Emerging Trends in Digital Banking to Dominate in 2024

This year has been harsh for many due to rising inflation. And unfortunately, the economic instability will continue into next year.

This makes banks particularly vulnerable and results in tangible changes in banking approaches. Financial organizations accelerate digital transformation to keep existing customers and engage new ones. Such a focus on customers is traceable in most digital banking trends as banks strive to grow their customer base to stay afloat.

Binariks banking software development services provider shares our overview of digital banking trends for 2024 below. Follow these trends to improve banking services and get more clients next year.

Top 13 digital transformation trends in banking

This overview is based on the recent report by Deloitte and other reputable sources reflecting upcoming banking industry changes. It can help you plan your digitization efforts for the next few years to design successful products.

1. One-stop shop platforms for comprehensive services

Modern users have too many programs on their smartphones to keep multiple financial apps. Therefore, they prefer providers with all critical products in one platform. Recent research on the trends in digital banking showed that 73% of clients request digital account openings from banks. 63% need loan functionality, and 59% would like P2P payments. Some other top choices are financial wellness, chatbox/voice banking, and cryptocurrencies.

Hence, if you want to design a banking app that effectively attracts users, you must combine these features. The tendency to create all-in-one platforms has been for a while, but in 2024, it will become a must-have requirement. Digital apps that offer solely banking services will give way to multifunctional applications like Chime or Ally. The Chime mobile banking app enables users to get paid up to 2 days early, use credit builder, search ATMs, integrate a digital wallet, make P2P transfers automate savings, and more.

2. AI from virtual assistants and beyond

Many banks are launching virtual assistants to help clients manage online banking inquiries. These assistants use the power of artificial intelligence to complete basic tasks and personalize banking services - many of them you can control with voice commands, another emerging digital banking trend.

The solution by Chase Digital is one of the decent examples of digital bank assistants. It can help you pay bills, transfer money, check your account balance, and view investments. You can lock or unlock credit/debit cards and manage other regular tasks.

AI is an online banking trend that goes well beyond chatbots in 2024. AI-driven personalization is now a game-changer, allowing banks to offer tailor-made financial advice and product recommendations by analyzing individual customer data.

In one of the examples, credit risk assessment has been transformed with AI's ability to process vast datasets. Banks use AI for more nuanced risk management, leveraging its ability to analyze large data sets to assess and mitigate various financial risks.

For example, JPMorgan Chase implemented an AI program called COIN (Contract Intelligence) to automate the interpretation of commercial loan agreements. This AI solution processes documents in seconds. Previously, this task consumed 360,000 hours of work each year by lawyers and loan officers.

Additionally, AI plays a critical role in fraud detection by identifying and acting on suspicious activities more swiftly and effectively than traditional methods. There are several ways AI achieves that: pattern recognition, anomaly detection, and predictive analytics that use historical data. AI systems are high-speed - they can process transactions in real time, allowing for the immediate detection of fraud.

Another significant impact of AI is streamlining back-office operations, including loan processing and compliance. The former one can now be automated completely.

3. Cashless payments for convenient transactions

Сashless transactions offer the speed and convenience every customer wants. Developed countries such as Sweden, Norway, and the Netherlands may soon become cashless. The UK, Canada, and the US report the growing use of digital wallets and contactless tap-to-pay cards. Mainland China and India, on the other hand, adopt QR code technology for mobile wallets, digital payments, and super apps. This way, the cashless trend thrives globally. By 2024, the cashless transaction volume will more than double (Source ).

When developing a banking app, you must ensure it supports the main cashless payment methods, including:

• NFC or RFID technology
• E-wallets
• QR codes
• Virtual cards

You may also invest in the technology for PoS terminals. Physical, virtual, and mobile PoS terminals are in high demand by small businesses that want to support cashless payments.

4. Investment in front-to-back modernization

While banks have significantly advanced in digitizing customer-facing systems in recent years, many still haven't aligned front- and back-office operations.

As a result, they cannot fully benefit from the implemented upgrades. The performance and quality of banking services suffer. In 2024, more banks will invest in front-to-back modernization to grow efficiency. To reduce inefficiencies, they also power the modernization with low-code/no-code application platforms, RPA, and cloud migration.

For example, Seacoast Bank developed ML models that estimate the CLV (customer lifetime value), entering every detail from teller costs to the probability of attrition. After an automated estimate, the system highlights the opportunities to reduce costs or improve customer engagement.

5. Omnichannel services organized around the customer

Omnichannel tendencies are vital in many industries, and digital banking is no exception. With the transition to online banking, customers use more channels to interact with a financial organization. It was found that retail banking customers navigate 2.7 channels during every interaction (Source ).

That's why digital banks that want to satisfy customers must ensure a consistent omnichannel customer experience. The UX must be equally smooth whether the person uses one interface or goes from a mobile app to a chatbot to a web platform.

You must invest in UX analysis to ensure quality user experience across every channel. It helps detect bottlenecks and pain points to enhance the design. The quality integration between channels is also essential as it allows you to gather all data related to one customer in a single admin platform.

6. Smart know-your-customer (KYC) solutions for verification

Smart KYC (Know Your Customer) solutions are advanced, technology-driven systems that automate and enhance the verifying and monitoring of banking customers' identity and risk profiles for regulatory compliance and anti-fraud purposes.

They are becoming indispensable in the banking sector in the heightened security and regulatory compliance era. These advanced systems leverage AI and machine learning to automate the verification process. The technology goes beyond basic identity checks, incorporating sophisticated document verification and biometric analysis mechanisms.

With new KYC solutions, customers of digital banks can open accounts remotely by uploading documents and undergoing biometric verification through their mobile devices.

An additional bonus is that smart KYC solutions are helping banks comply with anti-money laundering (AML) and other regulatory requirements as they are better at risk assessment and regulatory reporting.

7. Banking robotic process automation (RPA) for automation

RPA is a digital banking trend involving software robots or 'bots' to automate repetitive and routine tasks. In banking, RPA can automate processes like data entry and compliance reporting. Recently, it has shown promise in complex tasks like mortgage processing.

The stats on RPA in banking are pretty impressive. Around 53% of organizations have started their RPA journey, with an additional 19% planning to adopt RPA in the next two years. Specifically in finance, about 80% of leaders have implemented or are planning to implement RPA (Source ).

The RPA bots that perform the tasks range from data entry and validation to report generation, compliance, and customer service. Like many other digital banking trends, the main goal is to speed up operations and automate repetitive routines.

8. Augmented/virtual reality to enhance experience

One of the more exciting emerging trends in digital banking, AR can enhance the customer experience by providing interactive and immersive ways to view financial products or navigate banking services. As for VR, it can be used for virtual branches, where customers can have an in-branch experience from their homes.

One example of using augmented reality (AR) in banking is the "Pepper" by HSBC. Pepper is the robot that interacts with customers in branches, providing information about bank services and assisting with customer inquiries. He even guides customers through various banking processes.

9. Open banking APIs and non-banking financial companies (NBFCs)

Open banking, driven by APIs (Application Programming Interfaces), allows third-party developers to build applications and services around the financial institution. In 2024, it will continue fostering unprecedented collaboration between traditional banks and non-banking financial companies (NBFCs).

For example, BBVA offers an open banking platform that allows third-party developers to create financial services using the bank’s APIs. This is one of the most collaborative recent trends in digital banking, as many stakeholders tend to benefit from it.

Banks benefit from open banking by accessing innovative technologies and platforms developed by fintech companies. This collaboration can lead to new revenue streams and improved customer services. Banks can also leverage the agility and innovation of fintech companies to enhance their digital offerings. In turn, fintech companies gain access to a more extensive customer base and a wealth of financial data through open banking.

However, the primary beneficiary of open banking is the customer. Customers gain access to a broader range of financial services and products tailored to their needs.

For instance, they can manage their finances more effectively through personal finance management tools that consolidate information from various accounts. Additionally, open banking can offer more competitive rates and innovative services due to increased competition and collaboration between banks and fintech companies.

10. IoT in banking (Banking on Things – BoT)

The Internet of Things (IoT), a trend that takes every field from infrastructure to medtech by storm, also extends into banking, termed 'Banking on Things.' Examples of BoT include smart ATMs adapting to customer preferences, IoT-enabled banking apps, and personalized offers based on IoT data.

For example, ATMs might remember a customer's preferred withdrawal amount or offer quicker access to frequently used services. BoT goes as far as some banks integrating their services with wearable devices like smartwatches. Tailored advice on loans and personalized services may be offered based on customer use of other IoT devices.

11. Cloud computing for storage

Cloud is one of the most consistent digital transformation trends in banking of recent years, which is no wonder, as it offers scalable and cost-effective data storage options. As a bonus, it gives banks faster deployment of new services and improved data analytics capabilities. In 2024, the cloud is no longer just an online banking trend - it has become a backbone of the financial services infrastructure.

Banks migrating to the cloud have long become mainstream - Capital One is one of the first large banks to migrate its core systems and customer databases to Amazon Web Services (AWS).

12. Pay-by-bank for smooth transactions

Pay-by-bank is a payment method where transactions are made directly from the customer's bank account without needing debit or credit cards. It's seen as a more secure and direct payment method because it does not rely on traditional card networks.

Pay-by-bank is an excellent online banking trend for 2024 as it is both secure and fast, which perfectly reflects what a consumer wishes for today. As this technology becomes more widely available, businesses look into pay-by-bank to avoid card processing fees and gain faster access to funds.

Interestingly, while the United States leads in many new trends in digital banking, it has not been at the front of the pay-by-bank trend, as US consumers are more attached to digital cards than people in many European and East Asian countries. However, companies like Stripe, Rapyd, and Flywire have been developing new pay-by-bank offerings for customers in the USA.

13. BNPL (Buy Now, Pay Later) as a credit alternative

Buy Now, Pay Later (BNPL) is a financial service that allows consumers to purchase and receive goods immediately while deferring payment later without interest in installments. BNPL services will remain popular in 2024 as they are a viable alternative to credit cards.

Customers can buy products immediately and pay for them over time without affecting their credit score. This online banking trend is prevalent in e-commerce and is expanding into other areas. Customers are not the only ones who benefit from BNPL. For merchants, it results in a smoother checkout process and fewer abandoned cards.

The most popular BNPL service is the European service Klarna due to its early market entry (2005) and strong growth strategy. The global BNPL market, valued at approximately $90 billion in 2020, is projected to reach around $3.98 trillion by 2030, growing at a CAGR of 45.7% from 2021 to 2030 (Source ).

Key statistics on digital banking technologies

The expanding generation of millennials is nudging banks to adopt digital banking services, which drives the market surge. By 2028, the digital banking market will surpass $10.3 trillion, up from $7.9 trillion in 2021 (Source ). The number of digital banking users in the US will reach 216 million in 2025.

Besides the rapid market growth, the increasing adoption of digital technologies for banks also considerably affects the industry. In particular:

• 84.7% of financial institutions already report RPA implementations. Robotic process automation helps financial services achieve 20-60% cost savings of baseline FTE costs.
• In banking, AI offers a $199 billion cost-saving opportunity for the front office. The middle and back office savings are $217 and $31 billion, respectively.
• A fully digital KYC model can save over $460 million in banking onboarding. At the same time, 78% of organizations admit they cannot provide an optimized digital experience.
• The number of consumers in the US using digital banking increased from 196.8 million in 2021 to 203 million in 2022, indicating a steady rise in digital banking adoption.
• In 2025, 53.7 million Americans will have a digital-only bank account.
• In 2022, 80 percent of millennials have admitted to using digital banking accounts (Source ). This marks the preference of younger generations towards mobile banking.

These are just a few examples of how technology impacts banks and financial firms. Innovations increase revenue, optimize expenses, enhance customer satisfaction, increase operational efficiency, and bring many other benefits.

Examples of banking tools that are gaining popularity

The number of available banking tools on the market expands way beyond the latest digital banking trends we have covered in this article. Let's look into the tools that banks and consumers use to make the most out of their experience:

Digital wallets and mobile payment apps

Digital wallets and mobile payment apps like Apple Pay and Google Pay are now a primary way for many users worldwide to interact with their finances. These digital wallets allow users to make payments directly from smartphones, and most e-commerce vendors now accept these payments.

Personal financial management (PFM) tools

Tools like Mint and YNAB help users track and manage their finances and be smart about their expenses. They offer features like budgeting and personalized financial advice.

Chatbots and AI-powered customer service agents

Erica by Bank of America is an AI-powered virtual assistant that helps customers with transactions and bill payments. The goal of this bot is to enhance the customer experience of Bank of America customers. This popular tool is truly a reflection of recent trends in digital banking. Since its launch, it has interacted with 37 million bank customers.

Biometric authentication systems

Touch ID and Face ID have gone mainstream in mobile banking. Many banks have integrated biometric authentication like fingerprint and facial recognition into their mobile apps for secure and convenient user access.

API-Driven banking platforms (open banking)

Plaid technology allows fintech apps to connect with users' bank accounts. It assists in various services, from payment processing to financial tracking.

Peer-to-peer (P2P) payment systems

Venmo and Zelle are the platforms that enable users to send and receive money directly from their mobile devices. As of 2022, Venmo has over 78 million users, primarily in the United States. Many Millennials and Gen Z users prefer Venmo for mobile payments. About 68% of Millennials who use mobile payment apps choose Venmo most frequently, and 90% of Gen Zers who use mobile payments say Venmo is their favorite app (Source ). Venmo offers a unique user experience that blends finance with social media. Users can leave public comments or emojis after every transaction, making it appealing, especially to younger generations.

Cybersecurity tools for fraud detection and prevention

Tools like IBM Trusteer and Riskified help banks detect and prevent fraudulent banking activities using advanced analytics and machine learning algorithms while analyzing transaction data.

Anti-money laundering (AML)

Financial institutions use AML software to prevent financial crimes like money laundering. Using tools like NICE Actimize and SAS AML, banks keep track of economic activities for further investigation.

Our experience

Binariks is a software development provider you can hire to implement innovative digital banking technology in your organization. We have experience with complex cloud migrations, AI implementation, biometric security systems, and digital currency. Our team also provides standard engineering services for web and mobile development.

We can assemble a dedicated team for you to develop an app from scratch or integrate a third-party solution. You can also hire Binariks for consulting services or part-time involvement, depending on your needs.

Learn more about our completed projects , and contact us to discuss your tech needs.

Final thoughts

In 2024, banks are going digital, with many digital banking providers undergoing digital transformation. The leading digital transformation trends in banking remain unchanged – AI, omnichannel banking, focus on mobile, and customer-centricity. Still, next year, we can see a significant increase in smart KYC, RPA, BNPL, and cloud computing.

All these innovations have one thing in common. They are technically challenging and require specific expertise. Hence, you will need an experienced software engineering partner to implement them successfully.