11 Trends in Banking to Follow in 2024

As the technology in payment processing and banking evolves, the sector is witnessing a significant shift towards digital transformation. 

As such, consumer digital payment processing grew by over 50% during the year 2022, indicating a marked transition towards digital transactions​​. Over the same period, the private debt saw a significant growth of 29% in 2022, illustrating a shift away from traditional banking institutions. To stay ahead of rising competition, it’s important to stay tuned to the latest trends in banking technology and business operations. 

In this post, I’ll delve into 11 major banking industry trends. You’ll discover about technological advancements, new business models in the sector, approaches to customer service, the wise use of data, and more. 

Top 11 Trends in the Banking Industry

The finance sphere develops dynamically, and competition here is rather extensive. Let’s review trends in digital banking adoption which can help stay ahead: 

#1 Shift Towards Open Banking and Banking–As-A-Service (BaaS)

Open Banking and Banking-As-A-Service (BaaS) represent a transformative shift in the banking industry. This trend involves banks and credit unions sharing data and services with third-party providers through Application Programming Interfaces (APIs), fostering a more interconnected financial ecosystem. This approach not only enhances service offerings but also leads to increased innovation and competition in the financial sector.

Key directions of the trend:

• API integration: Facilitates seamless data sharing between banks and third-party services.
• Enhanced collaboration: Encourages partnerships between traditional banks and fintech companies.
• Customized financial products: Enables the creation of tailored banking products and services.
• Improved customer experience: Offers more choices and better control over personal financial data.

Real-life examples:

HSBC’s partnership with Finastra, which focused on offering a collaboratively crafted BaaS FX option that will empower banks to distribute digital financial products. At the same time, Barclays, the British multinational bank, has embraced open banking by providing APIs that allow third-party developers to build new financial applications and services.

#2 Mobile-First Banking Practices

The shift towards mobile-first banking practices is a response to the growing demand for banking services that are accessible and convenient. The next one of the trends in consumer banking involves prioritizing mobile platforms, allowing customers to perform a wide range of banking transactions directly from their smartphones. Statistics reveal that 74.1% of banked households whose reference person was between 15 and 24 year old were using mobile banking as their primary method to access bank accounts

Key directions of the trend:

• Mobile banking apps: Development of user-friendly banking applications.
• 24/7 access: Offering round-the-clock banking services through mobile devices.
• Enhanced security: Implementing advanced security measures for safe mobile transactions.
• Personalization: Customizing app features based on user behavior and preferences.

Real-life examples:

Chase Bank offers a robust mobile app that allows customers to conduct transactions, view balances, and receive personalized alerts. ING’s mobile-first approach includes features like voice-activated commands and biometric security, enhancing the user experience and security.

Interested in discovering 5 challenges of digital transformation in banking? Read another our blog post to obtain detailed information. 

#3 Personalized Experience at Every Step

Personalization in banking is about tailoring services and communication to individual customer preferences and behaviors. This trend focuses on enhancing customer engagement and satisfaction by delivering a more customized banking experience.

Key directions of the trend:

• Data-driven insights: Using customer data to understand preferences and predict needs.
• Customized communication: Tailoring messages and offers to individual customer expectations.
• Adaptive interfaces: Designing banking platforms that adjust to user preferences.
• Predictive services: Offering products and services based on anticipated needs.

Real-life examples:

Bank of America’s ‘Erica’, a virtual assistant, provides personalized financial guidance based on user transactions and habits. Simultaneously, Citibank uses AI to analyze customer data, offering personalized product recommendations and financial advice.

#4 Green Banking

Green banking involves incorporating environmentally sustainable methods and policies into banking operations. This trend emphasizes promoting eco-friendly investments and reducing the carbon footprint of banking activities, aligning the sector with broader environmental objectives.

Key directions of the trend:

• Eco-friendly products: Offering green loans and environmentally focused investment options.
• Sustainable practices: Implementing paperless banking and energy-efficient operations.
• Carbon footprint reduction: Supporting projects that offset carbon emissions.
• Community involvement: Engaging in local environmental initiatives and education.

Real-life examples:

The Deutsche Bank has invested in renewable energy projects and offers green bonds to fund environmentally friendly initiatives. HSBC’s Green Banking initiative focuses on reducing its own operational carbon footprint and financing sustainable projects.

#5 AI-Driven Banking Automation

AI-driven banking automation trends mark a significant evolution in the financial sector. By leveraging artificial intelligence, online banks and credit unions are revolutionizing processes from customer service to decision-making. This trend includes the use of technologies like chatbots for customer interactions and predictive analytics for smarter, data-driven decisions.

Key directions of the trend:

• Chatbots and virtual assistants: Enhancing customer support with AI-powered conversational agents.
• Predictive analytics: Utilizing AI for better risk assessment and personalized financial advice.
• Process automation: Streamlining back-office operations and transaction processing.
• Fraud detection: Using AI to identify and prevent fraudulent activities more effectively.

Real-life examples:

JPMorgan Chase’s Contract Intelligence, or simply COIN platform, uses AI to interpret commercial loan agreements, significantly reducing processing time. Wells Fargo employs an AI-driven chatbot through Facebook Messenger to provide instant customer support and banking services.

#6 Lending-As-A-Service (LaaS) & Embedded Finance

LaaS and Embedded Finance represent a modern approach to lending, seamlessly integrating financial services into non-financial platforms. Such trends in investment banking allow customers to access credit products directly through third-party services, making the process more convenient and accessible.

Key directions of the trend:

• Seamless integration: Embedding lending services into retail and e-commerce platforms.
• Instant credit access: Offering immediate lending decisions and disbursements.
• Customization: Tailoring credit products to specific market segments with their specificities
• Partnership models: Collaborating with fintech and e-commerce platforms to expand reach.

Real-life examples:

Affirm partners with retailers to provide point-of-sale financing options, allowing consumers to apply for credit at the checkout. Goldman Sachs’ Marcus platform collaborates with Amazon to offer lines of credit to sellers on the marketplace.

#7 Real-Time Payments As A Global Standard

The adoption of Real-Time Payments (RTP) as a global standard is transforming the way transactions are processed. This trend is focused on the immediate transfer of funds, aiming to enhance efficiency and convenience in personal and business transactions.

Key directions of the trend:

• Instant transactions: Eliminating delays in money transfers, especially at a consumer level.
• 24/7 availability: Offering round-the-clock payment services.
• Interoperability: Ensuring compatibility across different banking systems and geographies.
• Enhanced security: Implementing robust security measures sufficient for real-time transactions.

Real-life examples:

The European SEPA Instant Credit Transfer scheme enables immediate cross-border euro transfers within Europe. Zelle in the United States allows users to send and receive money instantly from their bank account.

You may discover in-depth information on the topic of cross-border payments from another our blog post. 

#8 Strengthening Customer Lifetime Value

Source: Ashnik

Strengthening customer lifetime value trend in online banking focuses on long-term customer relationships rather than short-term transactions. This trend involves understanding and meeting the evolving needs of customers throughout their life stages, thereby enhancing loyalty and profitability.

Key directions of the trend:

• Customer Relationship Management (CRM): Leveraging data to understand and predict customer needs.
• Personalized services: Offering products and advice tailored to individual life stages.
• Loyalty programs: Implementing reward systems to retain and appreciate long-term customers.
• Cross-selling: Introducing relevant products to existing customers based on their needs and history.

Real-life examples:

American Express uses advanced analytics to offer personalized rewards and benefits, enhancing customer loyalty. Bank of America’s “Preferred Rewards” program provides benefits like lower loan rates and higher interest rates on savings based on customer relationships and balances.

#9 Responsible, Ethical, and Secure Use of Data

The survey by DepositAccounts shows that Gen Z has less trust in many financial institutions regarding personal data protection, which amounted to 60%, compared to as much as 80% for the Baby Boomers generation.  

The focus on responsible, ethical, and secure use of data is paramount in the global banking industry. This trend is driven by increasing concerns over data privacy and security, especially among younger generations like Gen Z, who exhibit less trust in financial institutions’ data handling.

Key directions of the trend:

• Data privacy: Strengthening data protection practices to safeguard personal information.
• Ethical data use: Ensuring fairness and responsibility in data usage.
• Security measures: Implementing robust technologies to secure customer data.
• Transparency and trust: Maintaining open communication about data practices to build trust.

Real-life example:

In response to privacy concerns and the rising number of data breaches, banks like JPMorgan Chase have invested heavily in cybersecurity measures to protect customer data.

#10 Cloud Computing

Cloud computing in banking refers to the adoption of cloud technology for data storage and processing. This trend is transforming the global banking industry by offering enhanced scalability, flexibility, and cost efficiency in operations.

Key directions of the trend:

• Scalability: Adjusting resources to meet fluctuating demands.
• Cost efficiency: Reducing operational costs through cloud solutions.
• Data accessibility: Ensuring easy access to data across various platforms.
• Disaster recovery: Improving data backup and recovery processes.

Real-life examples:

Barclays has embraced cloud computing, utilizing it for improved data analytics and customer service enhancements. HSBC’s partnership with Google Cloud demonstrates the shift towards cloud-based solutions for data processing and analysis.

#11 Online Banking Gamification

Banking gamification involves applying game design elements to banking activities. Consumer trends in banking like this one aim to engage customers by making banking interactions more interactive and enjoyable, encouraging positive financial behaviors through rewards and challenges.

Key directions of the trend:

• Interactive engagement: Using game mechanics to enhance customer interaction.
• Rewards system: Offering incentives for desired banking behaviors.
• Financial education: Educating customers through gamified learning experiences.
• Customer loyalty: Building loyalty and engagement through fun and interactive elements.

Real-life examples:

BBVA has implemented gamification strategies in its mobile banking app, offering rewards and challenges to encourage savings and financial literacy. It even received the innovation award for such interventions. Wells Fargo’s “My Savings Plan” integrates gamified elements to help customers track savings goals and progress.

What Can Banks Do to Digitalize Themselves in 2024 and Beyond?

Here are some of the general strategies that will help determine the priority of trends, start with their adoption, or prepare for their adoption in the future. 

1. Begin with assessment and planning. Evaluate current digital capabilities and identify areas for improvement. Strategic planning should involve understanding market trends, customer needs, and technological advancements.
2. Focus on the customer-centric approach. Prioritize customer experience above all. This means designing services and interfaces that are user-friendly, accessible, and tailored to customer preferences and behaviors.
3. Invest in technology infrastructure. Allocate resources towards upgrading digital infrastructure. This includes cloud computing, cybersecurity, data analytics tools, and AI-driven technologies to enhance efficiency and service quality. After all, sooner or later you’ll require sufficient resources to handle any tech advancements. 
4. Plan for and conduct employee training and development. Equip staff with the necessary skills and knowledge to navigate new digital tools and processes. Continuous training ensures employees are adept at using emerging technologies and providing digital-first customer service.
5. Establish collaboration with fintech and tech partners. Form strategic partnerships with companies that can help you with digitalization or becoming a part of an advanced system, for example, providing online banking services via third-party apps. These collaborations can bring in new perspectives, innovative solutions, and advanced technologies that can accelerate digital transformation. Consider DashDevs fintech development firm, as a trusted partner. We collaborate with more than 10 banks and see firsthand how the partnership advances them towards business goals achievement. 
6. Engage and educate customers. Actively involve customers in the digital transition. Educate them about new digital services, ensuring they feel confident and secure in using these platforms. Customer feedback should be integral to the digitalization process.

For banks and credit unions to successfully digitalize in 2023 and beyond, a balanced approach is key. Start preparing your company in advance so you can follow banking industry trends and stay ahead of the competition. 

Final Take

The banking industry trends discussed reflect the dynamic nature of the financial industry, highlighting the shift towards more digital, customer-centric, and sustainable banking practices. Banks and credit unions that proactively embrace these trends will find themselves better positioned to meet the demands of the modern consumer, leverage new technological opportunities, and navigate the complexities of the digital era.

Getting started with your own banking app or digitalizing an existing product may require specialized expertise and experience. With more than 12 years of experience and over 500 projects completed, the DashDevs team is ready, willing, and able to assist you. 

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