Not so long ago, trades handled by the world’s largest bank in the globe’s biggest market traversed on a USB stick.
This is just one in a series of attacks that affected parts of the global financial system. For instance, the Industrial & Commercial Bank of China Ltd. (ICBC) in the USA suffered a cyber attack.
Such an attack – as described by market participants – followed a hacking attack suspected to have been carried out by a Russian-linked criminal group, Lockbit. This hacker group continues to earlier attacks on the Boeing company and the British post office.
That proves increased fraud and cyber risk will require financial services leaders to be much more agile than ever. New strategic options will need to be created to help firms tack in the direction of the prevailing breeze, wherever it’s coming from.
Every year brings a new wave of disruption. So what lies ahead in 2024? In its Fintech and Payment Trends for 2024 report, Juniper Research identifies several potential game-changers.
Juniper’s key fintech trends for 2024:
- Gen AI will transform customer relationships
Without a doubt, 2023 was the year of generative AI. Every industry is obsessed over how it might change, improve, or disrupt. That said, in fintech, there were few specific use cases. Juniper thinks this is set to change, and that in 2024 gen AI “will crystalize into specific benefits.”
The reason is simple: data. Banking has a deep well of info about transaction behaviour, account balances, spend categories. It can apply AI to this data to improve the customer relationship.
- AI tools will tame the challenge of AML compliance
While AI has the potential to ‘mass personalize’ customer banking experiences, another profound impact might come in a more ‘dry’ area: regulation.
Compliance is an enormous challenge for banks. It’s complex and time-consuming. Take anti-money laundering. A wide range of regulations are in place to defend against it, some national, many multinational. So-called ‘regtech’ can help to manage the workload by automating many processes. The use of AI in compliance promises to improve the tech considerably.
- A European digital wallet emerges
Digital identity matters in an increasingly online world. Citizens and consumers need to be able to authenticate themselves when they are not physically present. Yet the world’s identity infrastructure (passports, ID cards, driving licenses) has been created for an in-person world.
The EU ID Wallet will let users store identity data, credentials, and attributes linked to their identity, as well as regulate cross-border electronic identifications. Expressed more plainly, it will let people access their own ID and share it as needed with third parties – reliably and securely.
- Rising demand for sustainable fintech
Environmental and social concerns matter to all bank stakeholders – from customers to employees to investors. In this context, we are seeing more initiatives from technology vendors aimed at addressing ESG (Environmental, Social, and Governance) issues.
- Biometrics to go in-store
Biometrics have gone from exotic to mainstream in the last 10 years. Virtually every phone user is now familiar with fingerprint and/or facial recognition. In 2024, we could see this trend migrate into the in-store payments arena.
- CBDC to go from theory to practice
Central banks have been wary of digital currency since Bitcoin burst onto the scene in 2009. Now, however, they are trying to co-opt it by creating CBDC (Central Bank Digital Currency).
In simple terms, the CBDC promises a new kind of payment instrument – a form of ‘digital cash’ that combines the advanced features of cards with the instant and universal benefits of coins, but is issued and controlled by national governments. Today, there are 150 CBDC trials taking place worldwide.
- ‘Account to account’ to challenge card payments
In most global markets consumers use cards to make online payments. There are few alternatives. But a promising option is the direct ‘account to account’ transfer enabled by open banking. This channel is well-established in India, Brazil, and China, and Juniper argues that it could gather momentum in Europe and the US too this year.
- BNPL to move into the B2B space
BNPL (Buy Now Pay Later) has enjoyed a huge boom in consumer online commerce.
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