What's Going On In Banking 2024 | Cornerstone Advisors (2024)

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What's going on in banking in 2024? ›

Like digital, the Age of AI is likely to have a transformative impact on the industry, affecting roles in virtually every part of the bank. Not only is the rapid adoption of gen AI the most important trend for banks in 2024—it's also shaping the other nine trends.

The most prevalent trend in the financial services industry today is the shift to digital, specifically mobile and online banking (more on each of those in a bit). In today's era of unprecedented convenience and speed, consumers don't want to have to trek to a physical bank branch to handle their transactions.

Financial institutions are embracing new technologies and investing heavily in digital transformation initiatives. Automation and artificial intelligence are replacing human thinking and urging institutions to revisit their talent landscape and the skills required to stay ahead of the curve.

Artificial Intelligence (AI) and Machine Learning (ML):

Banks increasingly leverage AI and ML technologies to enhance operational efficiency, detect fraud, and improve customer experiences. AI-powered chatbots and virtual assistants are being used to provide personalized assistance and support.

Investment banking trends for 2024 show the sector at a pivotal crossroads—one that's marked by demand for digital transformation, shifting economic paradigms, and opportunities in emerging new areas like sustainable finance, blockchain, and RegTech (among others).

The news: Last Friday, Pennsylvania financial regulators seized and shut down Philadelphia-based Republic First Bank in the first FDIC-insured bank failure of 2024. The deposit insurance fund is expected to pay out $667 million to cover the bank's failure.

Credit risk is the biggest risk for banks. It occurs when borrowers or counterparties fail to meet contractual obligations. An example is when borrowers default on a principal or interest payment of a loan. Defaults can occur on mortgages, credit cards, and fixed income securities.

The most common cause of bank failure is when the value of the bank's assets falls below the market value of the bank's liabilities, which are the bank's obligations to creditors and depositors. This might happen because the bank loses too much on its investments.

By 2025, Alan McIntyre, senior managing director for banking at Accenture, expects payments to move completely away from cards and phones toward wearables and biometrics. “Whether it is tapping a ring that you wear or facial recognition, the payment will become more seamless,” he said.

The banking technology trends that are forecast to take center stage in the banking sector by 2025 include biometric authentication, artificial intelligence (AI), and machine learning. These innovations will help banks become more efficient while providing a better customer experience.

Is banking going digital? ›

The rise of banking-as-a-service (BaaS) also accounts for an increase in digital services, as more legacy banks are opening up their application programming interfaces (APIs) for fintech and third-party app development.

People trust banks because they are government-accredited institutions. Your bank has licenses and safeguards to protect your money, should you choose to hold it there. You can go there in person at any time to take out cash from an ATM, open a savings account, or dispute a charge on your account.

We expect additional credit deterioration in 2024, largely at the lower end of the ratings scale, where close to 40% of credits are at risk of downgrades.

Generative AI solutions can assist banks in assessing customer risk profiles, detecting suspicious activity and monitoring data models. It can also notify banks of any noncompliance or suspicious transactions. Applying AI and HPC to risk management allows banks to run models with more data, computations and accuracy.

Generative AI (gen AI) is revolutionizing the banking industry as financial institutions use the technology to supercharge customer-facing chatbots, prevent fraud, and speed up time-consuming tasks such as developing code, preparing drafts of pitch books, and summarizing regulatory reports.

A brighter 2024 outlook for U.S. regional banks as rates and deposit costs change course. With interest rates appearing to have peaked and lenders' deposit costs easing, 2024 could turn out to be a far more hospitable year for U.S. regional banks than 2023. For U.S. regional banks, 2023 was a tumultuous year.