By Ola Oyetayo, Co-founder and CEO of Verto 

We’re living through a period of immense change — and the financial landscape in 2024 is no stranger to these transformations. The evolution of digital Banking and fintech over the past few years has been truly significant, with mobile banking apps now being the go-to for most users globally. This shift has been fuelled by fintech companies that offer innovative products such as digital wallets, challenging the status quo of traditional banking.

The integration of blockchain technologies and the rising interest in cryptocurrencies have also left a mark on the industry, reinventing how we understand currency and transactions.

For traditional banks, this year is one that’s rich in opportunities – but also one that’s filled with hurdles. Just look at the rise of generative AI, which is set to transform payments, improve risk management, and refine customer interactions. The first forays into using AI for customer service and financial guidance are already underway. To stay competitive and meet customer demands, banks must be agile and quick to adopt these new technologies, a task that I know is easier said than done in a sector known for its caution.

Further, we’re likely to see AI algorithms playing a significant role in areas such as fraud detection and risk assessment in the months and years ahead. For consumers, a global shift towards digital payments is already well underway – and this trend could extend into biometric payments in developed economies and the widespread adoption of digital wallets in emerging markets.

Banks looking to innovate must tread a fine line between adopting breakthrough technologies and maintaining the trust and security their customers expect. Investing in robust cybersecurity measures is essential, as it showcases a dedication to protecting customer data and transactions. By fostering an internal culture of innovation and partnering with fintech startups, traditional banks can keep their finger on the pulse of the latest developments.

The rise of open banking

Open banking is reshaping the landscape, fostering efficiency, and allowing Fintechs to provide more tailored services. This is likely going to lead to a market where customers start to expect bespoke offerings. Banks, fintechs, and big tech companies will need to balance competition with collaboration, using that collaborative spirit that open banking encourages while still striving to outshine their rivals.

When it comes to evaluating risk, especially in emerging markets, more data doesn’t necessarily mean a change in strategy. Rather, it allows for a more nuanced and informed approach to risk assessment. Banks can exploit this data to run detailed scenario analyses, ensuring their decision-making is grounded in a clearer understanding of potential outcomes.

Adaptable regulation is key to enabling banks to safely innovate while ensuring consumer protection and market stability. The current challenge lies in navigating a complex regulatory environment that can stifle innovation, particularly around emerging markets and international payments. Regulatory sandboxes can offer a middle ground, allowing banks to test and refine innovations in a controlled setting.

Keeping up with the changing landscape

Looking at cryptocurrencies and blockchain, it’s clear that their role in mainstream banking will grow. To match customer interest, fintechs must ready themselves to facilitate secure cryptocurrency transactions, a task that will become increasingly standard as these technologies gain acceptance.

In today’s financial ecosystem, the roles of central banks and fintechs are distinct yet intertwined. Central banks hold the reins on monetary policy, seeking to maintain economic stability, while fintechs are on the frontlines of innovation, pushing boundaries and leading the way in financial inclusion and advanced data analytics. While fintechs often lead with innovation, central banks remain pivotal, capable of driving significant changes that fintechs must adeptly navigate.

Lastly, the rising levels of public and private debt remain a concern for the global economy and financial stability. High debt burdens can make economies and businesses more susceptible to economic stress, potentially leading to market volatility. Leaders in the financial sector must carefully monitor these trends, ensuring resilience in the face of shifting economic tides.

In conclusion, banking in 2024 demands a blend of foresight, adaptability, and prudence. By embracing the potential of technology while safeguarding the fundamentals of trust and stability, the banking industry can hope to chart a successful course, even as the evolution of the sector continues at pace.

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