Deloitte has released its “2024 Financial Services Industry Predictions,” which outlines some of the most significant emerging trends across the financial services industry over the next three to five years. Among the most significant trends, the report highlights the impact AI could have on transforming retail investing, enabling deepfakes and fraud in banking and driving new insurance offerings. Climate change is also predicted to continue to increase insurance costs for commercial real estate property owners and impact profitability of insurers.

“The seismic shifts we will see in financial services as a result of emerging technology and innovation will likely be transformative and provide new opportunities for growth,” said Jim Eckenrode, managing director, Deloitte Center for Financial Services, Deloitte Services LP. “At the same time, financial services organizations will face new risks and resiliency challenges, including market volatility, impact from climate change, talent gaps and new regulations, and organizations should plan now for what’s on the horizon.”

Highlights of Deloitte’s 2024 Financial Services Industry Predictions include:

Retail investors may soon rely on Generative AI for financial investment advice: Deloitte predicts GenAI-enabled applications will likely become the leader in advice mind-space for retail investors, growing from its current nascent stage to 78% usage in 2028 and could become the leading source of retail investment advice by 2027ⁱ. 

Generative AI expected to magnify the risk of deepfakes and other fraud in banking: Hyper-realistic fake content has never been easier to create—or harder to catch. As threats grow, banks should invest in AI and other technologies to help detect fraud and prevent losses. Deloitte predicts GenAI could enable fraud losses to reach $40 billion in the US by 2027, up from $12.3 billion in 2023ⁱⁱ.

Providing insurance coverage for AI may be a blue ocean opportunity: Regulatory guidance, large losses and market demand may drive the need for AI insurance, and some insurers and insurtech startups are already developing products in this space. While the opportunity is massive, insurers will likely also face difficulties in assessing and pricing the complex and evolving risks of AI. Deloitte predicts that by 2032, insurers can potentially write ~$4.7 billion in annual global AI insurance premiums, at a compounded annual growth rate of around 80%.

Climate change to increase commercial real estate insurance costs: The links between climate change, extreme weather and insurance costs will likely remain for the foreseeable future. Deloitte predicts that the average monthly cost of insurance for a commercial building in the US could increase from $2,726 per month in 2023 to $4,890 per month in 2030, at an 8.7% compound annual growth rateⁱⁱⁱ. For states with the greatest extreme weather risk, current monthly costs could more than double.

Climate change and homeowners’ insurance: Similarly, climate change and severe weather events are also dramatically affecting the profitability and sustainability of the US homeowners’ insurance sector. Deloitte predicts that if insurers, in partnership with government agencies and policyholders, invest $3.35 billion in residential dwelling resiliency measures, the two thirds of US homes that are not currently built to code could be made resistant enough to reduce many weather-related claims losses. These actions could, in fact, save insurers as much as $37 billion by 2030^iv.

Additional trends included in the report that are expected to shape the financial services industry:

In-app payments expected to take social commerce to the next level: Social media platforms are transforming into the new “storefronts” for consumers, who can discover and buy products within the apps. Deloitte predicts that in-app payments on social media sites could grow at a compound annual growth rate of about 30% from $19.1 billion in 2024 to $94.5 billion in 2030^v.

AI can accelerate the portfolio valuation process: AI can help private investment firms increase the frequency and transparency of their portfolio valuations and attract more retail investors. There will be benefits and challenges of using AI for portfolio valuations, such as mitigating the denominator effect, satisfying limited partners’ information needs and complying with regulatory requirements. Deloitte predicts as many as 25% of private equity firms will be using AI to augment their portfolio valuations^vii.

“As financial services firms face an ever-changing landscape, they should think about what’s on the horizon,” said Monica O’Reilly, Vice Chair, US Financial Services Industry Leader, Deloitte & Touche LLP. “Market pressures and emerging risks as well as new growth opportunities will shape business strategies, and financial services firms should prepare for that now.”

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Canara Bank has partnered with Kyndryl, the IT infrastructure service provider, to optimize the bank’s business services and operations and modernize its IT infrastructure. As Canara Bank’s IT partner, Kyndryl will augment the bank’s end-to-end IT operations and streamline services delivery across core banking, IT infrastructure, applications, and network operations.

Kyndryl’s solution will provide Canara Bank with an end-to-end view of its business services, risk mitigation using advanced capabilities and tools, and focus on services availability while enhancing observability and reliability. This is aimed at enhancing bank’s customer service experiences.

A unified digital IT services dashboard will provide a single pane of glass view of Canara Bank’s key performance indicators, tools dashboard, and knowledge repositories to the bank’s employees.  

K Satyanarayana Raju, MD & CEO, Canara Bank, said, “Our goal is to improve operational excellence, profitability, and scale to become the ‘Best Bank to Bank with’ in India. We are investing in enhancing our technology core, service and process frameworks, and delivery capabilities to provide state-of-the-art banking services to our customers. Kyndryl’s skills and expertise in building, operating, and managing critical technology for Indian banks will help us in building the future we’ve envisioned.”

Kyndryl will implement a set of advanced tools to create sophisticated preventive and predictive intelligence capabilities. This will help reduce incidents through auto-remediation, shorten maintenance timeframes, and improve application availability. The platform will be optimized to recognize and remediate IT failures and anomalies within the bank’s infrastructure and provide data-driven insights such as outage predictions that will boost the bank’s control over its mission-critical operations.

Lingraju Sawkar, President, Kyndryl India said, “We’re honored to be a trusted partner to Canara Bank. Our approach is focused on ensuring Canara Bank’s business continuity, mitigating risk, and enhancing the Bank’s key business performance indicators…”

IBM spinoff Kyndryl was reportedly competing with IBM to win this key deal from Canara Bank. 

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