The industry of finance is undergoing major changes that are driven by a variety of emerging trends. Scott Tominaga mentions that these transformations impact everything, right from consumer expectations to the use of technology, thereby shaping a more dynamic financial landscape. Moreover, emerging finance trends sparked by digital disruption have only amplified with COVID-19.
Scott Tominaga underlines a few of the top financial services trends of 2024
Technological advances have skyrocketed in the financial services industry over the last couple of years, adding further complexities to an already turbulent landscape. Tech innovations including generative AI, transition to the cloud, and increased fraud and cyber risk, are blurring of industry lines, and require financial services leaders to be much more agile than ever. Here are some of the major financial services trends to keep an eye on in 2024:
- Generative AI: The use of Generative AI is becoming increasingly popular for personalizing financial planning and investment management, especially in sectors like insurance. As AI has the capacity to identify trends in data, artificial intelligence can be used by insurers to develop personalized products that may lead to more accurate risk assessments as well as ease insurance costs for individuals. Generative AI is likely to be among the key financial services trends of the year and has high chances of becoming the driving force of change throughout the industry.
- Hybrid cloud technology: More companies are likely to transition to hybrid cloud models for their workloads, in order to effectively conduct and manage compliance tasks. It is vital to recognize that a hybrid cloud by design is not the same as a hybrid cloud by default. Happening upon a hybrid cloud infrastructure does not necessarily imply that a company is getting the best in terms of scalability, functionality and efficiency. Hence, financial institutions must keep an eye on digital transformations, as well as integrations required for supporting competitiveness and growth in a curated hybrid cloud environment.
- Cybersecurity risk management: AI is likely to bring several challenges when it comes to cyber risks. Cyber threats are expected to become all the more complex over time. As threats increase, it becomes vital for companies to invest in proper cybersecurity risk mitigation and management tools. Investments in such tools are expected to increase in 2024. Financial companies might need more internal resources to manage their security, especially with rapid growth. They may even opt to outsource security services to have constant protection while focusing on other tasks.
- Sustainability: An important trend for the year is the increased focus provided by financial institutions to ESG and sustainability efforts. Organizations within the financial services industry are likely to support the investment in green initiatives more than ever before. These companies are expected to prioritize initiatives like the use of renewable resources, recycling and reducing the carbon footprint.
Scott Tominaga points out that history shows the financial services industry has frequently been a catalyst for progress, and helped both organizations and people to manage economic and societal changes. Financial services-based companies need to have design strategies to keep up with the new-age trends, and adapt their operations as per their accordance.