This year was predicted to see a broad perspective for the digital revolution of banking. "The widespread adoption of hyper-automation and the integration of AI will further empower financial institutions to streamline their operations, boost efficiency, and harness the power of data analytics," stated Frodo Berg, Managing Director for EMEA at Provenir, in December of last year.

The efforts of legacy banks to scale their digital transformation are becoming more visible as we approach the halfway mark of 2024.

Banking's digital transformation: Improving client experiences

The first change for banks, according to Peter Pugh-Jones, Director of Financial Services at Confluent, is realizing that they are "fundamentally data companies: really, data is their 'product', rather than the agreements they enter with customers."

Today, it's all about meeting consumers where they are by making the appropriate use of the data. The Head of Banking at GFT UK, Shilpa Doreswamy, observes that customers' expectations of their financial institution are being altered by hyper-personalised products.

"The creation of hyper-personalised customer experiences through the application of advanced data analytics and artificial intelligence to deliver customized financial advice, offers, and customer support via digital platforms," the speaker states.

Making data-driven decisions by utilizing AI and machine learning will also become essential. There will be more use cases for personalized product suggestions, real-time fraud detection, client acquisition, and process optimization.

BRD recently talked to FinTech Magazine about their transformational journey. In order to fully utilize the enormous amounts of current data, it has begun implementing data analytics. At the same time, it is progressively implementing AI to improve customer experience and expedite operations.

"We have a very consistent path ahead, which is the way to go with AI," says Maja Mikic, executive director of BRD for digital transformation. "AI is being introduced on a small scale."

Jasmeet Narang, Director of Financial Crime and Chief Transformation Officer at Santander UK, provided an overview of the bank's digital future elsewhere. The video below has further information.

The DeFi era is here.

With the banking industry leading the way in decentralized finance (DeFi), money transfers are also evolving.

"While we're at the beginning of the generative AI (GenAI) journey, the banking sector is further along with decentralised finance (DeFi)," stated Prakash Pattni, Global MD for Financial Services Digital Transformation at IBM, earlier this year.

As central banks investigate the prospect of issuing their own regulated digital currencies, we're witnessing a significant increase in attention being paid to central bank digital currencies (CBDCs). A digital Euro has already undergone testing in Spain.

The emphasis is now being placed on DeFi becoming widely used rather than cryptocurrencies, so we'll be moving into the realm of regulated businesses where more individuals can use it online with reputable banks.

"This will simplify cross-border payments while also resulting in the creation of more retail solutions." Digital currencies will be used more widely owing to their legitimacy, further ingraining them into society, and fintech businesses will look for methods to include them into their daily assets.

Similar technology are being used by central banking institutions to create real-time payment networks. Since its establishment by the Brazilian central bank, the RTP network Pix has quickly emerged as the preferred method of payment for enterprises, especially SMEs, eliminating the need for "middle-men" credit card infrastructures.

In 2023, Pix was used 74% more than the year before, processing 42 billion payments in the Brazilian economy.