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What can businesses in the financial sector expect from tech this year?

What can businesses in the financial sector expect from tech this year?

Robert Cottrill, Technology Director at digital transformation company ANS, discusses the key tech trends for businesses within the finance sector in 2024.

2023 was a huge year for tech, from the rise of ChatGPT to developments in hybrid cloud. Cyber security concerns remained prominent for businesses, and global events like the AI Summit brought AI to the forefront of tech development conversations. This has prompted businesses, especially those within the financial sector, to consider AI technology as a priority discussion point to stay competitive.

So, the big question now for organisations in the financial sector is what can they expect to see next in tech? For IT managers within financial services, understanding advancements in cloud and AI will mean they can implement these technologies effectively to aid the digital transformation of the sector.

Here are five key trends to look out for in the year ahead.

1. AI will become even more accessible

2023 was the year of generative AI and ChatGPT played a large part in this. According to data from Next MSC, the global AI market increased by almost 50% from 2022 and is now worth over $207bn. This year we can expect AI to become more easily accessible to businesses, with developments in AI chatbots, such as the release of ChatGPT5, which is expected to provide better use and flow down into other products.

Another development to facilitate the adoption of AI is Microsoft’s Copilot, which is expected to gain increased traction this year. The software can improve process efficiency and workflows by automating repetitive time consuming tasks, revealing powerful insights from data sources and helping content generation.  This can allow employers and higher-level business decision-makers to analyse financial performance at a glance, without the need for complex formulas.

2. The rise of invisible AI

If you thought AI developed quickly last year, this year we can expect AI to advance at a greater pace, to a level where prompts are no longer required. We call this invisible AI, where the technology works in the background often without our knowledge. All managers need to do is enable the AI and the technology will take it from there.

AI is going to become an integral part of working lives in the financial sector this year. As it continues to develop and the sector starts to use it unknowingly, employees may not even realise that they are using AI at all. Think of it as AI automatically carrying out risk analysis without being prompted to do so.

This means that invisible AI could greatly improve efficiency for those within the finance sector. As AI continues to develop and complete more administrative jobs, such as auditing using Robotic Process Automation (RPA), it will free up time to focus on more strategic activities.

However, business decision-makers still need to consider the risks. As more efficient technology comes into play, it is important that managers are aware of potential data privacy and security concerns which may arise through tech like invisible AI. Given the highly sensitive data that organisations such as banks hold, this is an even greater concern for this sector. If they know the risks and can put measures in place to protect themselves and their workers, the technology can transform productivity and performance.

Working with expert tech providers can ensure that these financial organisations are able to meet the increasing demands for AI transformation alongside protecting customer data.

3. Hybrid cloud will make a comeback

Public cloud has taken charge over the last few years. However, hybrid cloud is expected to return to popularity in 2024. We’ve seen some big companies and start-ups move some of their infrastructure out of the public cloud and back to their own hardware due to concerns about data sovereignty and cost management.

While public cloud services offer a sweet spot for consumable services, organisations in the finance sector (especially SMBs) are realising that making all apps cloud-native is not feasible. Most now understand that they just won’t be able to modernise a large proportion of their apps, and they’ll end up simply sitting in costly Infrastructure as a Service (IaaS).

If we look at banks, the move will mean there’s a shift from fixed to variable expenses, allowing them to focus on funding business initiatives rather than tying up investment in under-utilized capital equipment.

4. Increased adoption of ‘Industry Cloud Platforms’

As the financial sector becomes more complex and specialised, there’s a growing need for sector-specific solutions. Industry Cloud Platforms are cloud computing platforms tailored to a particular industry’s needs and requirements. Unlike generic cloud platforms that offer a broad range of services applicable to various business sectors, industry cloud platforms are designed to address the unique challenges, regulations, and processes within a specific vertical.

These platforms aim to provide industry-specific solutions, applications, and services that leverage the benefits of cloud computing. For example, cloud platforms tailored to the finance industry can include tools that specifically manage financial services data to improve customer experience and enhance efficiency.

5. The rise of the low code ecosystem

Low code tools are essentially business productivity tools that enable people to create technical solutions to solve problems. It is a way of developing solutions and applications that use pre-built software modules, so employees don’t need coding skills or IT expertise to be able to build the software that they need.

Low code will enable more businesses in the financial sector, not just techies or developers, to use its simple modular building techniques to solve a range of problems. But it’s important not to fall into the trap of thinking low code is ‘just to make apps’.

Managers should make sure that when implementing low code they think about how it could be used throughout the business, from speeding up bank account registrations to monitoring loan applications. If they do this effectively, organisations in the finance sector can take advantage of tech democratisation and digital adoption, to boost competitiveness with larger organisations than they ever have been before. We can see this with the rise of disruptive, digital-only banks such as Monzo, which have massively levelled the playing field when it comes to competing with larger organisations.

What to expect in this year

This year will see rapid development and transformation of the tech that dominated 2023. Understanding advancements in technology should be a top priority for managers operating within financial services to remain competitive and stay ahead of the curve.

There are immense opportunities for businesses to improve their performance this year by embracing exciting technological changes. Partnering with a trusted technology provider will only reinforce these benefits, guiding business decision-makers on the right path for positive and effective technological adoption in 2024.

Originally published in Business Express.