As we usher in a new year, the team at Sentis Managed Solutions have pulled together our list of tech trends that’ll impact the finance market in 2024. From AI to DeFi, we run you through our predictions for the biggest technological trends in finance this year.
AI in Finance
As we’ve already seen throughout the last year, AI has the potential to enable a plethora of new capabilities and efficiencies, right across the board. For financial services, that’s likely to mean much more intelligent automation, personalised experiences, and data-driven insights which can help financial firms deliver services faster and more efficiently to consumers.
Throughout 2024, however, we’re predicting that AI is also going to pose huge new ethical and regulatory challenges, as well as security risks to financial firms. The FCA has already released its developing approach to the use of AI in financial businesses, and the increase in attack vectors (from using external AI applications) will require a security partner that knows exactly how to combat AI-related security concerns.
Another exciting example of tech in finance is the proliferation of open banking. Open banking is a regulatory framework that allows customers to share their financial data and access financial services from third-party providers, such as fintechs and non-banking financial companies (NBFCs).
By opening up the market to newcomers and disrupting the traditional lending models, open banking will increase competition and collaboration in the financial sector, as well as enhancing customer choice and convenience.
However, as with everything that involves data sharing, enhanced customer choice has to be balanced with security concerns; data protection is absolutely crucial when it comes to open banking and this is something regulators will no doubt be keen to enforce.
Cybersecurity will continue to be a critical priority for the financial sector, as digital transformation projects reshape business structures and workflows, and increased connectivity exposes financial data and transactions to ever greater cyber threats and attacks.
Finance firms will therefore require advanced solutions and strategies to deal with an increasingly connected and vulnerable world, such as biometric authentication, blockchain encryption, and AI-based detection and prevention.
Working with a specialist cybersecurity team can help to train your teams on how to prepare for the most common types of attacks – such as increasingly complex phishing attacks – and having a dedicated cybersecurity partner can help you deal with the more advanced malware and ransomware threats you might face.
Sustainable finance refers to the integration of environmental, social, and governance (ESG) factors into financial decision-making and practices. Sustainable finance, it is hoped, will support the transition to a low-carbon and inclusive economy, as well as creating new opportunities and challenges for financial services, such as green bonds, ESG investing, and climate risk disclosure.
With a growing awareness of climate and social issues, expect sustainable finance to become a much bigger thing in 2024! Whether at board level for bigger firms or for winning clients that have climate issues as a core focus, sustainable finance is going to be one of the biggest differentiators throughout the next year.
DeFi is a form of peer-to-peer finance that uses blockchain and smart contracts to create decentralised and transparent financial products and services, including lending, borrowing, trading, and insurance. DeFi has had a huge impact already, but as we move into 2024, we’re predicting big things for peer-to-peer finance with the potential to shake up the industry.
Look out for more stable digital currency developments – the EU has already been debating their offerings – and an uptake in cryptocurrencies in more subtle, less volatile ways by the established players in the tech and finance fields.
To keep yourself and your business protected from cyberattacks, get in touch with the team at Sentis. We’re here to help you keep your security posture up to date and make the most of your IT services. Book a call today to find out more.