergence of a new generation of IA tools.
Insight: Customer Focus
Enhancing customer service and customer journeys has long been a top priority for retail banks, with onboarding reigning as the dominant automation use case for several years. However, we anticipate that 2024 will mark the turning point for retail banks, where they will really look into elevating and offering great customer banking experiences.
The global average customer experience will improve for the first time in three years."
This will include established processes such as mortgage applications to niche services like closing accounts for deceased clients and account handling through a power of attorney, and improvements will even touch on micro journeys such as real-time ID verification and credit card replacement. While these experiences might not happen often for an individual, they hold significant importance, shaping customer loyalty and recommendations for years to come.
We can cite three reasons why 2024 will be a pivotal year for customer journeys:
- Niche fintech expertise and services are transitioning to traditional banking through acquisitions or talent hires.
- Increased customer willingness to switch providers, coupled with streamlined processes and the end of interest rate stagnation, will boost market share for providers with exceptional customer journeys.
- The latest generation of AI tools empowers banks to create swift and painless customer journeys, featuring accelerated Know Your Customer (KYC) checks, digital onboarding, fraud detection and seamless design processes, catering to customer expectations for digital banking — especially young, tech-savvy ones.
#4: Employee Spotlight
2024 Prediction: Moving back to banking basics — unlocking the value of the employee talent.
Key takeaways: Employee Spotlight
- The battle for talent in banking persists.
- Banks must strategically deploy automation and AI-powered tech to enhance job satisfaction and replace less fulfilling tasks with technology.
Insight: Employee Spotlight
Even in a tightening labor market, the battle for talent to deliver new transformation programs will continue unabated. Banks face two choices: either invest significantly to attract top-tier professionals or establish internal programs to cultivate and advance the careers of their existing employees. The latter approach involves leveraging employee domain expertise and empowering them to bridge their industry know-how with technological advancements for the benefit of the business.
At the junior operational levels, recruiting can be sluggish and turnover remains high, particularly with many Gen Z workers uninterested in banking careers. Banks must navigate the decision of when to deploy automation and AI to enhance job satisfaction and when to completely replace tasks that are less fulfilling with technology.
By designing great customer journeys, making data accessible across the organization and relieving banking operations of mundane tasks, employees can look forward to 2025 with better career options, satisfied customers and more interesting work. Now that is something to celebrate!
New gen AI-based automation tools will breathe life into the citizen developer movement, encouraging individuals to do more to improve their own personal productivity.”
Bain & Company, LinkedIn
The Future of IA and Banking Technology
Learn more details about how IA is set to help in 2024 by reading our 2024 intelligent automation predictions e-book. Explore the trends and insights that will shape the landscape of IA and gain valuable perspectives on digital transformation for the year ahead.
