Original text here from Patrice Bernard (LinkedIn)
Forrester's predictions for 2024 paint a somewhat somber picture of the banking industry, suggesting no major revolutions in the short term. This sentiment is tied to a lack of ambitious strategies among both established players, often too focused on cost-cutting, and newcomers. However, some potentially significant disruptions loom on the horizon.
Firstly, generative AI, despite its widespread media attention, poses risks for financial institutions. While currently in experimental phases, Forrester anticipates that it could lead to serious issues for ten institutions, particularly due to employees or partners circumventing existing rules. Potential violations could include copyright infringement, misuse of personal data, or introducing biases. Beyond the immediate embarrassment for the implicated firms, these incidents might have a lasting, negative impact on the industry's attitude towards technology, possibly stalling projects and missing out on extraordinary opportunities.
Secondly, the analysts focus on the mobility of deposits. As interest rates rise, triggering tactics to attract deposits (like enticing promotions), customers are becoming more opportunistic, aided by the ease of transfers through open banking mechanisms. Banks must consequently demonstrate their value anew in an increasingly diverse market.
Lastly, Forrester highlights the trend of niche offerings. Initially appearing a decade ago, often in the form of neo-banks, these services cater to specific demographic groups (like influencers or expatriates) or particular life circumstances (such as bereavement). While the concept is sound, a spate of closures or acquisitions due to unsustainable business models might dampen isolated ambitions. However, this idea could be adopted by larger players looking to offer personalized solutions to similar targets. While Forrester envisions historic big groups taking this on, I am more skeptical about their ability to demonstrate necessary agility. Instead, I foresee the rise of a "meta-niche" concept, where providers use a generic base to easily create specialized packages.
Overall, Forrester’s three predictions offer a vision that’s more intriguing than the analysts suggest. Each prediction has the potential to challenge the legitimacy of traditional industry players in the future landscape, especially if new competitors, emerging from various sectors, capitalize on these opportunities.
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