Technology trends in finance in 2024

2023 has been very rich in news in the world of technology and also in the transformation of players in the financial sector.

5 major trends arise for 2024:

The potential of generative Artificial Intelligence for companies in the financial sector

ChatGPT has just celebrated its first birthday. Highly hyped in the media, this tool has put Artificial Intelligence (AI), and in particular generative AI, back on the agenda for organisations. Generative AI was the most talked-about topic at the World Economic Forum, with Bill Gates citing it as the best productivity tool in any sector.

In 2023, financial institutions focused on challenges especially regarding data leakage and infrastructures, and cognitive biases through targeted use cases. According to McKinsey, generative AI could have a significant impact on the banking sector, boosting productivity by between 2.8% and 4.7% of annual turnover, representing an additional gain of between $200 billion and $340 billion¹.

Banks will continue their transformation, making full use of their data to offer a better client experience, to optimize their risk and fraud management, and to automate most repetitive tasks. AI will become employees' best companion, enabling them to concentrate on value-added tasks.

Tokenizing the world

By 2023, tokenisation has taken off across a wide range of products, from bonds and investment funds to fewer liquid products such as real estate and private equity.

The world's largest financial institutions have matured on questions related to tokenisation, and market infrastructures are evolving in step with their achievements. It is in this context that the leading custodians will be able to offer digital custody. Financial institutions anticipate that 2024 will be a year in which the number of achievements will grow along with the increasing liquidity needed. This will be an opportunity to seize the opportunities offered by the pilot scheme in Europe.

Crypto and beyond

The crypto world has suffered several setbacks since November 2022. Crypto winter was a period that saw the bankruptcy of platforms such as FTX and the fall of stablecoin Terra Luna to name a few.

Nevertheless, crypto prices took off in 2023, with capitalisation up 80%², particularly following the announcement of crypto spot ETFs validated by the Securities and Exchange Commission (SEC) on 11 January 2024. Asset management giants such as Blackrock and Fidelity are leading the way.

With MiCa³ regulations coming into force this year, Europe has a real competitive advantage. The launch of a digital Euro, both wholesale and retail, is also on the agenda of the European Central Bank. Experiments in tokenisation of assets using a central bank digital currency are planned for the second part of 2024.

All these factors argue in favour of the continued institutionalisation of the crypto world but also digital assets for settlement and delivery.

Protecting assets in a digital and resilient world

The recent development of ChatGPT and artificial intelligence has helped to fuel the creativity of hackers.

For 2024, cybersecurity must be built by design, taking ethical factors into account. The Data Act that has just been adopted in Europe should reinforce this factor and make it a priority. Investment will be the key to success.

Alongside this growing risk, it is the resilience of organisations that will be topical, particularly with DORA (Digital Operational Resilience Act)⁴. The regulation will apply to all 27 members of the EU on 17 January 2025, but preparations are being made now.

Towards a better, greener world

Driven by growing urgency, client demand and the introduction of new regulations, such as the European Sustainable Finance Disclosure Regulation (SFDR) and the Corporate Sustainability Reporting Directive (CSRD), financial institutions are increasingly focusing on ESG issues.

As Arnaud Jacquemin, Head of Societe Generale Securities Services, explains: 

In the face of ESG⁵ challenges, the banking sector is called upon to play a central, responsible role in accompanying and supporting a more resilient economy.

New technologies, particularly on the data side, will accelerate this movement and contribute to organisations positioning themselves in new niches. It is therefore a potential source of innovation for asset servicers. The pairing of Artificial Intelligence and Blockchain has a bright future in this business segment.

Grasping change

Technology is only a means to an end. It is the combination of technology with our ability to grasp change that will drive innovation and tomorrow's future business models. The human being is at the heart of this process, as an agent of change to facilitate adoption. At SGSSLuxembourg, we have developed artificial intelligence initiatives to automatically read our prospectuses or detect atypical cash flows. 2024 will be a year rich in innovation if, and only if, we have the capacity and conviction to change. It is up to us to work together to create a better, more responsible world.

Laurent Marochini
Head of Innovation at Societe Generale Securities Services Luxembourg