The banking industry has witnessed tremendous technological transformation in the past decade. The advent of smartphones, faster connectivity, and more user-friendly apps has accelerated the shift towards digital banking. Fintech start-ups are disrupting traditional banking institutions with innovative mobile and online services.

In today’s digital age with tech-savvy customers, banks can’t stick to the old ways but need to reimagine Banking and rewire themselves to remain relevant. As we enter 2024, banking institutions need to increase the use of artificial intelligence and incorporate personalization to deliver a seamless banking experience to customers.

In this blog post, we explore the future of digital banking – the emerging trends, predictions for change, and what the future banking landscape may look like in 2024 and beyond.

Key Takeaways

• Mobile Banking usage will continue to rise with over 85% of smartphone users relying on it. Banking apps will become more intelligent and personalized.

• Biometric authentication like fingerprint, facial recognition, and voice recognition will be widely used to enhance the security of mobile banking apps.

• Open banking will gain more acceptance globally with customers comfortable sharing data to avail of innovative financial services from banks and fintech collaborations.

• Digitalization efforts by banks will help cut costs and achieve sustainability goals on reducing carbon footprint through paperless banking, lesser plastic card waste, and dematerialized bank cards.

• Integration of ESG metrics and ethical financing frameworks will position banks firmly as “ethical banks” by 2024 rather than just profit-driven institutions.

• Exploration of metaverse for offering financial advice, augmented banking processes, and hyper-personalized promotions targeting tech-savvy consumers will advance.

• While digital transformation will sweep banking, cash, and brick-and-mortar branches will retain some relevance with small businesses and technology-resistant customer segments.

• Banks willing to embrace technology, sustainability, and customer-centricity will thrive by 2024 and beyond by staying resilient and relevant. An omnichannel presence with differentiated services based on generational preferences will be key.

The Rise and Rise of Mobile Banking

Mobile banking has, without doubt, become the most popular banking channel in recent years with an ever-increasing number of users embracing banking apps. A report from Qmark estimates more than 85% of smartphone users will rely on mobile banking by 2024. Millennials and Gen Z will make up the majority of these mobile bankers.

The main drivers for mobile banking include 24/7 accessibility, easy transfers, personalization, and simplicity. Mobile banking usage surged during the pandemic when customers avoided branches and opted for contactless banking. The rise of 5G connectivity will also propel more mobile banking users as it will make transactions faster and more secure.

What will mobile banking in 2024 look like? Apps will become even more intelligent and customized to user needs. Personal finance tools and two-way communication with bankers will be integrated into mobile apps. Banks will develop super apps with additional services for everyday tasks like grocery shopping, buying insurance, wealth planning, etc. This will open up additional revenue channels over and above banking services.

Biometric Authentication for Enhanced Security

One significant barrier to the increased use of mobile banking has been security perceptions. As fraud threats increase, customers are wary about banking on their mobile devices. Banks have already implemented multi-factor authentication and encryption to enhance security.

We foresee fingerprint authentication, facial recognition, and voice recognition will become mainstream by 2024 to enhance security for banking apps. Gentle authentication methods like behavioral biometrics that recognize how users interact with devices will add a layer of security without disrupting user experience. Digital identity verification using government IDs will curb identity fraud. Blockchain technology supporting the digital ID authentication process with its decentralized encryption will help banks build further trust.

Open Banking to connect the dots

Before open banking, transaction data rested with banks giving them absolute control over customer data. With open banking, customers can control their data and share it securely with third-party companies of their choice. The UK led the charge in 2018 and the US and Australia followed suit.

According to Technavio Research, the global open banking market will grow by 40% by 2024. As customers become more comfortable sharing their data through open banking, innovative new banking services will emerge tying together various apps for productivity and lifestyle solutions.

For example, an accounting app could connect to users’ banks and help analyze daily balance trends. Forgetful customers can allow a planning app to check bank balances and pending bills, alerting them to schedule payments.

API-based financial services will support both banks and fintech companies to collaborate and roll out highly personalized banking products. The year 2024 will see open banking gain more acceptance through emerging use cases for customers and businesses.

Cost-cutting and Going Green with Digitalization

Banks will continue to lower their carbon footprint and shift towards sustainable operations powered by digital solutions. Banks have leased or reduced their physical branch networks and a few bank branches may disappear completely from the landscape by 2024.

Digitalization will help banks with streamlining supply chains and optimizing branch operations leading to more cost savings. Centralized cash processing centers through digitization of back-office functions will also contribute to emissions reduction.

Banks will create an online education platform for customers to transition from offline requests for new cards, disputes, and account changes to online self-service options in their mobile apps. Real conversations with bankers will also focus on digital channels like video calling and chatbots saving customers the commute to branches.

Paperless banking initiatives in full swing will slash paper wastage allowing digital delivery of key banking documents like statements, contracts, and disclosures through email and apps. By dematerializing plastic cards, digital bank cards stored in mobile wallets with tokenization for security will become the norm.

Smart contracts built on distributed ledger technology will digitize commercial agreements benefiting trade finance. Sustainable banking practices via digitalization will contribute to banks’ net zero targets over the next decade.

Ethical Banking Revolution

Environmental, social, and governance issues have come to the forefront in recent years with customers seeking transparency on how banks invest their funds or finance businesses. Fossil fuel investments, private prisons, and immigration detention centers are some areas that have attracted controversy leading customers to question banks’ societal impact.

70% of banking customers surveyed recently said they would switch to banks that are actively doing good. A Deloitte survey found Generation Z seeks transparency around how financial institutions handle ethical issues.

By integrating Environmental, Social, and Governance (ESG) metrics into business operations, 2024 will see banks positioning themselves firmly as ethical banks. This includes green financing frameworks that support sustainable projects and industries as well as social financing facilities for minority communities.

Reduced income inequality and financial inclusion of the unbanked will be part of the 2024 banking goal. Technological innovation in financial services will ensure wider access to credit and accounts for excluded groups.

Banks will conduct human rights impact assessments to evaluate risks within portfolios and financing decisions. Voluntary ESG disclosures will update stakeholders regularly on sustainable finance initiatives like green lending and investments in ethical bonds. Ethical banking indexes will rank banks on holistic performance guiding customers to banks that “walk the talk” on purpose-driven agendas.

Banking in the Metaverse – Exploring New Worlds

2022 witnessed several banks dip their toes into the metaverse waters with basic showrooms and virtual branches using 3D avatars and video chat capabilities. Meta (formerly Facebook) has committed $10 billion towards metaverse development while Microsoft aims to mesh teams and meeting functionalities into virtual spaces for collaboration.

Come 2024, we foresee ten or more global banks leveraging metaverse technology to offer financial advice, augmented banking processes, and hyper-personalized promotions to tech-savvy consumer groups through immersive environments.

Transactions may involve cryptocurrencies or blockchain-based digital assets as new forms of payment. The decentralized nature of blockchain fits right into the peer-to-peer connection capabilities of the metaverse.

Virtual spaces may showcase digital art like NFTs pledged as security for loans or displayed at a virtual branch lobby. Gamification of financial health checkups and products could drive engagement amongst youngsters in the metaverse. Banks hosting hybrid events in the metaverse with virtual keynotes, breakout networking sessions, fireside chats, and masterclasses will epitomize future conferences.

The canvas for financial services possibilities in the metaverse is vast, unlocking experiential relationship-building between bankers and customers. However, navigating data privacy, identity management and realistic visual depictions remain key challenges banks must address.

Outlook for Banking in 2024 and ahead

As we glance into the future, 2024 seems a pivotal point with open banking and digital transformation sweeping the industry at full pace. Personalized predictions, ethical accountability, and engaging customer experiences will take center stage. Behind the scenes, improving operational efficiencies via automation, streamlined processes, and carbon neutrality will drive banking operations.

While forecasts seem promising, banks need coherent digital strategies considering the breakneck speed of technological change not just to stay competitive but to be future-ready. Agility to constantly evolve and success in driving bank-fintech collaboration will separate digital leaders from reluctant adopters.

Regulations around nascent areas like cryptocurrency integration must progress cautiously balancing calculated risks against potential rewards. As 5G infrastructure expands connectivity into remote terrains, concerted attempts to bridge the financial inclusion gap even in the most underdeveloped regions must continue.

Though speculations abound on the future of money whether decentralized or Central Bank-issued digital currencies, cash may retain relevance with small businesses.

Brick-and-mortar branches will serve technology-resistant customers well into the late 2020s. So omnichannel presence with differentiated services based on generational preferences seems the most pragmatic path forward.

The next wave of banking evolution promises a dynamic ride but banks willing to embrace technology and sustainability while keeping customers at the epicenter will flourish by staying resilient and relevant in 2024 and beyond.

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