Unveiling the Top Tech Trends in Financial Services for 2024
The financial services landscape is on the brink of an evolutionary leap in 2024, driven by an amalgamation of cutting-edge technologies, regulatory adaptations, and a relentless pursuit of enhancing security and customer experience. As we navigate this dynamic landscape, several prominent tech trends are set to reshape the industry this year.?
1. Digital ID Verification Becomes the Norm
For a long time now, digital ID verification has been becoming more and more commonplace. It is increasingly rare for physical copies of identity documents to be asked for, particularly with in-person checks. This is because digital solutions have become so much better on every level. Way more convenient, better in many ways at identifying fraud, certainly more consistent, and considerably more efficient. As the technology continues to improve and organisations find more and more effective ways to distribute and layer these technologies, this acceleration to digital will continue.?
Adding further fuel to the fire in 2024 is the upcoming Data Protection and Digital Information Bill. Here The Government will seek to add greater trust into a burgeoning market of suppliers where information can be confusing for buyers. With uncertainty removed for buyers, confidence will increase and the digitisation only becomes faster.?
What will become particularly interesting as the market shapes up is the battle for management of identity on a user’s behalf. Apple, Google, Microsoft, Facebook and Amazon have already used their huge customer bases to do this effectively in various use cases. How many of us log into third-party services already using these credentials? In financial services, ApplePay and GooglePay are examples of the identity being used, and many App Store and Play Store financial services apps place some level of reliance on Apple and Google credentials. Ultimately though, there is a level of identity risk that these companies have not yet been able to win the trust of financial institutions for. Can these companies overcome this or will the problem be solved by other organisations? Banks still have huge customer footprints and strong identities, but will their risk averse governance processes allow them to innovate at a pace to open up this new opportunity? Many have tried in the past and failed. Biting at their heels will be the tens of identity companies servicing various financial institutions now. Can they find a way to effectively build a brand that end-users trust with their identity?
2. Traditional Communication Channels are Dead
As technology continues to redefine CX, traditional communication channels such as email, paper, postal services, and even conventional phone calls are fading into obsolescence.
Even more so following the lockdowns, easy-to-use digital processes are expected from every organisation a person engages with. Any push to paperwork now can expect to be met with an eye roll and an instant fall in brand perception. That’s not to mention the operational cost and risk associated with managing paperwork. This reality will continue to be clear to financial institutions through the feedback they receive. Digitisation has been rapid and will continue. Now all that remains are the most difficult and complex of processes. These are processes where multiple parties are involved (such as in business, corporate and investment banking products), products are complex (such as where assets are involved or there is a high amount of manual assessment) and / or where parties may not already be known to the FI (such as in onboarding, mandate change, power of attorney or bereavements processes). As FIs seek to compete in an ever more digital world they will push resources into these last analogue customer facing areas of their operations.
Email, once a primary mode of communication, is now looking increasingly ancient as a technology. Overloaded by volume, emails' main battlefront for years has been to manage against spam. For financial services companies sending important messages, the delivery certainty needs to be much stronger. Connected to the problems of spam are the high rates of attempted fraud perpetrated through the channel. The channel is so cheap to use at volume and fundamentally not built to provide assurance of identity or to assure data protection at rest or transit. Many FIs will already have dropped email because of the security risks. As fraud over email continues to climb, and inboxes become increasingly clogged and unresponsive, more and more FIs will eliminate or reduce thier reliance on email. The challenge for FIs will be how to provide customers, prospects, partners and beneficiaries with a convenient channel that doesn’t resort back to paperwork.?
The traditional phone call, while not completely obsolete, is facing a paradigm shift across our lives. Across demographics, people prefer alternative channels like instant messaging and social media platforms for quicker and more convenient interactions. Forcing two parties to commit to a time to have a conversation, where that time commitment is unknown, becomes increasingly untenable for individuals with their busy lives, and increasingly expensive for FIs to resource. The clear hatred people have for techniques that FIs have attempted to minimise resources such as IVR menus and call queues have been obvious for decades. As with email and paper, the challenge for FIs will be in identifying what is forcing people onto the phone today and identifying solutions that can effectively digitise this. Given the high expense and often poor customer satisfaction connected to telephony, and customer’s clear preference for digital channels, the trend will surely be for less and less of the traditional phone call.
3. Less Omnichannel, More Right-Channel
Pre-2024 the focus has been on bolt-ons to channels to try and make them fit for purpose. Omnichannel solutions and CRMs have sought to manage communications coming in through numerous channels that a customer may choose to use. Thousands of tools have been developed and implemented that seek to solve the trust, security and data control challenges with the various channels being used.?
Whilst the number of channels continues to grow, throwing up more and more technical challenges, financial institutions are becoming increasingly despairing of how to manage them all. As none of these channels have been developed for the regulatory and trust rigours of financial services, the spend to try and adapt is constant, and often limited in what is practical to achieve.??
In 2024 I expect FIs to start to realise that end customers don’t want to choose their channel from all those they currently use. They just want a convenient channel that is effective for the query and/or transaction they want to achieve. In 2024 I expect less focus on financial institutions handling complex processes through many channels, to institutions creating and managing a channel that is accessible to all prospects and customers and can deliver the optimal convenience, speed and security at minimal operational cost.
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4. Artificial Intelligence Drives Real Value
As with so many technologies of recent times, AI has been seriously hyped through 2023. For me though, this is one technology where the hype is justified. When working to digitise processes that continue to rely on legacy communication channels, we’re naturally working with the processes that don’t tend to easily fit templates. In that scenario, humans are required to consume data in various, often unstructured formats, and make decisions based on rules that are sometimes grey. Traditional digitisation methods have focussed on forcing users into webforms to structure the data on behalf of the FI to be able to then run rules against it. At best this leaves behind cases that just can’t be made to fit the template and at worst creates incredibly difficult user experiences. This drives poor completion rates and inefficiencies.?
I think what AI opens up is the opportunity for technology to do at least some of the heavy lifting that humans traditionally do. Key to this will be accepting that AI is a technology that doesn’t get it right 100% of the time. This may mean that quality control humans are still required, as they often are today to mitigate against human error. I think also the copilot model will be the most common one, where the AI works as an assistant to a human making them far more productive.?
Opportunities I think will focus around things like:
We’re still at an early stage of the adoption cycle. I think most people who understand process engineering, understand the potential of AI, so I expect to see heavy innovation over 2024. No doubt there will be challenges ahead as champions battle risk functions coming to terms with the various new risks associated with this technology. Ultimately, at the end of the year, the potential and progress of these technologies seems destined to ensure AI is well established on the majority of FI’s roadmaps in 2025.
Final Thoughts
These are just some of the trends and areas that financial services firms will be focusing on in the year ahead. The financial services industry of 2024 stands on the precipice of a transformative era, driven by technological innovation and investment focussed on enhancing the customer experience, improving security and reducing costs.?
At Nivo, we provide financial institutions with a first-of-its-kind communication platform that allows for instant messaging between an institution and its customer, and enables biometric id verification, document gathering and document signing. Our solution also incorporates open banking and includes bank-standard level security.
Used by hundreds of financial services providers, our Verified Identity Messaging (VIM) platform delivers improved communication, streamlined back-office processes, reduced operational costs, and more importantly, incredible customer satisfaction and advocacy.?
Our goal will be to capitalise on this continued digitisation of financial services and play our role in more easily connecting consumers and providers around the world.
Find out more about our solution by visiting our website, or see the solution in action for yourself here: https://www.nivohub.com/book-demo?
Interesting points! I'd add cybersecurity will be paramount with digital IDs becoming the norm. It's not just about the right channel, but also ensuring these channels are protected. I see a greater role for blockchain technology in enhancing security and privacy in fintech too. Exciting times ahead!