BANKING

Pattni : The financial and banking sector has undergone a significant digital transformation in 2023 , driven by a focus on ESG commitments , macroeconomic uncertainty , a renewed focus on risk management and the rapid spread of automation . This transformation is expected to continue in 2024 , with technology playing a leading role .

While we ’ re at the beginning of the generative AI ( GenAI ) journey , the banking sector is further along with decentralised finance ( DeFi ). We ’ re seeing much more focus on central bank digital currencies ( CBDCs ) as they gain traction and central banks exploring the possibility of issuing their own regulated digital currencies . There have already been tests of a digital Euro in Spain .

This is shifting the focus away from cryptocurrencies and towards DeFi becoming mainstream , so we ’ ll move into the sphere of regulated entities where more people can use it online with established banks .

This will lead to the creation of more retail solutions but also simplify crossborder payments . Fintech companies will explore ways to make it part of their day-to-day assets and digital currencies will see broader adoption due to legitimacy , further embedding them into society .

The momentum for regulated digital currencies will continue to grow in 2024 as banks look to incorporate this into their architecture , helping this to become the new normal . However , there are still technical challenges to overcome to ensure blockchain-based solutions can meet the needs of banks and customers such as realtime payment processing .

Pettet : In my view , it ’ s not how much digital transformation will accelerate in 2024 , but what form it will take . Digital transformation accelerated during COVID- 19 as banks and businesses were forced to define new operating models in order to continue to operate and compete . At this point , digital transformation is the norm and will continue to be so .

This point is evident as major banks reduce their branch footprints while increasing their investment in digital channels . In doing so , they ’ ve placed a heavy focus on differentiation by creating unique experiences and new value propositions for their customers .

This will continue , but digital transformation will also accelerate with investments focused on reducing operating costs in 2024 and beyond , driven largely by the changing interest rate environment .

The era of cheap deposits to fund lending operations is ending and banks need to find alternate revenue streams while reducing costs , which will drive where they focus their digital investment .

Areas such as processing lending applications , customer onboarding , migration of cheque payments to

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