Despite the wild ride and changing market conditions of the past few years, global banking has proven to be largely resilient and generally sees a more positive outlook.
Inflationary pressures have brought the “low for long” interest rate era to an end (or at least to a sustained pause), allowing banks to improve overall financial performance. That said, now is not the time for global banking to rest on its laurels.
Now more than ever, challenges, pressures, and impacts abound and are coming from literally every direction. These include changing macroeconomic conditions, volatile markets, geopolitical turmoil, the digitalization of everything everywhere, disruptive challengers, regulatory pressure, climate crises, workforce and workplace transformation, the tsunami of AI growth and innovation, and risk, risk, risk, as far as the eye can see.
Looking toward 2024 and beyond, here are some key trends that will require diligent focus if banking remains resilient and rises above the tide.
Doubling down on fraud focus
As digitalization touches every interaction and aspect of our lives, the points of penetration for fraud and financial crimes continually increase in scope and complexity. And as AI screams forward at a blistering pace, new challenges will arise that will require banks to continually double down their focus on fraud and financial crime prevention. Now is not the time for distraction. Now is the time for banks to expertly employ cross-enterprise analytical solutions to address these points of impact.
Keeping up with banking disruptions
Want to bank with Amazon? Apple? Who knows, maybe Netflix will get into the banking game too. The next non-bank challenger is already knocking at the door – if they haven’t already slipped through it. Innovations across the digital payments landscape, changes in lending, and consumer expectations driven by big tech and consumer experiences are reshaping banking in ways we could not have imagined just a few years ago. For traditional banking, that means now is not the time to stymie innovation with a risk-averse culture. Now is the time to set the pace of innovation while maintaining a keen eye on risk.
The impact of AI
The full impact of AI is still a mystery, but we know that the blistering pace of AI’s growth will completely transform our human lives and the business and banking landscapes forever. Conversational AI models like ChatGPT have come screaming onto the scene. While they’re just the tip of the AI iceberg, these conversational AI models are already raising significant concerns about data privacy, bias in AI, ethics, and accuracy.
As banks race to map and test the many potential opportunities and challenges that AI will serve up across the entire enterprise, now is not the time to apply the limited thinking of the past. Now is the time to focus on creating and deploying AI with intentionality, discipline, transparency, human-centricity, and ethical equality.
While these are just three areas of focus for 2024 and beyond, the list is long, varied and continually growing. Though the myriad points of challenge and opportunity may seem insurmountable, now is not the time for financial institutions to shrink back and maintain the status quo. Now is the time to step forward and lead the charge toward a stable, accountable, transparent, and human-centric future for global banking.