The finance industry is evolving faster than ever, driven by technology and changing customer expectations. As we look ahead, the pace of change is only set to increase. To stay ahead, businesses must understand the trends shaping the future. Here are five bold predictions that could redefine the next decade in finance.
AI Revolution to Take Over
Make no mistake: AI technology is already transforming the financial sector in a big way. The latest report by Statista suggests that the banking sector’s investment in AI could hit $40 billion in 2025. That’s an increase of more than $8.7 billion compared to what finance leaders invested last year.
Below are some ways AI is changing the finance sector:
- Analyse customer data and improve risk management.
- Automate routine banking tasks, such as data entry.
- Increase data analysis and processing speed and accuracy.
- Provide personalised banking experiences.
- Minimise operating costs in the banking sector.
Explosion of Digital Banking
Digital banking is rapidly gaining ground in the banking sector as customers seek convenient ways to conduct transactions. In simple terms, digital banking refers to the provision of financial services through online platforms and mobile apps. These platforms enable customers to manage their accounts and transfer or receive money remotely.
According to Finder, 87% of UK adults use digital banking platforms. These numbers reveal the growing pressure on banks to embrace online payments. Besides convenience, banking customers prefer to use these platforms due to their cost-effectiveness. Traditional banks must adapt to this new reality.
Cryptocurrency Payments to Go Mainstream
Cryptocurrencies have transitioned from being mere obscure assets to popular payment methods in the last few years. A study by Bankrate.com reveals that 24% of millennials own cryptos, with 21,000 different coins in circulation. Unlike government-issued fiat currencies, digital coins use a decentralised blockchain. This means banks don’t control the flow of these coins.
The benefits of cryptos are visible, with top brands like Microsoft and Tesla accepting Bitcoin payments. These coins are even more prevalent in industries such as gaming and entertainment. Most new casino sites UK support two-way crypto payments, with payouts taking minutes or a few hours. Expect more businesses to accept these coins in the years to come.
Focus on Customer Well-Being
Competition in the banking sector has never been more cutthroat. Fortunately, this is a good thing, as financial institutions must think outside the box to improve their services. Financial wellness has recently emerged as a key strategy, with banks striving to guide their customers towards better financial health.
As banking becomes digital, more institutions will adopt a holistic approach by offering customer tools to support budgeting, saving, and investing. These institutions will also provide personal financial education through online courses and coaching. And yes, AI’s data analytics will play a key role.
Heavy Cybersecurity Investment
The convenience of banking online comes at a heavy cost – increased exposure to cyber threats! In light of this, expect banks to increase their investment in cybersecurity measures over the next decade. This sector will take proactive measures to protect banking systems, financial transactions, and customer data.
Consider this – a report by Absrbd suggests that cybersecurity investment in the finance sector could experience a CAGR of 14.4% between 2022 and 2032. Meanwhile, 71% of banks utilise AI to mitigate online threats, while 48% plan to adopt blockchain technology by 2025. Cybersecurity will remain a key area of focus.
Conclusion
We believe these are the must-watch trends in the finance sector, backed by proven statistics. It’s evident that technology will be vital in driving decision-making and enhancing customer experiences. Therefore, this industry must shift from its traditional approach and build a future by leveraging the latest trends. It’s an interesting changeover period for the banking sector.
