Welcome to the Jan. issue of NEACH’s Innovating Payments Executive Summary. In this issue, we highlight predictions and trends for 2024 across the spectrum, from cybersecurity trends to watch in 2024 to a community banker's CEO roundtable looking at the year ahead and an expected surge in buy now, pay later over the next 12 months. Also, in this month’s issue, generative artificial intelligence (AI) is gaining traction in the financial services industry—but it is not without risks.
Finally, learn about NEACH U, a certificate program designed to help financial professionals take their careers to the next level. And be sure not to miss NEACH's 2024 Industry Update to learn what to expect in the year ahead.
Read on to learn more.
2024 Predictions and Trends
Cybersecurity Trends to Watch in 2024
Cybersecurity is top of mind for every banker in the year ahead, so this is an important story. According to Bank Info Security, this information comes from a new report from CyberEd.io and questions posed to some of the industry's leading cybersecurity and privacy experts by Information Security Media Group about 10 top trends to watch for in 2024.
The top five, excerpted and adapted below, include:
1. Cybercriminals will use advanced ransomware tactics, AI, and deepfakes to enhance their targeting capabilities.
2. Organizations will embrace human risk management and monitor employee behavior and interactions with security products.
3. Hackers will target remote work infrastructure and exploit vulnerabilities in VPNs, cloud services, and RDPs.
4. Cyberattacks against third-party suppliers and software vendors will intensify.
5. Cyberattacks on critical infrastructures will increase, requiring enhanced defenses.
For more on this trend, visit Bank Info Security.
CEO Roundtable 2024: The Year Ahead
This month’s issue of the Independent Banker Magazine features a CEO roundtable article focused on the challenges and opportunities for the year ahead. Four highly regarded community bank CEOs offer their insights and perspectives for the year ahead.
Here are a few highlights from how CEOs responded when asked what their community bank’s most significant challenges and opportunities would be in 2024:
· Managing the net interest margin.
· Managing increased funding costs.
· Repositioning balance sheets while anticipating areas of increased risk.
· Gathering deposits and the current rate environment.
When asked about their most critical business goal for 2024, their answers varied, ranging from balancing loan and deposit growth to succeeding in difficult economic times with increased industry consolidation to improving the employee experience and expanding into new markets.
Also top of mind for these CEOs is artificial intelligence (AI). As noted in the article, “We are also seeing a real interest in AI and what it might look like on a practical level for community bankers. Some CEOs are educating themselves about AI, while others are exploring new technologies to harness its power. All are looking to its potential benefits while finding ways to minimize its risks.”
To read the article in its entirety, visit the IndependentBanker.org.
Buy Now, Pay Later (BNPL) to Surge in 2024
“In 2024, BNPL is going to be increasingly on consumers’ radars and a payment option they expect from all financial institutions and merchants,” Jacqueline White, president of i2c, told Karen Webster during the latest “At the Edge” conversation for PYMNTS.com. “It’s never been more important for people to be able to hang onto their cash, as more consumers are looking to use BNPL to pay for the necessities of life … all the way around to fun things like travel and entertainment,” she said.
Currently, much of the BNPL space is dominated by non-financial service providers. But increasing customer demand for these short-term loans may provide new opportunities for financial institutions in 2024, especially those wanting to cater to younger consumers’ preferences, says The Financial Brand. However, financial institutions should pursue BNPL purposefully and strategically to limit risk and avoid credit issues.
Trendlines to Watch in 2024—Industry Executives Weigh In
PYMNTS asked industry executives across the payments and digital commerce landscape to give their take on the pivotal shifts, technological advancements, and strategies that shaped businesses in 2023 and the trends to watch in 2024. Their responses, compiled in an eBook, “offer a comprehensive perspective on the emerging trends and pivotal strategies shaping the industry’s trajectory in the coming year,” says the publication.
Among their predicted trends:
· Payment modernization will accelerate faster in 2024.
· AI will fuel a tech resurgence going into 2024.
· Personalized digital financial experiences will grow in the year ahead.
· Instant payments will undergo a pivotal shift in 2024.
· Balancing innovation, regulation, and profitability will be critical in 2024.
To hear more from industry leaders about where they see the industry heading in 2024, download PYMNTS' new eBook here.
Artificial Intelligence (AI)
Financial Services Sector Harnesses Generative AI for Security and Service
According to PYMNTS' new Tracker, Banking on AI: Financial Services Sector Harnesses Generative AI for Security and Service, 83% of financial institution leaders are eyeing generative AI. In addition, 32% of financial professionals anticipate using AI to provide more personalized services to clients.
Highlights, as noted by PYMNTS, include:
- Generative AI is revolutionizing finance and banking, enhancing consumer interactions and risk models while introducing challenges like data security and systemic decision-making risks.
- The technology is significantly advancing banking as a service initiative and embedded finance, with applications ranging from personalized customer services to anti-money laundering programs.
- PYMNTS Intelligence examines the actions that regulators are taking to address risks associated with generative AI, particularly in areas of model explainability.
To download the Tracker, visit PYMNTS.com.
Companies Diversify AI Sources After OpenAI’s Management Upheaval
“Companies are reportedly diversifying their artificial intelligence sources after OpenAI’s period of management upheaval in November,” reported PYMNTS. The event highlighted the risk of over-reliance on one company's technology, prompting organizations to protect themselves from potential disruptions, as the Wall Street Journal(WSJ) noted in a Jan. 5 article (subscription required).
According to PYMNTS, Walmart held meetings with tech team members to underscore the importance of using the retailer's internal platform, which allowed the company to include various AI models, ensuring that its AI capabilities remain intact even if issues arise with a particular provider.
While AI is gaining ground among corporations and in the financial services sector, adopters should take steps to mitigate potential risks and understand the opportunities and challenges inherent in AI.
NEACH
NEACH’s 2024 Industry Update
Don’t miss NEACH’s 2024 Industry Update on Wednesday, Jan. 24, 2024, from 2 - 3 pm ET. A description of the event is below:
As the payments landscape continues to evolve, rules and regulations are always trying to play catch up. One person cannot stay current with all the changes and technologies available in the payments industry. The Federal Reserve Bank has launched the FedNow payment channel, and volumes in the RTP Network are increasing daily. While some of us are still trying to fully understand what faster payment option is right for our business model, the industry keeps moving forward. Fortunately, NEACH is in a position where they are at the forefront of many of these changes and are in the room when they are being discussed. Throughout the previous year, staff at NEACH have been compiling what is to come and what they hear may be coming to the payments industry. With the knowledge of why the changes are occurring and when to expect the changes, the NEACH staff can present the Industry Update in a manner that anyone can understand.
To register for this event, click here.
NEACH’s 2024 Look Ahead
The NEACH team is assembling a 2024 commentary that will post on NEACH’s Members’ Corner and Innovating Payments websites. Also included will be NEACH’s expectations for the year ahead. You won’t want to miss this!
Take Your Career to the Next Level with NEACH U
NEACH U offers 11 certificate programs spanning various facets of the payments industry. You’ll learn from the finest experts in the field, who impart their invaluable wisdom, experience, and network. Which means your journey doesn’t end in the classroom; it forges a lifelong connection to a community of payments professionals that makes your experience truly exceptional. Embrace an extensive array of subjects across all program levels and commence your journey towards obtaining your NEACH U certificate.
Click here to learn more.
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