The Rise of Online Banking: What To Expect in 2024

A 2023 survey with 59,175 respondents in 21 countries revealed that the share of global online banking penetration is significantly high.

In some countries, including the United States, online banking penetration recorded a share of over 100 percent.

These figures signify the continuous rise of online banking adoption, reflecting the growing consumer preference for more convenient, straightforward, and accessible banking solutions.

However, online banking is more than just convenience, accessibility, and simplicity. It also involves transformative technologies that can reshape the banking industry.

So, what should the industry expect in online banking in 2024?

Scaled Adoption of Generative AI

The banking industry has been experimenting with generative artificial intelligence (AI) since 2023.

Generative AI converts prompts like text, images, audio, videos, and codes into new content. For example, it can turn text inputs into images, videos to text, or images to music.

In 2024, the banking industry will likely see an upscaled adoption of this technology for bank reinventions. Blending this integration with marketing, salespeople, and customer management can substantially increase banks’ revenue.

For instance, training gen AI with customer management data, such as risk profiles, objectives, income levels, and spending habits, enables banks to deliver comprehensive and individualized financial services.

Recreation of Brick-and-Mortar Bank Services With AI

With innovative AI tactics, the digital customer experience is functional. However, most interactions remain emotionally devoid because remote banking exchanges suppress human elements.

In response to this hurdle, banks can use AI to examine their extensive customer data and treat each client as unique. This strategic adoption restores the human elements in remote banking by recreating brick-and-mortar bank services.

Thus, banks can reestablish the personalized touch of face-to-face banking interactions, ensuring customers feel valued and understood.

Risk Mitigation

Risks are inevitable, but they can be challenging to notice immediately. In 2024, banks must improve risk management to prevent or mitigate unprecedented threats.

A notable risk management priority is cybersecurity.

With AI, banks can shift their cybersecurity efforts from prevention to resilience.

Cyber resilience is the capability to recuperate and ensure continuity amidst data breaches. For example, you can implement temporary remote work to maintain productivity and functionality when employees can’t access the company’s databases.

Although this solution isn’t a cybersecurity element, it helps prevent downtimes.

At the same time, AI automation can help banks train their fraud detection models to foresee and avert hackers’ advanced data compromises.

Prevalence of Cryptocurrencies and Blockchain Technology

In 2023, the average global digital currency ownership rate stood at 4.2 percent, with over 420 million users. This data highlights the enduring presence of cryptocurrencies in online banking.

Cryptocurrency is popular among investors for the following reasons:

• Quick money transfers

• Investment portfolio diversification

• Ease of accessibility

Most cryptocurrencies use blockchain networks.

Blockchain technology has distributed databases or ledgers. Participants, also called nodes, of public and private networks can update this system. It also has smart contracts that can streamline financial transactions.

As the development of cryptocurrencies and blockchains continues, these integrations are expected to redefine financial services by providing heightened accessibility, transparency, and efficiency to global consumers.

A New Paradigm of Human-Machine Collaborations

Most enterprises turn to hiring to address skill gaps. Now that AI impacts almost every occupation, simply expanding your talent pool won’t suffice.

For this reason, banks are poised to envision a new paradigm where employees and machines cooperate seamlessly.

This paradigm emphasizes human elements while complementing AI’s capabilities, which are crucial to preserving personal touches in banking.

Targeted Price-Setting

Even the most minor price changes can have significant consequences. Fortunately, banks can forecast the potential aftermath of these issues through AI.

Gen AI, with predictive analytics, can make it easier for banks to evaluate and set targeted prices based on data-driven predictions. These assessments will consider various variables to identify the most reasonable prices.

After price-setting, the AI observes the price’s performance and learns from the data to enhance future pricing strategies. As the algorithms become more perceptive, banks can continue offering the most attractive prices.

Image by wayhomestudio on Freepik

Cloud-First Approach

Banks continue to recognize the capabilities of cloud computing. Industry leaders are also pushing for cloud migration.

Hence, banks are encouraged to adopt a cloud-first approach to implement flexible banking systems.

However, it will still take time for the banking industry to become fully cloud-first.

But instead of emphasizing why banks should use cloud technologies, today’s question is, “How can the industry adopt cloud computing more quickly?”

Integration of Low-Code and No-Code Development Platforms

Low-code and no-code development platforms are designing solutions that reduce the need for coding.

Low-code requires basic coding skills, while no-code doesn’t require any programming knowledge.

More banks are expected to adopt these platforms for the following reasons:

• To speed up digital service rollouts

• To address skill shortages in application development

• To quickly develop digital services without spending too much on high-cost specialists

The AI Approach to Regulations

Banking regulations are necessary to protect financial institutions and customers. However, complex rules can make management more challenging and costly for banks.

In 2024, establishing the balance between banks and regulators is critical. Regulators must set guidelines without making it too complicated for banks.

Fortunately, banks and regulators can collaborate by sharing data through AI. This approach aims to streamline the process and make the regulations efficient for both sides.

The Transition to Quantum Computing’s Tangible Benefits

Quantum computing is an emerging advancement that uses quantum mechanics to solve complex issues conventional computers can’t address. In 2024, it is expected to transition to tangible benefits.

With this technology, quantum computers can simultaneously perform many calculations through quantum superposition and entanglement.

Unlike standard computers that use bits (which are either zero or one), quantum computers use quantum bits or qubits.

Qubits allow quantum computers to run multidimensional quantum algorithms by existing in multiple states simultaneously.

Banks and financial institutions are the early quantum computing investors. They aim to use the technology to upscale AI systems for fraud detection, high-frequency trading, and risk management.

Thus, financial companies like SoFi can offer convenient and cost-efficient online banking experiences, such as allowing consumers to open a checking account online with no deposit while integrating quantum computing to protect financial data, enhance management, and foster customer loyalty.

Bankers as Engineers

AI encourages IT departments to adopt operational tasks beyond maintaining technological systems. At the same time, non-technical staff must understand digital advancements to help design new banking products.

As such, bankers must also become engineers to immerse themselves in the creative and development processes. In return, this shift to engineering can benefit banks’ long-term business prospects.

Be Well-Informed

Each innovation has its opportunities, responsibilities, challenges, and ethical considerations. Staying informed about these aspects is essential in adoption and implementation.

Remember that informed decisions and responsible use are the keys to maximizing the potential of these technologies. This way, we can build a banking industry that balances innovation with customer-centric values.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.