As the environment declines as a priority for the banking sector, industry incumbents are set to focus on other core themes such as generative AI and financial inclusion in 2024.

GlobalData’s Banking Predictions for 2024 explores over twenty themes in the industry for 2024, covering technology, macroeconomics and regulation. Key takeaways from the report include how themes such as ESG, AI, cybersecurity, personalisation, and financial inclusion will affect incumbents and new entrants as well as the limited potential for IoT within the sector.

Financial Inclusion

The past couple of years have seen new entrants into the retailing banking sector focussing on specific customer sub-segments that have traditionally been overlooked along the lines of ethnicity, socio-economic status, religion, geography, sexuality, gender and more. However, GlobalData’s report highlights that these foci are not differentiated enough to warrant dedicated providers.

Instead, the report suggests that incumbent retail banks can use this opportunity to make acquisitions of failed new entrants like LGBTQ+ focussed digital bank Daylight or cherry-pick popular features to be integrated into their platforms.

Artificial Intelligence

Artificial intelligence is also set to benefit incumbents according to the report. Throughout 2024 it is expected that big banks will trial different types of generative AI, with the most successful ones being rolled out and potentially reducing operating costs drastically.

GlobalData’s report suggests that generative AI I won’t be used to replace advisors but should be able to augment these customer-facing roles via assisting with information retrieval and fraud detection.

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Elsewhere, generative AI could also be used to plug the cyber skills shortage, as cybersecurity remains a priority for the industry. AI is being used to analyse large amounts of datasets to identify cyber threats. On the flip side, the proliferation of AI is being used to create vicious malware in a very short time creating sophisticated attacks on the industry, so the industry must remain vigilant in combatting these attacks.

IoT is a dead end for banking

Whilst the Internet of Things (IoT) has been a key business industry theme, the report suggests that in this case, “IoT in banking feels more like a vendor ‘pushed onto the industry’ rather than an empirically observable phenomenon”. This is due to the industry not having many ‘things’ to connect to the internet. Instead, IoT in banking focuses more on connecting the customer to a digital banking ecosystem. GlobalData’s thematic research indicates that in regard to IoT, the winners in the industry will be financial service providers that successfully enable end-to-end connectivity