What lies ahead for the financial services industry?

Garry Robertson, Client Lead for Financial Services at esynergy

In the last two decades, the financial sector has changed completely. Banks have shifted to online services and customers now use apps much more than brick-and-mortar branches. Digitally native ‘disruptors’ such as Monzo, Vanquis and Starling have put pressure on more traditional institutions to adapt as they snapped up thousands of customers. Cybersecurity has become more of a worry than physical robberies, and regulations on have struggled to shift to adapt to this new digital world. And this is not the end.

New innovations such as AI and GenAI especially will challenge the sector to shift yet again, and systems even a few years old are beginning to be out of date. So, what does the future hold for financial institutions? How will they keep up?

This sector faces a unique challenge

Because of the nature of finance, security is paramount. As these behemoths have shifted to an online space, they have been forced to the vanguard of cybersecurity, identity checks and multiple levels of verification. A breach in security would mean dire consequences – both for institutions and for the customers who have placed their faith in the bank.

At the same time, disrupter banks emerged, pushing the industry towards a more digitally accessible model. Apps needed to be more appealing and easier to use, while still meeting regulatory and security standards. Continuity is also a concern. Many organisations are nervous about making any changes to existing programmes in case something goes wrong. While the instinct of financial institutions is to stay with programmes and platforms they are familiar with, this leaves them at risk of falling into ‘technical debt’ and becoming stuck with legacy systems that will leave them behind the curve. Sticking with what feels safe instead of continuing to evolve could cost an organisation efficiency, money and customer loyalty.

The finance of the future

As Generative AI has been taking the world by storm, the financial sector will need to be flexible enough to transform itself once again. Not only will GenAI shape the security protocol and engineering of systems in finance, but it presents a huge opportunity to meet a growing need: hyper-personalised customer experiences, customized products and contextual services.

Consumers are calling for more and more specific set-ups: apps that can display all their accounts and investments in one place, being able to choose investments based on personalised criteria, and market projections that are relevant for them and their interests. Institutions should be considering the potential of AI in this space to deliver innovative consumer experiences that will keep up with mounting expectations. For example, we are currently supporting a large financial service provider to set up GenAI chatbots for instant, 24/7 contextual responses to customers. This includes personalised customer interactions using data, and crucially provides scalable support during peak times. There is no going backwards in terms of consumer expectations for banking technology – they will only continue to evolve.

If there is one take-away for financial institutions, it is that they should prepare to invest in AI and GenAI solutions that will empower more personalised platforms with guard rails of compliance and explicability for their customers and regulators. It is the organisations that embrace this new technology early that will reap the benefits.