Commercial banking top trends for 2024
February 15, 2024
February 15, 2024
Last year, interest rates were headline news. The economy is now shifting gears as customers seek stability and banks adjust to increased compliance and capital allocation challenges. The financial world is walking on tiptoe, trying not to disturb the “soft landing” everyone is hoping for as inflation settles down.
However, this cautious approach may hold commercial banks back from investing in technological advances with the potential to boost productivity, simplify compliance, automate risk management and transform the customer experience.
Commercial banks may struggle to find the balance between addressing the present challenges conservatively and embracing reinvention and innovation—made possible by gen AI and advanced data tools. That balance will be the key to a smooth ride through the uncertain waters of 2024 and will propel banks toward future growth.
As we share the trends that we expect to dominate the industry for the next year, the focus is split between these two priorities. Each bank will need to calculate where its balance point lies.
The opportunities that lie hidden in banks’ data will rise to the surface as they invest in systems that allow them to add high-value services to their client offers, customize these offers, automate tasks to improve efficiency, use gen AI to unlock data insights and stay ready to take on new challenges.
Although banks have been increasing their IT spend, most of that budget has been allocated to compliance and maintenance activities. In 2024, we expect to see a shift to projects with transformative potential, separating the leaders from the pack.
Many of the trends that will shape 2024 started years ago, but this is the year that the disparate threads will come together in a single tapestry.
Jared Rorrer / Global Commercial Banking Lead
Although risks vary by region, globally, banks will be focusing on meeting new compliance requirements, staying on top of ESG commitments and optimizing capital. Geopolitical risks, such as disruptions to the supply chain, will also be top of mind.
Commercial banks should establish a strong digital core and invest in advanced analytics and automation tools for treasury management, fraud prevention and compliance. They also need to stay at the forefront by incorporating AI into their workflow.
Our analysis suggests generative AI could uplift a bank’s operating income by an average of 20%, and banks that leverage the technology effectively could get a 22% to 30% productivity uplift.