2024 Financial services outlook

Key trends are poised to reshape the financial services sector in 2024, offering both challenges and opportunities for those seeking to remain competitive and relevant.

Enterprise Generative AI is revolutionizing the finance industry and is one of the change makers of the industry. By 2026, over 100 million humans will engage with Generative AI for their enterprise work, and organizations that operationalize AI transparency, trust, and security will achieve a 50% improvement in terms of adoption, business goals realization, and user acceptance. The opportunity for businesses in the industry is huge, with Goldman Sachs predicting it could generate between approximately $31 billion to almost $40 billion through a combination of annual cost savings and new revenue opportunities by 2025. As such, it is vital firms understand what the biggest opportunities and trends are within the sector. 

The key trends driving the adoption of Generative AI, often in combination with Narrow AI, in the financial industry are:

1.      Customer and employee experience

• Over the next 12 to 24 months, Generative AI will drastically improve how customers interact with financial services providers. AI enablement of digital channels will be crucial for firms looking to attract younger customers, as 47% of Gen Z state they will walk away from a brand after a single bad customer experience.

• AI-augmented virtual assistants and chatbots have the potential to provide firms with a deeper, more nuanced perspective and personalized view of the customer journey. For example, by analyzing text-based and speech-based interactions, chatbots can be used to help customers move money from one account to another or signposts to areas of the website that enable the customer to achieve their end goal. Combined with discovering new data, the result will allow faster detection of issues and, subsequently, a quicker resolution time by augmenting decisions.

• AI will also help companies to improve employee engagement and, by doing so, increase staff commitment and retention. For example, companies have seen turnover rates of 45% in customer service departments due to their high-stress nature. By augmenting this with AI, these agents can give better, more impactful recommendations to customers and, as a result, be more satisfied and motivated. 

2.      Personalized banking

• Customers are increasingly looking for products more aligned with their priorities and lifestyles. For example, some studies indicate that 66% of consumers expect companies to understand their unique needs and expectations, and 52% expect all offers to be personalized. Generative AI will enable firms to offer more personalized financial products. More specifically, by providing drastic improvements in contextualizing customer and company data, actionable insights will be discovered more quickly.

• By automating the time-consuming processes of discovery, Generative AI and narrow AI technology will help reduce the time required to review loan applications, helping people gain access to money significantly quicker than ever before. It will also reduce friction around verifying loan documents and customer identification, enabling workers to focus on more value-add tasks while improving the customer experience. All of which will improve customer experience and lead to cost reductions.

3.      Fraud detection and regulatory compliance

• It is estimated that fraud leads to a loss of $4.1 trillion annually. Given the magnitude of this threat, firms are constantly looking for ways to identify fraudulent actions as soon as possible. 

• Simultaneously, firms also face multiple regulatory requirements, both within and across countries. The operational costs associated with keeping pace with the implementation and enforcement of policies have been growing steadily for the past several years. One study pegs the cost of compliance for banks at $10,000 per employee.

• Consequently, firms are going to use Generative AI to augment current fraud and compliance tools and techniques by leveraging its strengths in the areas of anomaly detection (e.g., identification of suspicious activity or gaps between new policies and current policy implementations) and ‘explainability’ (e.g., generating documentation needed for audit trails).

• As employees are required to undergo regular training, firms will also use it to generate materials for compliance training. 

4.      Social listening

• Firms are looking for new ways to monitor, analyze, and engage with content generated from social media channels, blogs, and other relevant online sources. Generative AI will accelerate this process as businesses can determine the drivers and implications of online conversations more accurately.

• This process will also help firms potentially uncover emerging trends and market needs across their customer base as the generative nature of the technology explores the relationships between a much broader set of variables than what has been previously used to assess customer needs.

• These insights will help drive better business decisions regarding ways to cater to their innate needs.

5.      Firms are looking for tools that drive external and internal benefits

• As finance firms look to maximize value from generative AI, many are looking at either internal or horizontal areas (e.g., use cases that benefit both internal and external operations at the same time). As such, we expect to see more action from industries, like lending providers, on industry use cases, as well as improved developer productivity and assistance for support teams for quicker incident resolution.

• The external benefits that generative AI can provide to these types of companies include personalized communication for debt collection, improved customer service, credit risk analysis, customer onboarding, and personalized loan recommendations. At the same time, the internal benefits include improved fraud detection, loan document processing, internal assistance for lenders and servicing staff, and contact center optimization.

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