With 2024 well under way, we’ll know soon enough if the financial sector tech predictions and trends identified in late 2023 will come to pass.
Yet staying on top of evolving customer requirements and emerging global trends requires a glance backward, too. In this blog we look at a range of reports, surveys and predictions from late 2023 and early 2024 to shine the spotlight on some of the challenges and opportunities we see for this sector.
AI innovations
Although data management, no-code/low-code solutions, cloud computing, cybersecurity solutions and application programming interfaces (APIs) remain the leading transformation technologies, the Infotech Tech Trends 2024 report reveals that ‘AI is the most rapidly emerging transformative technology’.
The Infotech tech trends report provides insights about a group they call ‘Transformers’ – organisations with IT leaders who describe IT as ‘transforming the business’, compared to other options on an IT maturity scale of expanding, optimising, supporting or even struggling to support the business.
Australian banks, superannuation funds and insurers have been using AI for a number of years, although in some cases, AI adoption is limited to customer interactions, such as chatbots. The Australian Banking Association (ABA) reports that chatbot interactions with customers are up 559% with phone interactions down 15%.
A recent CSIRO report shows that 68% of Australian businesses have already implemented Artificial Intelligence (AI) technologies and a further 23% are planning to implement in the next 12 months.
9Yards Senior Consultant Alex Crommelin notes that “adopting AI into an organisation has three phases; getting ready by setting up people, tech data and governance, using AI tactically to gain efficiencies, experience and knowledge and using AI strategically to transform and differentiate. An AI strategy should incorporate each of these phases with clear goals and outcomes defined for each.”
Our sources
Infotech tech trends 2024 report
Bank On It – Customer Trends 2023 report from the Australian Banking Association
CSIRO AI Ecosystem Report (Dec 2023)
Export Finance Australia – Australia—AI adoption creates benefits and challenges for businesses
Digital payments
According to a report commissioned by the Australian Banking Association, 98.9% of banking transactions in Australia are happening digitally.
A 2023 KPMG report placed Australians as ‘amongst the most digitally savvy consumers globally’.
Evolving customer needs and the introduction of open banking are likely to increase digital payments.
Digital wallets have a high adoption rate in Australia. Globally, our region has the highest adoption rate for this form of payment, and its usage is expected to increase.
“When considering which digital payments to adopt,” says Crommelin, “it is important to ask, ‘How mature is industry adoption for each payment type?’ A digital payment is only useful if there is another person or merchant to send or accept the payment. Digital payments have to be blended into the customer channels, so they have to compete with other customer-facing initiatives to be prioritised for implementation by being relevant to customers and improving their experience.”
Our sources
Open Banking and 2023 customer trends report on the Australian Banking Association website
KPMG’s Australian Fintech Survey Report 2023
The Global State of Fintech on the Discover Global Network
Cybersecurity
With online banking in the top 3 cyber crimes reported by businesses, and banking and financial services sitting at number 6 in the top 10 sectors reporting cyber incidents, cybersecurity continues to be a key trend for the financial sector.
In a worldwide survey commissioned by Discover Global Network, over 5000 respondents put fraud prevention at the top of the list of reasons followed closely by instant payments.
The number of bank employees covering content disarm and reconstruction (CDR), cyber security and fraud has doubled between FY18 and FY22, showing that banks are responding to the heightened need to prevent and manage cyber threats.
According to the Infotech trends 2024 report, it is usually financial organisations that bear the brunt of protecting their customers against cyber threats, rather than the technology companies who are supplying the products with vulnerabilities.
Another interesting signal identified in this report is that the organisations undertaking transformation activities are generally not investing more in cybersecurity – maybe because they believe the digital transformation activities themselves will mitigate the risks.
9Yards digital transformation consultants say that the opposite is often true. Organisations undertaking digital modernisation or digital transformation need to include cyber security in their planning. Cyber attacks are as much a concern for new technologies and updated infrastructure, as they are for legacy systems.
Our sources
Australian Signals Directorate (ASD) Cyber Threat Report 2022-2023
Bank On It – Customer Trends 2023 report from the Australian Banking Association
Infotech tech trends 2024 report
Does your digital transformation strategy consider current trends?
Are you aware of the challenges, opportunities and risks your organisations should address? Talk to our digital transformation consultants about how 9Yards can help ensure your digital transformation is on track for success.
