10 Digital Banking Trends to Follow in 2024
3/08/2023
As we set our sights on 2024, the financial landscape is brimming with exciting trends that promise to reshape the way we bank.
According to recent industry reports, the RegTech solutions market is projected to reach $87.17 billion by 2028, transforming compliance processes and ensuring adherence to stringent regulatory requirements.
Additionally, the BNPL sector has experienced explosive growth, with transactions estimated to reach $995 billion globally by 2026, reshaping payment behaviors and boosting customer satisfaction.
In this article, we'll explore these and other key banking trends driving the digital banking revolution, including the integration of AI-driven personalization, the surge of embedded finance models, and the rise of digital-only banks.
Don't miss out on this glimpse into the future of digital banking. Read on to discover the trends that await us in 2024 and beyond.
According to recent industry reports, the RegTech solutions market is projected to reach $87.17 billion by 2028, transforming compliance processes and ensuring adherence to stringent regulatory requirements.
Additionally, the BNPL sector has experienced explosive growth, with transactions estimated to reach $995 billion globally by 2026, reshaping payment behaviors and boosting customer satisfaction.
In this article, we'll explore these and other key banking trends driving the digital banking revolution, including the integration of AI-driven personalization, the surge of embedded finance models, and the rise of digital-only banks.
Don't miss out on this glimpse into the future of digital banking. Read on to discover the trends that await us in 2024 and beyond.
Why Stay Up-To-Date on Banking Trends in 2024?
For banks and financial institutions, keeping pace with the latest technology innovations and customer demands is no longer optional — it's a competitive imperative. The global banking landscape is transforming rapidly, accelerated by the COVID-19 pandemic.
Legacy banks can't afford to be caught off guard by the lightning-fast speed of change. Being an informed banking leader, tracking industry shifts, and knowing where to make strategic bets will separate the winners from the losers.
For entrepreneurs, fintechs and investors, understanding evolving banking behavior and pain points directly shapes new opportunity areas. By riding key tailwinds in banking early, massive growth is possible despite the sector's high barriers to entry.
Overall, the banking trends covered in this piece highlight where the market is heading in 2024 and where new value can be created both for established banks and challenger fintechs.
Let's dive into the key banking trends in 2024 that will impact banks in the year ahead.
Legacy banks can't afford to be caught off guard by the lightning-fast speed of change. Being an informed banking leader, tracking industry shifts, and knowing where to make strategic bets will separate the winners from the losers.
For entrepreneurs, fintechs and investors, understanding evolving banking behavior and pain points directly shapes new opportunity areas. By riding key tailwinds in banking early, massive growth is possible despite the sector's high barriers to entry.
Overall, the banking trends covered in this piece highlight where the market is heading in 2024 and where new value can be created both for established banks and challenger fintechs.
Let's dive into the key banking trends in 2024 that will impact banks in the year ahead.
Key Drivers of Change in the Banking Sector in 2024
Several interlinked factors are disrupting the traditionally stable banking sector, opening doors for innovation:
Digital Transformation & Emerging Technologies
From cloud to AI to blockchain, banks are overhauling legacy systems and racing to integrate cutting-edge tech. The demand for smooth digital banking services continues rising. Many emerging technologies also enable entirely new operating models.
Changing Customer Expectations
Customers now anticipate hyper-personalized, mobile experiences with real-time insights and decisions.
Competition from FinTech & Big Tech
Agile fintech challengers are grabbing market share in every geography by better serving digital-native cohorts. Meanwhile, huge platforms like Amazon post an existential threat.
Sustainability & Social Responsibility
Stakeholders now demand that banks transparently report on and improve environmental sustainability, diversity in hiring, and financial inclusion. Most institutions have announced major ESG commitments.
The Top 10 Banking Trends that Will Shape 2024
Banking Trends 2024 #1- Regtech
RegTech evolution is a trend in the financial industry that demands close attention for several compelling reasons.
Firstly, the ever-changing landscape of financial regulations poses a complex challenge for banks and financial institutions.
By adopting RegTech solutions, institutions can automate compliance processes, ensuring adherence to regulatory requirements.
For example, advanced RegTech platforms can efficiently monitor transactions for suspicious activities, thereby mitigating the risk of financial crime.
Secondly, the adoption of RegTech can lead to significant cost savings and operational efficiencies. Rather than relying on manual processes, banks can streamline their compliance procedures, reducing the need for extensive manpower.
As a result, resources can be redirected toward enhancing customer experiences and developing innovative financial services.
With financial regulations becoming increasingly stringent, embracing RegTech is not just a trend, but a necessity for institutions aiming to thrive in the modern banking landscape.
Firstly, the ever-changing landscape of financial regulations poses a complex challenge for banks and financial institutions.
By adopting RegTech solutions, institutions can automate compliance processes, ensuring adherence to regulatory requirements.
For example, advanced RegTech platforms can efficiently monitor transactions for suspicious activities, thereby mitigating the risk of financial crime.
Secondly, the adoption of RegTech can lead to significant cost savings and operational efficiencies. Rather than relying on manual processes, banks can streamline their compliance procedures, reducing the need for extensive manpower.
As a result, resources can be redirected toward enhancing customer experiences and developing innovative financial services.
With financial regulations becoming increasingly stringent, embracing RegTech is not just a trend, but a necessity for institutions aiming to thrive in the modern banking landscape.
Banking Trends 2024 #2- BNPL (Buy now Pay later)
BNPL (Buy Now, Pay Later) dominance holds immense significance for both consumers and businesses alike. With its flexible payment options and interest-free financing, BNPL services have changed the way people make purchases.
For consumers, this trend provides greater financial flexibility, enabling them to spread the cost of purchases over time without incurring high-interest charges.
As a result, more customers are turning to BNPL solutions, boosting customer satisfaction and loyalty.
From a business perspective, embracing BNPL services can lead to increased sales and cart conversions.
By offering BNPL options at checkout, businesses attract a broader customer base, particularly among younger demographics who prefer alternative payment methods.
For instance, a fashion retailer integrating BNPL services can witness a rise in average order values and reduced cart abandonment rates.
As BNPL continues to gain momentum, businesses that fail to incorporate these payment options may risk losing a competitive edge.
By embracing BNPL, both consumers and businesses can enjoy the benefits of seamless, convenient, and tailored payment experiences, setting the stage for a flourishing financial future.
For consumers, this trend provides greater financial flexibility, enabling them to spread the cost of purchases over time without incurring high-interest charges.
As a result, more customers are turning to BNPL solutions, boosting customer satisfaction and loyalty.
From a business perspective, embracing BNPL services can lead to increased sales and cart conversions.
By offering BNPL options at checkout, businesses attract a broader customer base, particularly among younger demographics who prefer alternative payment methods.
For instance, a fashion retailer integrating BNPL services can witness a rise in average order values and reduced cart abandonment rates.
As BNPL continues to gain momentum, businesses that fail to incorporate these payment options may risk losing a competitive edge.
By embracing BNPL, both consumers and businesses can enjoy the benefits of seamless, convenient, and tailored payment experiences, setting the stage for a flourishing financial future.
Banking Trends 2024 #3- Bank as a Service (BaaS)
Bank as a Service (BaaS) expansion will bring numerous advantages to both traditional financial institutions and non-financial businesses.
With BaaS, businesses can integrate banking and financial services into their platforms, effectively becoming financial service providers without the need to establish a full-fledged bank.
This presents an incredible opportunity for businesses across various sectors to enhance customer experiences and engagement.
For non-financial businesses, BaaS enables them to offer a wide array of financial services seamlessly within their platforms.
For example, e-commerce companies can provide payment processing, lending, and even savings accounts to their customers, amplifying customer loyalty and driving additional revenue streams.
Additionally, BaaS empowers startups and fintech companies to launch innovative financial products with reduced time-to-market, fostering an environment of entrepreneurship and innovation.
On the other hand, traditional banks and financial institutions can leverage BaaS to expand their market reach and attract a new customer base.
By partnering with non-financial companies, banks can extend their services to a broader audience and increase customer acquisition.
This collaborative approach not only strengthens the financial ecosystem but also enhances competition and fosters a more dynamic and customer-centric banking landscape.
With BaaS, businesses can integrate banking and financial services into their platforms, effectively becoming financial service providers without the need to establish a full-fledged bank.
This presents an incredible opportunity for businesses across various sectors to enhance customer experiences and engagement.
For non-financial businesses, BaaS enables them to offer a wide array of financial services seamlessly within their platforms.
For example, e-commerce companies can provide payment processing, lending, and even savings accounts to their customers, amplifying customer loyalty and driving additional revenue streams.
Additionally, BaaS empowers startups and fintech companies to launch innovative financial products with reduced time-to-market, fostering an environment of entrepreneurship and innovation.
On the other hand, traditional banks and financial institutions can leverage BaaS to expand their market reach and attract a new customer base.
By partnering with non-financial companies, banks can extend their services to a broader audience and increase customer acquisition.
This collaborative approach not only strengthens the financial ecosystem but also enhances competition and fosters a more dynamic and customer-centric banking landscape.
Banking Trends 2024 #4- AI Driven Personalization
For customers, AI-driven personalization means receiving targeted offers and recommendations based on their spending habits, financial goals, and risk profiles.
From personalized investment advice to customized credit options, customers benefit from financial solutions that align with their specific circumstances.
This level of personalization enhances customer satisfaction and loyalty, leading to long-term relationships with the bank.
For financial institutions, AI-driven personalization opens up opportunities for cross-selling and upselling, as they can proactively offer relevant products and services to customers at the right time.
By providing personalized recommendations, banks can increase customer engagement, drive conversions, and ultimately boost revenue.
As AI technologies continue to advance, the potential for AI-driven personalization in the financial sector becomes even more promising.
Embracing this trend empowers banks to deliver tailor-made experiences that cater to individual needs, creating a win-win situation for both customers and financial institutions in the dynamic landscape of digital banking.
From personalized investment advice to customized credit options, customers benefit from financial solutions that align with their specific circumstances.
This level of personalization enhances customer satisfaction and loyalty, leading to long-term relationships with the bank.
For financial institutions, AI-driven personalization opens up opportunities for cross-selling and upselling, as they can proactively offer relevant products and services to customers at the right time.
By providing personalized recommendations, banks can increase customer engagement, drive conversions, and ultimately boost revenue.
As AI technologies continue to advance, the potential for AI-driven personalization in the financial sector becomes even more promising.
Embracing this trend empowers banks to deliver tailor-made experiences that cater to individual needs, creating a win-win situation for both customers and financial institutions in the dynamic landscape of digital banking.
Banking Trends 2024 #5- Digital Wallet Revolution
Digital wallets enable users to store their payment information securely on their smartphones, streamlining the checkout process and eliminating the need to carry physical cards or cash.
This newfound convenience has contributed to the widespread adoption of digital wallets, making them an integral part of modern-day payment habits.
For consumers, digital wallets provide a fast and secure way to make purchases both online and in physical stores.
With features like tokenization and biometric authentication, digital wallets offer advanced security measures, safeguarding sensitive financial information from potential threats.
Moreover, users can enjoy contactless payments, facilitating quick transactions and reducing physical touchpoints, which has become even more critical in recent times.
For businesses, accepting digital wallets translates to improved customer experiences and increased sales.
By catering to the growing demand for cashless transactions, businesses can attract a broader customer base, especially tech-savvy individuals who prefer the convenience of digital payments.
Additionally, digital wallets provide valuable data insights to businesses, enabling them to better understand customer behavior and preferences, ultimately driving more targeted marketing strategies.
This newfound convenience has contributed to the widespread adoption of digital wallets, making them an integral part of modern-day payment habits.
For consumers, digital wallets provide a fast and secure way to make purchases both online and in physical stores.
With features like tokenization and biometric authentication, digital wallets offer advanced security measures, safeguarding sensitive financial information from potential threats.
Moreover, users can enjoy contactless payments, facilitating quick transactions and reducing physical touchpoints, which has become even more critical in recent times.
For businesses, accepting digital wallets translates to improved customer experiences and increased sales.
By catering to the growing demand for cashless transactions, businesses can attract a broader customer base, especially tech-savvy individuals who prefer the convenience of digital payments.
Additionally, digital wallets provide valuable data insights to businesses, enabling them to better understand customer behavior and preferences, ultimately driving more targeted marketing strategies.
Banking Trends 2024 #6- Decentralized Finance (DeFi) Advancements
Built on blockchain technology, DeFi platforms enable users to access a wide array of financial services without the need for intermediaries like banks.
This democratized approach empowers users with full control over their assets, providing greater financial inclusion and opportunities for individuals who may have been excluded from traditional banking.
For users, DeFi advancements present a range of innovative opportunities.
From decentralized lending and borrowing platforms to yield farming and liquidity provision, users can engage in various DeFi protocols to grow their wealth and access financial services in a more accessible, transparent, and inclusive manner.
For the financial industry, DeFi poses both opportunities and challenges. On one hand, traditional financial institutions are exploring ways to incorporate DeFi principles and smart contracts into their operations, unlocking new efficiencies and cost-saving potentials.
On the other hand, DeFi's decentralized nature poses regulatory challenges, as it operates outside the traditional regulatory framework. Striking the right balance between innovation and compliance is essential to harness the full potential of DeFi.
This democratized approach empowers users with full control over their assets, providing greater financial inclusion and opportunities for individuals who may have been excluded from traditional banking.
For users, DeFi advancements present a range of innovative opportunities.
From decentralized lending and borrowing platforms to yield farming and liquidity provision, users can engage in various DeFi protocols to grow their wealth and access financial services in a more accessible, transparent, and inclusive manner.
For the financial industry, DeFi poses both opportunities and challenges. On one hand, traditional financial institutions are exploring ways to incorporate DeFi principles and smart contracts into their operations, unlocking new efficiencies and cost-saving potentials.
On the other hand, DeFi's decentralized nature poses regulatory challenges, as it operates outside the traditional regulatory framework. Striking the right balance between innovation and compliance is essential to harness the full potential of DeFi.
Banking Trends 2024 #7- Enhanced Biometric Security
Biometric authentication methods, such as fingerprint scanning, facial recognition, and voice recognition, provide a higher level of security compared to traditional password-based systems.
By using unique physiological or behavioral characteristics, enhanced biometric security ensures that only authorized individuals can access sensitive financial information.
For users, this trend offers a frictionless authentication experience. Instead of remembering complex passwords, users can simply use their biometric traits to access their accounts securely.
This not only enhances user convenience but also reduces the risk of password-related security breaches.
For financial institutions, enhanced biometric security provides an effective defense against fraud and unauthorized access.
Biometric data is more difficult to replicate than traditional passwords, making it a robust deterrent against identity theft and cyberattacks. As a result, banks can enhance customer trust and protect their reputation by implementing state-of-the-art biometric security measures.
By using unique physiological or behavioral characteristics, enhanced biometric security ensures that only authorized individuals can access sensitive financial information.
For users, this trend offers a frictionless authentication experience. Instead of remembering complex passwords, users can simply use their biometric traits to access their accounts securely.
This not only enhances user convenience but also reduces the risk of password-related security breaches.
For financial institutions, enhanced biometric security provides an effective defense against fraud and unauthorized access.
Biometric data is more difficult to replicate than traditional passwords, making it a robust deterrent against identity theft and cyberattacks. As a result, banks can enhance customer trust and protect their reputation by implementing state-of-the-art biometric security measures.
Banking Trends 2024 #8- Sustainability-driven Banking
With growing awareness of climate change and social responsibility, banks are stepping up to incorporate sustainable practices into their core operations.
By aligning their strategies with environmental, social, and governance (ESG) principles, sustainability-driven banks actively contribute to building a more sustainable and equitable future.
For consumers, sustainability-driven banking offers a unique opportunity to support environmentally conscious initiatives through their financial choices.
Customers can opt for green banking products, such as eco-friendly loans for energy-efficient homes or green investment funds that support renewable energy projects.
This enables individuals to actively contribute to positive environmental and social impacts while securing their financial future.
For banks, embracing sustainability-driven practices is not only an ethical imperative but also a strategic advantage.
ESG investments have demonstrated competitive financial returns, attracting a new generation of socially conscious investors.
Besides, banks with strong sustainability profiles enhance their brand reputation, attracting environmentally and socially conscious customers and building long-term loyalty.
By aligning their strategies with environmental, social, and governance (ESG) principles, sustainability-driven banks actively contribute to building a more sustainable and equitable future.
For consumers, sustainability-driven banking offers a unique opportunity to support environmentally conscious initiatives through their financial choices.
Customers can opt for green banking products, such as eco-friendly loans for energy-efficient homes or green investment funds that support renewable energy projects.
This enables individuals to actively contribute to positive environmental and social impacts while securing their financial future.
For banks, embracing sustainability-driven practices is not only an ethical imperative but also a strategic advantage.
ESG investments have demonstrated competitive financial returns, attracting a new generation of socially conscious investors.
Besides, banks with strong sustainability profiles enhance their brand reputation, attracting environmentally and socially conscious customers and building long-term loyalty.
Banking Trends 2024 #9- API-focused Ecosystems
Through the use of Application Programming Interfaces (APIs), banks are opening up their systems and data, allowing quick integration of various services and functionalities within a unified ecosystem.
For businesses, API-focused ecosystems offer unprecedented opportunities to create tailored financial solutions that serve their customers' unique demands.
By accessing and leveraging banking APIs, businesses can offer a wide range of financial services directly through their applications, enriching customer experiences and enhancing customer loyalty.
For financial institutions, API-focused ecosystems facilitate partnerships with startups and fintech companies, spurring a wave of innovation in the financial industry.
Collaborating with third-party developers enables banks to expand their service offerings without building everything in-house, leading to faster time-to-market and reduced development.
For businesses, API-focused ecosystems offer unprecedented opportunities to create tailored financial solutions that serve their customers' unique demands.
By accessing and leveraging banking APIs, businesses can offer a wide range of financial services directly through their applications, enriching customer experiences and enhancing customer loyalty.
For financial institutions, API-focused ecosystems facilitate partnerships with startups and fintech companies, spurring a wave of innovation in the financial industry.
Collaborating with third-party developers enables banks to expand their service offerings without building everything in-house, leading to faster time-to-market and reduced development.
Banking Trends 2024 #10- Digital-only Banks Proliferation
As technology continues to advance, a growing number of banks are opting for a digital-only approach, offering their services exclusively through online platforms and mobile applications.
These banks have no physical branches, allowing them to reduce operating costs and pass on the savings to customers in the form of better rates and lower fees.
For consumers, digital-only banks provide a refreshing alternative to traditional banking. With user-friendly interfaces, flawless mobile banking experiences, and 24/7 customer support, these banks offer unparalleled convenience and accessibility.
Moreover, digital-only banks often use AI-powered personalization to tailor their offerings to individual customer preferences, providing a truly customer-centric experience.
For the banking industry, the proliferation of digital-only banks signifies a shift towards a more competitive and agile landscape.
These banks use technology to streamline processes, create innovative products, and quickly adapt to changing customer demands.
As a result, traditional banks are prompted to enhance their digital offerings to remain relevant in an increasingly tech-driven world.
These banks have no physical branches, allowing them to reduce operating costs and pass on the savings to customers in the form of better rates and lower fees.
For consumers, digital-only banks provide a refreshing alternative to traditional banking. With user-friendly interfaces, flawless mobile banking experiences, and 24/7 customer support, these banks offer unparalleled convenience and accessibility.
Moreover, digital-only banks often use AI-powered personalization to tailor their offerings to individual customer preferences, providing a truly customer-centric experience.
For the banking industry, the proliferation of digital-only banks signifies a shift towards a more competitive and agile landscape.
These banks use technology to streamline processes, create innovative products, and quickly adapt to changing customer demands.
As a result, traditional banks are prompted to enhance their digital offerings to remain relevant in an increasingly tech-driven world.
5 Bonus Banking Trends to Also Look for in 2024
Banking Trends 2024 #Bonus 1 - Advancements in Cybersecurity & Fraud Prevention
As digital banking expands attack surfaces, banks will double down on cybersecurity using technologies like AI-enhanced authentication, network traffic analysis, behavior-based intrusion detection, and cloud-scale threat intelligence.
Investing in advanced fraud prevention and risk monitoring protects customers.
Investing in advanced fraud prevention and risk monitoring protects customers.
Banking Trends 2024 #Bonus 2 - Voice Banking and Conversational AI Assistants
Advances in natural language processing will drive adoption of AI-powered voice banking assistants.
Customers will increasingly chat with virtual agents to check balances, deposit checks, make peer-to-peer payments, and handle inquiries.
Customers will increasingly chat with virtual agents to check balances, deposit checks, make peer-to-peer payments, and handle inquiries.
Banking Trends 2024 #Bonus 3 - Hyper Personalization Through Data Analytics
With 87% of bankers prioritizing personalization, we'll see broad adoption of services like proactive money management advice tailored to income streams and even climate change risks using customer data analytics.
Banking Trends 2024 #Bonus 4 - Banks Exploring the Metaverse Opportunity
By 2024, several top banks will establish metaverse money management interfaces blending virtual and real-world banking.
Digital asset management and crypto services will move into these immersive experiences. The metaverse also creates new advertising platforms to engage next-gen consumers.
Digital asset management and crypto services will move into these immersive experiences. The metaverse also creates new advertising platforms to engage next-gen consumers.
Banking Trends 2024 #Bonus 5 - Transitioning Workforce & Workplaces
Banking will see an unprecedented pace of employee turnover and role reinvention as demands evolve rapidly.
Training programs will shrink skills gaps. Banks will also rethink office spaces, branch formats, and remote work policies to adapt to hybrid work and decentralization fueled by technology.
Training programs will shrink skills gaps. Banks will also rethink office spaces, branch formats, and remote work policies to adapt to hybrid work and decentralization fueled by technology.
How to Adapt to These Emerging Trends?
Incumbent banks and new entrants clearly need coherent digital transformation roadmaps to navigate a complex landscape with many diverging, uncertain trends.
Investing in innovative technologies while upskilling talent and truly putting rapidly changing customer expectations front and center allows banks to execute on the right future vision.
Entrepreneurs should identify and double down on solving unmet customer needs highlighted by these trends.
Ultimately, the institutions that turn evolving behaviors into opportunity by leveraging custom software development will shape and lead the future of banking.
At Roonyx, we understand fintech.
For over 11 years, we've partnered with organizations to build secure, scalable solutions that solve real-world problems - from fraud prevention to accounting automation.
Our 100+ fintech engineers have delivered 250+ products, earning an 84% client retention rate.
We collaborate closely, focusing on your vision and users' needs.
Our proven framework converts your ideas into accepted features efficiently. Our proprietary management tool enables real-time tracking.
Whether you need an investment app, lending platform, or blockchain solution, our expertise combines stability and innovation.
Let's discuss how custom fintech software from Roonyx can accelerate your business growth.
Investing in innovative technologies while upskilling talent and truly putting rapidly changing customer expectations front and center allows banks to execute on the right future vision.
Entrepreneurs should identify and double down on solving unmet customer needs highlighted by these trends.
Ultimately, the institutions that turn evolving behaviors into opportunity by leveraging custom software development will shape and lead the future of banking.
At Roonyx, we understand fintech.
For over 11 years, we've partnered with organizations to build secure, scalable solutions that solve real-world problems - from fraud prevention to accounting automation.
Our 100+ fintech engineers have delivered 250+ products, earning an 84% client retention rate.
We collaborate closely, focusing on your vision and users' needs.
Our proven framework converts your ideas into accepted features efficiently. Our proprietary management tool enables real-time tracking.
Whether you need an investment app, lending platform, or blockchain solution, our expertise combines stability and innovation.
Let's discuss how custom fintech software from Roonyx can accelerate your business growth.
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