Digital Transformation in Banking 2024: Trends, Challenges, and Strategies

The challenges faced by the banking sector in 2024 mean that digital transformation priorities, and efficiency of execution, can be the difference between winning and losing in an increasingly competitive sector. 

From the daily stand-up to code review best practices, software development processes must continue to adapt to unlock the potential of new technology, and address its inherent challenges.

This article will look at key trends and challenges in banking which digital transformation must address in 2024. It will also suggest the strategic approach CIOs and other leaders can take to manage developments in tech, a turbulent economy, and changing consumer habits. 

The Economy

Deloitte reports that the world’s most advanced economies (the U.S., U.K., Japan and the Euro area) are expected to experience minimal growth in 2024, estimated at just 1.4%. 

The stagnant growth faced by banks in more established markets, alongside increased competition from institutions in more buoyant economies, mean an ongoing emphasis on cost efficiency as a competitive advantage.

For engineering teams, this means that 2024 is the year for a full audit of their software estate and their development processes (and just how much it all costs) to identify exactly which costs can be justified.
This cannot be achieved without the right tools. Banks must consider investment in analytics solutions capable of forming their vast datasets into insights that can be shared easily across teams and acted upon as a strategic priority.

Engineering leaders should embrace tools for objective and automated code review, and especially those providing data-driven insights into cost-efficiency, such as BlueOptima’s Developer Analytics platform. 

The Digital Transformation of the Customer

In 2024, digital transformation applies to consumer habits just as much as to enterprise organisations.
Customers have more options and no longer feel obligated to keep all of their banking activities under one roof. Digital payment, mobile wallets, and alternative financing options, are rapidly changing the way customers manage their money.

Fintech Magazine’s article emphasises how Millennials and Gen Z expect an immersive and interactive technology. As these demographics grow their wealth and disposable income, ‘it’s obvious that to stay competitive every bank will need to set a higher CX bar.”

CIOs and other leaders must work closely with Product and User Experience teams to ensure a quality experience for the end user is delivered, measured, and constantly improved.
Engineering progress must be measured by more than just output metrics like the count of story points as a measure of velocity amongst developers.

Leadership should optimise for code quality and therefore Product and UX quality, through a more holistic use of productivity and quality metrics in their code reviews.

Data, Generative AI and Cyber Security   

2024 is seeing the continued march of generative AI technology into the banking sector. Accenture projects that efficiencies gained from AI could lead to an organisational productivity uptick of 20 to 30 percent, as well as revenue increases by as much as 6 percent. If left unchecked, however, AI provides the same efficiencies to bad actors.

When sensitive personal and financial data is involved, effective code review protocol goes quickly from a quality control issue, to a security one. KPMG’s report on Banking Trends in 2024 indicates risk and regulatory concerns associated with data breaches has led banking to be slower than other sectors in AI adoption.

Banks should seek to weaponize AI against security threats, rather than falling victim to them.
Fortunately, tools like BlueOptima’s Secrets Detection, are available to continuously monitor codebases for sensitive information such as passwords, tokens and API keys. Security-minded IT leaders can review more key factors to consider when using generative AI here. 

Conclusion

In 2024, banks continue to face a turbulent global economy, fierce competition, and changing consumer behaviour.
Developments in AI technology will continue to accelerate, bringing new challenges in the management of data and cybersecurity risk, but also a profound opportunity to unlock more value through automation, and data-driven insights.

In the face of these challenges, CIOs will continue to prioritise budget-driven quality in software development. Tools like BlueOptima’s Developer Analytics and Code Insights can be utilised to continuously assess code review best practices and identify vulnerabilities, and so safeguard against potentially disastrous cybersecurity threats.

Much of this burden will fall on developers, so CIOs and other leaders must deliver a digital transformation strategy that provides them with a roadmap to success, and the tools to get there on time and on budget.