• Manuel Sandhofer, SVP & General Manager at Nium 
• Yasuhide Matsumoto, Senior Director and Subject Matter Expert (AI) of the Technology Strategy Unit at Fujitsu
• Ville Sointu, Head of Solutions & Strategy for Mobile Financial Services at Ericsson
• Andy Cease, Director of Product Marketing at Entrust 
• Elias Ghanem, Global Head of Financial Services at Capgemini Research Institute

We look at how a heightened focus on cybersecurity could impact the market, the rapid rise of blockchain and cryptocurrency markets, the continued application of AI and machine learning, evolutions in open banking, further adoption of mobile payments, and a potential boom in partnerships between fintechs and welltechs. 

Can we expect a heightened focus on cybersecurity in 2024?

Ville Sointu

All eyes – from end users to providers – will undoubtedly be on cybersecurity as we enter 2024. The surge in digital payments brings an elevated risk of fraud, particularly in the backdrop of the industry’s rapid integration of cutting-edge technologies like AI that can be used for malicious purposes. 

This year, we observed global leaders convene at the G20 summit to voice their concerns over the rising threat of AI-driven cyber attacks, malware, scams, and data manipulation. They called for the development of robust mitigation strategies against advanced persistent threats (APTs). This conversation is only the beginning and is poised to become increasingly intricate as technology continues to advance. 

Put simply, cybersecurity will undeniably take centre stage in 2024, prompting a more vigorous drive towards establishing global cooperative frameworks. These frameworks can help curb risk and ensure a financial landscape that is not only transparent and trusted, but also held accountable. 

Andy Cease

Financial institutions face mounting pressure to adopt digital technologies, from both consumer preferences and a rapidly shifting competitive landscape. Customers increasingly seek seamless mobile and online experiences from their banks, while new fintech disruptors gain ground with digital-first offerings. 

However, digitalisation increases the need for banks to focus on cybersecurity, as these processes also expose banks to new cyber risks if they are not approached strategically. Per IBM, data breaches and fraud could cost more than US$4m per incident, severely damaging trust and reputation. As banks reshape operations, balancing security and experience is paramount.

How fast will blockchain and cryptocurrency markets continue to grow?

Elias Ghanem

The growth outlook for blockchain technology remains positive as global companies continue to actively explore potential use cases. However, the cryptocurrency markets stand at a critical juncture amid a prolonged crypto winter. 

Financial institutions are actively engaging in pilots related to blockchain technology, with a pronounced focus on enhancing infrastructure for central bank digital currencies (CBDCs) and bolstering blockchain interoperability. 

Meanwhile, key use cases – such as cross-border transactions, credit scoring and lending, deposit tokens, purpose-bound money and more – are steadily gaining traction on a global scale. These developments present significant utility potential, and more pilot programmes will continue into 2024.

The unexpected collapse of multiple large crypto firms such as FTX, Blockfi, Celsius and Voyager marked the beginning of a prolonged crypto winter. Investor trust has waned, and regulatory clarity will be crucial to restore confidence, without which renewing mainstream growth for crypto might prove to be difficult. 

A key development that could renew mainstream cryptocurrency growth includes the upcoming implementation of the Markets in Crypto-Assets (MiCA) regulation in the European Union (EU) that aims to enhance consumer protection and transparency for EU crypto activities. 

Additionally, if more traditional financial institutions and wealth management firms expand their involvement in the cryptocurrency space by offering new services related to digital assets, it could serve to bolster investor confidence as they see the support of a reputable institution behind it.

How will application of AI and machine learning continue to advance?

Yasuhide Matsumoto

It is speculated that AI will greatly evolve not only in industrial fields such as manufacturing and finance, but also in areas more familiar to us in our daily lives. First, as AI advances, the scope of data use will broaden. 

In addition, as data sets expand and diversify, AI systems and applications are expected to improve beyond their traditional scope. For example, AI and machine learning are expected to make transportation safer and more efficient, such as with self-driving cars and drones in the future, which will impact our everyday lives.

The most important key trend will be generative AI. GenAI is a technology that is different from existing AI and is expected to have a significant impact not only on the tech industry, but also on our society in the coming years. 

In particular, use of GenAI in the future is expected to reduce development work hours using conversational AI and coding automation, as well as in the design spaces, where videos, game production, web pages and other tasks will be generated automatically, reducing work-hours and increasing work efficiency.

AI and machine learning are projected to have the following effects in these three traditional industries in the next few years: 

• Healthcare: It is expected that the use of material informatics will greatly shorten the drug discovery process, and that data analysis of genetic information and disease history will enable individualised improvement tailored to each person, and the use of such data will enable early detection of diseases and more effective treatment with more effective therapies. 
• Finance: By evaluating market data and executing transactions at fast speeds, it is expected to achieve risk avoidance, such as fraud identification and risk assessment, as well as optimise investment strategies.
• Manufacturing: Data utilisation is expected to greatly improve productivity. In addition to optimising supply chain/logistics and resource allocation, the use of data can be considered in the area of predictive maintenance, which has been overlooked by humans in the past, enabling data-based analysis to predict equipment failures and achieve leaner production schedules.

It is no exaggeration to say that AI ethics and explainable AI will be most central to the future development of AI and machine learning technologies. Discrimination and bias, in terms of ethics, and transparency, in terms of responsible AI, are particularly important. It is necessary to clarify where the responsibility lies with regard to accountability for AI decision-making, and it is essential to work hard to develop guidelines and regulations that are tailored to individual situations, as has been discussed with many other countries and companies.

Ville Sointu

AI and ML are still in their early stages when it comes to their applications in financial services (FS). Currently, AI excels at efficiently sifting through mountains of data, making it a valuable tool for fraud detection and first-generation robo-advisory services. 

Notably, this year we’ve seen how GenAI has begun to reshape the “front office” of FS by enhancing customer service capabilities through supporting tools that can provide much better situational awareness to customer service agents in call centres, resulting in reduced operational costs.

In 2024, as AI and ML continue to proliferate, the industry will focus on refining and advancing these use cases. Expect to witness the emergence of more dynamic, AI-assisted customer service agents with “superpowers” that will work in tandem with human agents to ensure high-quality, efficient and compliant customer service. 

This will be done with the power of real-time analysis of every customer interaction and suggested next action-type activities. AI will also be able to monitor for compliance and data protection in real-time. 

It is crucial to note that all this must – and will be – done in a privacy-preserving way, where no sensitive data is stored or exposed to anyone who the customer doesn’t give consent to.  

Additionally, AI will be harnessed to empower individuals lacking appropriate credit ratings or residing in regions with inadequate markets, endowing them with an AI-generated credit score and paving the way for more global participation in financial services.

However, as these advanced use cases come to the forefront in 2024, ethical considerations pertaining to AI will consequently assume a more prominent role. More questions will be raised globally about how to ensure that AI-based financial decisions remain explainable and transparent. 

Effective AI implementation hinges on the availability of large amounts of data which, in turn, raises concerns about privacy, consent and ethical standards. To unlock the full potential of AI, while preserving trust and credibility, countries will grapple with the necessity of establishing regional rules and regulations to govern risk compliance.

Andy Cease

The most secure technologies often assist in streamlining the verification process customers want using AI and machine learning. For instance, integrating ID verification into the mobile experience accelerates onboarding by enabling features like form autofill. This not only enhances customer satisfaction, but significantly reduces application abandonment rates. It also provides secure verification without a paper trail by authenticating the customer's ID with cloud-based AI, encrypting and storing the digital ID only on the customer's mobile device.

Elias Ghanem

GenAI has emerged prominently, garnering widespread attention and interest on a global scale. While its impact on data security and privacy remains a point of contention, banks are taking an optimistic, yet cautious approach, embarking to identify the most valuable use cases of GenAI. 

However, the cost of not participating in the GenAI revolution will be more significant than the cost of grappling with potential risks as the technology develops.

Banks are actively conducting pilot studies to assess the impact of GenAI technology on various facets of their operations. A notable aspect is that many banks are using internal data to power use cases, improving employee output and productivity, but are not venturing to use customer information keeping in mind privacy and security concerns. 

Use cases, particularly around code development and testing, and in assisting customer service teams, are increasingly being implemented. We expect more use cases and applications to emerge focusing on middle and back-office tasks in 2024, while, in the front-office, GenAI will be utilised for improving customer experience.

As these pilot programmes continue to deliver promising results, particularly in improving the productivity of lower-skilled employees, it is essential to acknowledge that this adoption is not without its costs. 

The demand for AI infrastructure, especially data centre services, currently surpasses supply due to the resource-intensive nature of developing and operating large language models.

Critical strategic decisions facing banks include the decision of whether to build AI capabilities in house, partner with external providers or adopt a hybrid strategy. Banks will also have to re-look at their talent pipeline and prioritise hiring and upskilling staff in AI skills and capabilities.

Finally, ethics will be a key consideration as the GenAI landscape matures. While most banks have existing governance frameworks, they need to account for new risk elements that emerge. Clear governance frameworks around policies, ethics and usage will be crucial for deploying GenAI and large language models.

What does the state of play in open banking look like in 2024?

Ville Sointu

In 2024, open banking will reach unprecedented levels of interconnectedness as insights and solutions from traditional financial institutions, fintechs and businesses converge more seamlessly. From a provider perspective, the widespread distribution of APIs is levelling the playing field, fostering increased innovation, new revenue streams and robust competition. For consumers, the seamless flow of data among these entities translates into expanded opportunities and more control over their financial wellbeing. 

However, compliance and safeguarding customer rights will emerge as pivotal concerns in 2024. Navigating the intricate web of sanctions and regulations across different countries poses formidable complexities and substantial costs, especially in regions where these regulations remain fluid. This dynamic creates serious legal and operational challenges for multinational providers. 

Moreover, providers are still taking steps to ensure that adopting the open banking API concept does not compromise the consent or rights of their customers. Expect a state of play that is largely in flux and agile as new laws, regulations and norms come to the forefront. 

Ultimately, we’ll eventually reach a point where embedded finance will be the keyword of 2024. By capitalising on the API distribution capabilities and protocols facilitated by open banking, providers will increasingly break down the silos separating data and employ it across various functions to enhance the financial wellness of all. 

Andy Cease

There are several key processes that banks are zeroing in on to innovate and win customers while developing better offerings. Improving the account opening and customer onboarding process is a priority for any bank deploying open banking. 

Research indicates consumers are only willing to spend 90 seconds to five minutes verifying identities and completing applications. Exceeding this brief time period often leads to users abandoning sign-ups before establishing the high-value relationship that banks need to achieve primary account status.

The move towards digital card issuance will be a key change. Traditionally, newly opened accounts came with physical debit or credit cards mailed to users' homes, forcing customers to wait days or weeks before transacting while raising risks of mail fraud and theft. 

Leading banks now increasingly offer instant digital card provisioning directly through customers' mobile banking apps, allowing transactions to begin immediately. While this introduces potential cybersecurity risks, innovations like tokenisation and biometric authentication help mitigate those concerns. 

Capabilities like digital wallets, wallet push provisioning and card controls also improve security by avoiding physical card information sharing.

Elias Ghanem

The EU leads the path for open banking. With its regulators actively shaping the frameworks and governing policies, it has provided a blueprint and practical evidence for further global adoption. 

Recently, the EU has introduced proposals for PSD3 and PSR, marking an update to the PSD2 aimed at improving open banking competitiveness among other objectives.

Globally as well, open banking has been growing. A significant development is that, in the US, the CFPB is working on a new personal data rights rule intended to give consumers the right to control their personal financial data, with the regulation expected to come into effect in 2024. 

The CFPB’s framework mandates that banks should provide qualified third parties with access to consumer financial data using APIs. With many banks using legacy back-end systems, partnerships with fintechs could see a boost.

While the path to open data is still long, regulations paving the way for open finance are now starting to emerge, such as the Financial Data Access (FIDA) framework in the EU, indicating a step in the right direction. 

The gradual shift towards open data will enable banks to increasingly transform themselves into lifestyle partners by becoming more embedded into the non-financial customer journeys, allowing them to go beyond offering core financial products and services.

How close will we be to the widespread adoption of mobile payments in 2024?

Ville Sointu

Mobile payments will continue to explode in 2024. Recent findings from Juniper Research reveal a compelling forecast: the total value of digital wallet transactions is set to rise by a staggering 77%, from $9 trillion in 2023 to $16 trillion by 2028.

The private sector, in particular, is stepping up to offer new and advanced services like ‘buy now, pay later (BNPL) options, microloans, and personalised investment opportunities. These innovations are resonating with increasingly diverse and engaged user bases across both developed and emerging markets. We’ve seen this from our own platform. 

The Ericsson Wallet Platform currently supports more than 400 million registered mobile wallet accounts across 24 countries, from emerging nations in Africa to developed countries in the Middle East. It facilitates almost three billion transactions, totalling more than US$40bn, each month – and these figures are growing by the day.

Much of this remarkable growth can be attributed to the cashless movement, which gained accelerated traction during the COVID-19 pandemic. 

From an environmental perspective, producing and transporting physical cash, which often requires armoured trucks, is substantial compared to the simplicity and eco-friendliness of tap-and-go solutions. 

Moreover, high-denomination cash can circumvent financial regulations and fund illicit activities due to its complete anonymity. 

However, it's essential to underscore that mobile payments and cashless solutions will not completely supplant cash in 2024.  

Expect to see more public players entering the space in order to bolster resilience and prevent excessive consumer reliance on private-sector solutions. Countries around the world are raising public dialogue around the development of central bank digital currencies (CBDCs) as a means to adapt to our increasingly digital age. 

For example, the European Central Bank is actively exploring the potential introduction of a digital euro, with a definitive decision expected to materialise some time in 2024. 

Andy Cease

Realising the full benefits of mobile payments requires evaluating and mitigating accompanying risks. Partnering with experts in financial security, identity and data protection provides access to sophisticated capabilities needed to safely transform digitally. 

Banks can reinvent processes with a dual focus on experience and resilience. As consumers demand digital capabilities, institutions that embrace innovation thoughtfully can build trust and loyalty despite cyber threats. 

While digital innovations provide attractive improvements, robust security is critical for maintaining customer trust and protecting the bottom line.

Elias Ghanem

The adoption of mobile payments will continue to grow in 2024. Key drivers include the rise of mobile wallets, contactless payments, the increasing prominence of account-to-account (A2A) transactions and tokenisation. 

For mobile wallets, it is estimated they will grow at a rate of 15% from 2023 to 2024, signalling compared to growth of 12% during the previous year.  

Furthermore, looking ahead to 2026, it is estimated that more than 60% of the global population will be using digital wallets. This projection underscores the continued momentum and increasing ubiquity of mobile payment methods.

Contactless payment has also been on the rise and is expected to grow at a rate of 7% from 2023 to 2024.  Amid heightened public health concerns during the global pandemic, contactless payments gained ground as a safer alternative.

A2A payments surpassed $525bn in transaction value in 2022. They serve as a driver for widespread adoption of mobile payments by offering a seamless and direct transfer of funds between bank accounts, bypassing traditional payment networks and providing a faster and more cost-effective way to make transactions. 

Tokenisation will be another driver for wider adoption since it allows consumers the convenience of swift transactions without the need for physical cash or cards. Tokenised cards are fast growing in volume. It also provides enhanced security, replacing sensitive information with a surrogate value, ensuring a safe and seamless payment experience.

Will welltech see a boom, particularly those focusing on financial health? 

Ville Sointu

Welltech focused on overall financial wellbeing is the next frontier of financial services. However, on a global scale, the year 2024 will maintain a strong emphasis on the convergence of financial inclusion and financial wellbeing. 

Retail investors in particular stand to reap the key benefits of the boom. The rise of robo-advisory services means customers previously unable to access human advisory services will be empowered to invest and grow their wealth. Power is being handed to the people, and participation is rising as a result.

Digital wallets and payment apps are increasingly offering a wider suite of investment services, which is attracting retail investors in emerging markets who can invest small amounts, purchase digital bonds, buy digital gold, trade shares and more.

A recent example of this in action is at MTN Uganda. The company’s late-2022 m-IPO initiative in partnership with the Uganda Securities Exchange (USE) helped position Uganda at the forefront of digitising capital markets for Africa. 

As the country’s first paper-free IPO platform aimed at retail investors, more than 21,000 investors were able to participate at the outset. More than 80,000 customers – a steep increase from the 20,000 pre-IPO account base –  have since opened Securities Central Depository (SCD) accounts using the MTN USSD and MoMo App platform, enabling them to apply for shares seamlessly, check their balances for all listed companies, monitor transactions and know their brokers. 

In short, in 2024, we’ll see this momentum continue and more people than ever will have the tools to enhance their own financial wellbeing along with that of their communities. 

The digital divide will continue to narrow, and the aspiration for a globally equitable financial landscape will steadily transition into a tangible reality. 

Elias Ghanem

In a world characterised by significant economic challenges, including geopolitical instability, market volatility, rising living costs and escalating interest rates, the financial wellbeing of individuals is facing unprecedented challenges, leaving 69% of retail banking customers classified as financially unhealthy. 

Personal financial management (PFM) apps are an increasingly important part of the strategy for banks to deepen their relationships with customers. From 2022 to 2023, the personal finance software market size grew at a rate of more than 6%, and this upward trend is forecast to continue, with the market size reaching US$2.2bn by 2027 at a steady CAGR of more than 6%. 

PFM apps enable customers to access a consolidated view, including bank accounts, credit cards and loans empowering customers to take control of their earnings and spending. Banks are going beyond this now to provide more value for customers, from leveraging AI to provide smart insights and tailored investment advice, to offering financial planning tools.

There is a convergence in financial health and wellness as well, with banks starting to allow customers to track their emotional and physical wellbeing as well in a single dashboard. 

Further, they are leveraging gamification to incentivise healthy financial and fitness habits among customers through various rewards. Finally, banks are also creating experiences to educate customers on leading more sustainable and healthy lifestyles.

Fintechs play an important role in this ecosystem as well, and a survey revealed that more than 40% of customers prefer PFM services from non-bank providers.  Open banking is a key driver for this since it allows third-party financial providers to access customers’ financial data, reducing friction.

Financial literacy is another crucial area of focus. Only 46% of Gen Z feel confident about their financial knowledge, a figure lower than that of baby boomers, Gen X, and millennials.  To engage this younger demographic, fintechs are incorporating innovative features such as short-form videos and personality tests for tailored advice.

Are there any other trends you feel will be particularly noteworthy in 2024?

Manuel Sandhofer 

In the world of real-time global payments, we're already seeing a widening pool of use cases for financial institutions, payroll platforms and online marketplaces as demand for faster, cheaper, more transparent cross-border pay-outs continues to rise. 

In 2024, we expect to see this drive even more traditional banks to partner with fintechs in order to stay ahead of the curve and meet the needs of their business customers.

In addition, next year we hope to see the materialisation of reforms that have been under way for some time, such as the EU's Payment Services Directive 3 and New Payments Architecture (NPA) in the UK. 

Regulators’ and policymakers’ commitment to fintech reform over the last few years has been clear and catalysed by the onset of open banking, the publication of the Kalifa Review, and more recently the creation of the Centre for Finance, Innovation and Technology. 

While 2024 may not be the year for a Big Bang 2.0, it will be the year that the industry builds on these foundations and continues to grow with confidence.

Ville Sointu

Next year, anticipate the term “explainable AI” to permeate the collective consciousness and emerge as a key concern within the financial sector. 

This concept took centre stage at the G20 summit, where leaders resoundingly called for global oversight and heightened transparency surrounding the rapidly evolving field of AI. 

Increasingly, crucial decisions are being delegated to AI assistants, like credit scoring and determining loan approvals. 

However, it is imperative for both customers and providers to possess a comprehensive understanding of the AI decision-making processes and not simply rely on AI blindly. People should have the capacity to understand the reason behind their eligibility for or exclusion from specific services on a more profound level than “because the AI said so”. 

In 2024, more strides will be made on a country-by-country basis to establish the foundation for transparency and accountability, with the goal of establishing a collaborative global framework.

Additionally, 2024 will witness a burgeoning adoption of self-sovereign identity (SSI) systems in response to widespread concerns over financial data privacy and autonomy. 

Pilot projects such as the European Digital Identity Wallet (EUDI) – the lead initiative of the EU Commission’s recent eIDAS 2 Regulation  – will grant cross-border e-ID available to any citizen of an EU member state who requests one by 2024. This marks a dramatic shift away from traditional paper-form systems, and citizens, governments and businesses alike all stand to benefit. 

EUDIs will be interoperable across the EU, giving wallet holders unprecedented choice and security over their data, and will unlock an array of online and offline public and private services like easily opening a bank account, filing tax returns, proving age, applying for a bank loan and more.

Once fully implemented, people will find it much easier to access services and validate their financial status in new countries – a process that has proven challenging despite our increasingly globalised and mobile world. 

Andy Cease

Identity verification and e-documentation will be increasingly implemented, ensuring regulatory compliance while reducing fraud risks beginning at onboarding. 

Ongoing monitoring later assesses account usage and transactions, combining AI and machine learning with human oversight to catch bad actors before attacks occur. 

Specifically, capabilities like biometric authentication, device fingerprinting, behavioural analysis and risk scoring enable layered monitoring throughout the customer lifecycle and will become main players in the future. By identifying suspicious patterns early, banks can take preventative action.