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

FAQs

What is going on in banking in 2024? ›

The banking sector faces headwinds in 2024. First and foremost are macro- and microeconomic challenges. Investing in digital transformation in the banking sector will continue in the year ahead as banks seek to enhance the customer experience and modernize technology platforms.

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.

Walking into a bank in the future might be drastically different, mainly because the customer might be the only human inside the building. Through AI and robotics, the banks of the future will be able to operate without any human assistance. Searches for “banking automation” have grown by 183% in the last 12 months.

Consumer digital-payments processing conducted by payment specialists grew more than 50 percent in the past few years. In payments, the shift to contactless digital payments is accelerating. In addition, the demand for embedded finance, offered through checkouts on websites or apps, is also growing.

Republic First Bank reported unrealized securities losses in excess of its equity as early as June 2022. State regulators closed Republic First Bank in April 2024, marking the first bank failure of the year.

On the back of expectations for a recovery in M&A and ECM activity and more DCM deals, IB firms have started responding positively and expect modest growth in 2024. We expect an increase in restructuring activity, especially in sectors such as commercial real estate, technology and consumer.

Digital banking encompasses a wide range of mobile and online platforms that provide banking services. While digital banking services don't have branches, they may be part of large ATM networks or allow for in-store cash deposits/withdrawals. Digital banking is becoming more popular with consumers.

Technological Turbulence

The banking sector in 2024 is adapting to a rapidly evolving technological landscape that brings both advancements and risks. One of the striking disruptive tech drivers is generative AI, which can improve workers productivity, enhance customer experience, and optimize costs simultaneously.

Bank Teller-While banking employment will not be lost entirely, many local branches will. People will still require the services of financial counsellors and specialists so that banks will stay open; however, there will be very few of them.

Next Best Offers (NBO) and Next Best Actions (NBA) allow banks to promote products and services in real-time as soon as a customer transaction is detected AND it relates to a product or service that the bank wants to offer. For instance, if a customer books a trip, the bank can offer its travel insurance.

What is next in banking and capital markets 2024? ›

Next in banking and capital markets 2024: Turn uncertainty into opportunity. Leadership is tested in adversity, and there's no shortage of that in today's difficult banking environment. Performance is under pressure from both external forces and internal complexity that compounds challenges.

Yet 52% anticipate a recession or downturn in the economy. The percentage of financial institutions that view Big Tech and megabanks as threats increased significantly for 2024. 15% of banks plan to reduce their technology spending in 2024—the largest percentage in the history of What's Going On In Banking.

Banking in the future

Financial services firms are starting to make the most of the endless possibilities that digitalisation presents – for both their business and society. Today, banks are undertaking multi-year digital strategies. And it's clear the banking landscape will look very different in the next 5 years.

Regulators are expected to continue ramping up supervisory activities through 2024 around liquidity, third-party risk, anti-money laundering (AML), cybersecurity, and operational resilience.

Your money is safe in a bank with FDIC insurance. A bank account is typically the safest place for your cash, since banks can be insured by the Federal Deposit Insurance Corp. up to $250,000 per depositor, per insured institution, per ownership category.

Among the cash management trends of 2024 is the use of emerging technologies like artificial intelligence (AI), application programming interfaces (APIs) and robotic process automation (RPA). AI in particular is quickly becoming the standard in cash management and finance management in general.

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.