Financial services are entering a new age thanks to fintech like never before. Growing customer demand for simpler, more approachable, and user-friendly services is driving industry innovation in critical areas.

We spoke to business leaders in this roundtable on the key ways that technology will drive financial services in 2024. This covers the ways in which technology is driving the development of digital currencies, enabling ESG activities, and enabling financial services firms to use Gen AI.

As financial services advance into the digital era, we'll also ask our experts for the "ideal recipe" for implementing technology in the greatest way to enhance client services in a balanced manner that caters to all demographics.

Our professionals are:

• Samina Hussain-Letch, Square's Head of Industry Relations and UK Operations

• Intellias's Head of Sales for Financial Services and Insurance, Olaf Baunack

• Wilson Chan is the Permutable AI CEO.

• John Stephens, Workiva's Industry Principal for Banking and Financial Services

• Amplitude's VP of EMEA, Jeremy Grinbaum

• VP of Customer Success at IDnow, Doug Pollock

1. In terms of Gen AI in financial services, what fresh developments are we beginning to witness? Does it support customized investment strategies and financial planning?

Square's Head of Industry Relations and Operations, UK, Samina Hussain-Letch

Gen AI enhances threat identification and response, which may be leveraged to fortify cybersecurity defenses. Algorithms that are adaptive and self-learning could help financial services keep on top of trends. By improving the customer experience, it may aid the industry in preventing fraud more successfully and gaining a deeper understanding of its clientele.

Algorithms driven by AI are able to analyze market patterns and execute transactions at a pace and frequency that are not possible with human intervention. This implies that companies may create complex and flexible investment plans, which is especially helpful for individual financial planning. Predictive analytics, another feature of Gen AI, can analyze historical data to predict market patterns, which is helpful for financial planning once again.

The process of integrating Gen AI into financial services is continuing, and as technology develops, we may anticipate seeing progressively more advanced and customized solutions in this industry.

Olaf Baunack, Intellias' Head of Sales for Financial Services and Insurance

AI-powered risk models in the financial services industry are capable of analyzing intricate financial scenarios and determining the possible hazards connected to loans, investments, and company endeavors. Artificial Intelligence (AI) assists decision-makers in minimizing possible losses and optimizing risk management tactics by offering real-time risk assessments.

All things considered, the emergence of Gen AI is revolutionizing the financial services industry by bringing cutting-edge technologies that improve automation, security, personalization, and risk management. Gen AI technology is anticipated to have an even greater influence on the payment sector as it develops, influencing how we will make payments in the future.

It appears that 2024 will be a turning point for Gen AI in the financial services sector. Concrete efforts are replacing experiments, and the goals are to improve customer experience, optimize operations, and create new possibilities.

Watch these important initiatives:

Client Relationship:

• Customized financial assistants: Anticipate an advancement in chatbots and virtual assistants driven by Gen AI, which will enable them to provide customized guidance, produce reports, and respond to intricate inquiries about investments and accounts.

• Content development for customer education: By customizing instructional materials (films, articles), Gen AI may enhance financial literacy and engagement by taking into account each user's unique needs and risk tolerance.

• Dynamic marketing and product recommendations: Gen AI can tailor marketing campaigns and provide pertinent financial product suggestions in real-time by utilizing consumer data and market trends.

Efficiency of Operations:

• Document automation and analysis: Reduce mistakes and free up human resources by automating processes like loan applications, KYC/AML compliance, and claims processing.

• Fraud detection and risk management: By analyzing enormous volumes of data, Gen AI can spot suspicious activity and anticipate possible fraud, reducing losses and boosting security.

• Algorithmic trading and portfolio management: By analyzing market data and producing investing plans, sophisticated algorithms driven by Gen AI might possibly increase returns and diversify portfolios.

Development of New Products:

• Microinsurance and customized financial products: Gen AI can assist in creating insurance plans and financial goods that are specifically designed for marginalized groups, hence expanding their access to financial services.

• Algorithmic wealth management for the general market: Robo-advisors with AI capabilities can provide more people with accessible and reasonably priced wealth management options, therefore democratizing access to financial knowledge.

• Chatbots for financial inclusion: By providing basic financial services and fostering financial literacy, conversational AI interfaces may reach unbanked communities in rural places.

Crucial Points to Remember:

• Ethical concerns and ethical development of AI: As the role of Gen AI increases, it is imperative to address bias, explainability, and data protection in order to foster trust and ensure responsible usage.

• Developing the proper skill set: To lead and supervise these projects, financial institutions must invest in personnel with experience in data science, artificial intelligence, and ethics.

• Cooperation and ecosystem development: Alliances between banks, tech firms, and startups may promote responsible development of Gen AI in finance and speed up innovation.

2. There has been talk that sustainable financing would become more prominent this year. How will funding for ESG strategies and support for green projects expand going forward?

Wilson Chan, Permutable AI's CEO

The incorporation of ESG considerations into portfolio management choices and the growing transparency of green efforts are two noteworthy trends of the past several years. These days, funds and companies are more eager to provide information about their sustainability programs and practices, giving investors useful data to help them make wise investment decisions.

Investors may evaluate if funds and firms share their values and aspirations for sustainability thanks to this openness. Investors are therefore more inclined to back green projects and pick stocks of businesses that exhibit a high adherence to ESG standards.

Even though fund performance is still a major consideration when making investments, it is becoming more and more obvious that fund performance and ESG principles are inextricably linked.

Investors are realizing that businesses with subpar ESG policies may eventually face serious risks and difficulties that might affect their financial performance.

As a result, the idea that incorporating ESG considerations into investing strategies might aid in risk avoidance and long-term value creation is beginning to gain traction.

Investors are now looking for investment options that not only meet their sustainability goals but also yield high financial rewards as a result of this realization.

Workiva's Industry Principal for Banking and Financial Services, John Stephens

Leading banks, such as JP Morgan and Bank of America, two of the biggest in the world by market capitalization, are continuing to give us signs that they are committed to helping to facilitate billions of dollars in direct and bridge financing to address climate change and green initiatives.

Some of these top international banks have contributed more than US$400 billion toward sustainable development goals since 2021. It is anticipated that both the budget and the level of commitment will persist until 2024.

Furthermore, US tax equity may be the world's most significant source of finance for the energy transition by 2024.

It is anticipated by the market that the demand for traditional tax equity from renewable energy projects will continue to exceed supply, presenting chances for companies to buy tax credits via tax equity partnerships or directly from developers.

In the end, it's expected that the finserv sector will keep incorporating ESG methods into mainstream programs to manage risk and comply with regulations, but also to change business models to significantly support net-zero projects and take complicated externalities into consideration.

3. How will the cryptocurrency industry expand this year, and will more regulation be implemented? Will the adoption of CBDCs continue to rise?

Olaf Baunack, Intellias' Head of Sales for Financial Services and Insurance

In the future, cryptocurrency promises to enhance transparency, lower entry barriers, and save transaction costs as it develops.

Moreover, cryptocurrency storage is safe, decentralized, and less susceptible to governmental meddling and inflation.

When combined, cryptocurrency and digital payments have the power to significantly influence ESG practices and increase our collective sustainability.

After a turbulent 2023, digital and cryptocurrency have enjoyed a revival in 2024. Though it's never easy to predict the future, the following lists of possible trends may help:

Sustained Expansion:

• Increased adoption: As infrastructure is developed and public awareness grows, the usage of cryptocurrencies for investments and payments may increase.

• Innovation: New blockchain-powered initiatives and apps may draw users and financiers.

• Mature market: Investment and engagement from institutions might provide security and assurance.

Regulatory Examining

• More regulation: To address concerns about money laundering, fraud, and consumer protection, governments are expected to enact stronger laws.

• Difficulties with compliance: This can put crypto enterprises in the way of innovation.

• Possible crackdown: Stricter measures may include prohibitions or restrictions on specific cryptocurrency-related activity.

Adoption of CBDC:

• Growing Adoption: Central banks all over the world are investigating and introducing Central Bank Digital Currencies (CBDCs), which might have an effect on the cryptocurrency and traditional financial scenes.

• Competition and cooperation: Depending on how they are developed and put into use, CBDCs may either rival or enhance current cryptocurrencies.

• Uncertainties: It's yet uncertain how CBDCs will affect the acceptance and usage of cryptocurrencies generally in the long run.

4. In order to satisfy client requests, how crucial is it for today's financial services providers—especially the legacy institutions—tailor newly onboarded technologies? What will the recipe be to deliver the finest CX?

Jeremy Grinbaum, Amplitude's VP of EMEA

For the same reason that patrons of other local establishments have remained devoted to their neighborhood's historical bank branches: a foundation of trust established via interpersonal connections.

The need for personalization is still present even as bank branches are closing, so financial institutions must digitally replicate these intimate, small-bank experiences.

Since outdated systems hinder long-standing banks, the cloud-native, agile neobank has the greatest chance.

First off, without knowing each user's more comprehensive financial objectives, neobanks are unable to enhance the client experience. Consider a scenario where a consumer uses a product to settle their student loan debt.

Asking yourself why a certain person wants to pay off their student loans might help you go above and beyond the transactional aspects of saving money and making payments.

Perhaps to establish a family, purchase a home, or open a savings account for their children. Challengers must see their product from the user's point of view. Establish a financial target first, and then provide a remarkable user experience to support it.

Challengers may deliver alerts and suggested actions where and when it is appropriate, resulting in a data-driven, personalized experience.

Providing an in-app push notice on a financial objective, for example. Combining this with a suggested next-best course of action can significantly improve trust and retention.

A fintech may better personalize messaging to enhance the user experience if it comprehends the objectives of its consumers and the reasons behind their travel choices. Building this kind of trust will improve client retention and offer chances for cross-selling into additional financial portfolio segments.

Olaf Baunack, Intellias' Head of Sales for Financial Services and Insurance

In the financial services industry, customer experience and Open Banking (seamless integration) are becoming key differentiators in the competition.

Generation Z and Millennials are increasing their personal wealth and discretionary income. The use of fintech products is growing. Combining these two realities makes it clear that each bank will need to raise the bar for CX in order to remain competitive.

Here are two instances of the cutting-edge tools and cunning strategies banks are using to provide the greatest customer experience and beat off rivals:

• Gamification is a potent tool that may boost client engagement and advance intelligent financial services. Banks may target clients based on their individual requirements by implementing gamification in their banking apps. People are drawn to games because they satisfy their need for enjoyment, amusement, simplicity, social connection, rewards, and competitiveness. Given the widespread use of smart devices, the widespread appeal of gaming, and the interests of tech-savvy millennials and Gen Z, it's an exceptionally sensible approach. The millennial generation is very driven to interact with companies through immersive and interactive technologies and to receive incentives for their purchases.There are a few notable instances of smart banks leading the way in the use of gamification to increase client loyalty, foster trust, and facilitate upselling.A social credit card called Barclays Ring was introduced by Barclaycard US and Mastercard. They have developed a social network of cardholders by utilizing game design strategies to enhance the engagement of card-related activities. Rewards for converting to paperless billing and making charitable contributions through Barclaycard's Giveback program, both online and offline, are used to promote the product as user-friendly and appealing to socially conscious and active consumers.

• Digital wallets for mobile cashless payments: By enabling quick and safe transactions using a smartphone or wristwatch, an integrated, QR code-based payment system benefits banks, e-wallets, payment platforms, shops, and customers. After establishing a connection between the system and their bank account, the user completes the transaction with a single scan. The system is totally safe and anonymous because it doesn't get any personal information or bank information. Vending machines, cash registers, banking apps, and shop loyalty reward systems may all be easily linked with a solution.Consider the customer of Intellias, a pioneer in QR payment technology and one of the authorized suppliers of Alipay, the largest payment processor in China.With the ability to expedite payment procedures, reduce expenses associated with point-of-sale (POS) equipment, and allow customers to pay overseas using their chosen method, the mobile QR platform enables businesses engage with customers more effectively. Through its interaction with other QR systems, like as the Alipay mobile payment services, these systems may access all participating businesses and retail chains by utilizing its European infrastructure. Users benefit from great customer experiences as a consequence, and traders attract more customers.

Doug Pollock is IDnow's Vice President of Customer Success.

With a strong hand on the pulse of modern consumer behavior, the finserv business has always been at the forefront of innovation.

What UK banking clients demand from their digital experience is demonstrated by our study.

For instance, in our survey of over 2,000 adults in the UK, more than 60% said that when choosing which bank to trust with their money, digital banking processes—like remote account opening, online banking, or an intuitive app—were either very important or important.

The study also revealed that it makes no difference if the company was created last week or is a well-known brand in its industry. Customers desire digital, but they also demand security. The firm bears the duty for safety and ought to implement the strictest security measures.

A strong CX process must be used to balance this demand for safety. Users may become disinterested and stop the onboarding process if they find it difficult or overwhelming to register to utilize a business's online services.

The ideal customer experience (CX) is adaptable and intuitive, assuring the user that there should be some friction during onboarding for the critical background operations that protect their data. Financial institutions must to interact with their clientele in a manner that suits them and, whenever feasible, offer adaptable and comprehensive solutions.

The growing usage of digital identification solutions in financial services is one significant trend in CX. Markets for digital wallets are already starting to mature, especially the UK and the EU, which is pushing for the use of digital identity wallets in all of its member states by the end of this decade.

The broad use of wallets is seen as a significant step toward facilitating safe and easy electronic transactions for companies, individuals, and government agencies.

Even if the UK is still in the early stages of adopting these digital wallet solutions, all financial services firms have to be prepared for the impending switch to reusable identities.