2024 Retail Banking Trends: Insights and Tips for Banks and Credit Unions to Drive Growth
As the new year approaches, predictions about what 2024 will bring continue to emerge. Although the economic outlook remains uncertain, banks and credit unions must strategize on ways to remain competitive, continue to automate, and connect to their account holders while building trust – all while controlling costs and IT overhead.
One thing is certain, there’s no “normal” for the banking industry, especially with continuous changes to regulation, increased competition from fintechs and industry disruptors, and the changing needs of account holders.
For many, 2024 will be about optimization: strategies, processes, and solutions, including those that reshaped the banking environment this year. According to Gartner, the trajectory is “upward” with modern banking technologies. A recent report predicts an 8.1% increase over 2022 in IT spend in the banking and investment services space, with a 13.5% increase on software spend overall. Despite this, and given the volatility of the economy, technology investments from banks and credit unions will need to demonstrate measurable value and benefit.
Here are a few predictions about emerging trends from Team Alogent:
Upgrading tech stacks to improve efficiency and communication.
The lack of interoperability between independent line of business solutions is still holding many institutions back in their ability to automate and deliver streamlined user experiences, as well as hindering their access to business intelligence that can impact product design, combat fraud, and improve personalization. In the new year, institutions that leverage newer tech stacks and solutions that take a more enterprise-level approach can make tremendous strides forward in automation and efficiency.
Many of these platforms also allow for the increased use of APIs - facilitating the use of open banking principles, removing siloes, and enhancing collaboration and communication. Banks and credit unions who expand their use of APIs will capitalize on the benefits of connected ecosystems, enabling more streamlined workflows and seamless access to third-party solutions.
Additional benefits will also be seen at banks and credit unions that that utilize a containerization, or modular, approach – often found within more modern platforms. By design, these tech stacks allow institutions to cordon off a specific environment when deploying features, testing, or performing maintenance. As a result, financial institutions reduce downtime, lower costs, and improve services for account holders – all differentiators in the new year.
Increased use of AI tools.
The opportunities with artificial intelligence may seem boundless – from improving data to reducing manual tasks and combatting fraud.
Despite existing advances in personalization and the application of data, there are still tremendous strides that can be made in using AI to harness transaction data and make it functional. By combining user behavior data with transaction data, for example, AI-powered tools can detect patterns, enabling banks and credit unions to make leaps forward in their ability to deliver personalized and timely services.
More applications will also be leveraging AI to streamline manual tasks and bring about additional efficiencies and cost savings. Although this use case may sound like technology is replacing teams, it’s the opposite. Institutions seeing success today are pairing AI with employees to enhance day-to-day roles, ultimately delivering back time in their days to apply to account holder-facing services across all facets of the financial institution - from workflows to the back office, and within data-backed solutions for better decisions and insights.
AI tools will also continue to be applied in fraud detection solutions, helping to guard against cyber threats and risks. In such a fast-moving market niche, it’s all-hands-on-deck to stay ahead of fraudsters, and leveraging AI will aid in the detection of patterns, anomalies, and more in 2024.
Increased usage of mobile and digital banking.
Mobile wallets, contactless cards, and peer-to-peer (P2P) payments will continue to be in demand as consumers and businesses demand strong remote-banking capabilities. Convenience and accessibility remain prominent, with anytime, anywhere access remaining the names of the game. As a result, digital banking platforms will enhance access to companion apps to offer complete ecosystems of capabilities that deliver streamlined and robust user journeys, enhanced security features, and personalized experiences. This demand for convenient and on-the-go banking will continue to drive financial institutions to develop intuitive self-service features linked to platforms that were previously in-branch only.
Going “all in” to the cloud.
Cloud computing has been a buzz for some time, but 2024 is the year to make a move to hosted offerings - so much so that Forbes states spending by businesses around the world on cloud computing infrastructure will top $1 trillion for the first time. However, Fortune reports that around 85% of financial institutions have yet to migrate fully away from on-prem solutions. What’s the drive in the new year? Factors like the growing need to adopt new platforms and offerings that easily flex, scale, and allow for third-party connectivity. Banks and credit unions must embrace the cloud to remain competitive, whether a hybrid or multi-cloud approach. In addition to strengthening their growth strategy, the cloud offers financial institutions greater ability to optimize resources and manage IT costs.
2024 is expected to bring challenges with uncertainty, and although no one can predict the future, a successful banking strategy must leverage data, include modern technology, and focus on the user experience to ensure differentiation and growth. The team at Alogent is ready to be your partner and help introduce products and services that will support your bank or credit union’s long-term strategy and deliver success.
Learn more about how we collaborate with financial institutions for long-term success in this article.
Be the first to know! Click below to follow us on LinkedIn for news and content updates!