How Is Q2 2024 Expected to Pan Out for the Banking, Financial Services, and Insurance (BFSI) Domain?

The BFSI domain refers to the banking, financial services, and insurance sector and comprises commercial banks, non-banking financial corporations, mutual funds, cooperatives, and other financial entities. The BFSI domain has been one of the few sectors in the global economy that have shown resilience even during the pandemic-induced recession. The increasing adoption of digital solutions for payment, lending, and other financial services is a major reason behind the strength of this domain. Furthermore, the domain has shown an incredible ability to evolve according to the changing needs of the global population; even and in the second quarter of 2024, certain trends are expected to influence the domain and help it reach new heights.

Promoting environmental sustainability by financing green and eco-friendly initiatives

Since the Paris Agreement on Climate Change 2015, the focus on environmental sustainability has increased. Almost all end-use industries are gradually enhancingtheir operation to make them more eco-friendly. Also, several companies are consciously making efforts to launch sustainable products and invest in projects that have minimal impact on the environment. At the same time, the BFSI domain, too, is actively supporting the battle against global warming and climate change by financing green and eco-friendly initiatives. Due to these efforts by investment banks and multilateral financial institutions, the sustainable finance market and the BFSI domain, in general, are expected to witness huge growth in Q2 2024.

Enhancing efficiency and customer satisfaction by employing Generative AI

Generative AI typically refers to the use of Artificial Intelligence to generate different types of content including text, video, images, and audio. In the past few years, various banks and financial institutions have been adopting AI-based tools and technologies to enhance their operational efficiency, while at the same time, improving customer satisfaction metrics. These AI-based tools offer services such as predictive analysis, personalized customer care, risk assessment, portfolio management, and even fraud detection. The adoption of Generative AI in insurance and associated services for speeding up the claims processes is one of the best use cases of AI-based tools in the BFSI domain.

Incorporating Virtual Reality technologies to strengthen customer loyalty

The BFSI domain is a highly dynamic one with several non-banking financial institutions and investment banks competing for dominance. To secure a lead over their peers, these institutions are adopting certain advanced technologies that will help them cater to the demands of their customers in a much better way. One such example is the launch of virtual reality (VR) collaboration platforms by several banking institutions for delivering different services and connecting with customers seamlessly. Similarly, the launch of banking wearable devices such as smartwatches and Bluetooth headsets to provide real-time transaction updates and information on other services is also predicted to boost the growth rate of the BFSI domain in Q2 2024.

The rise of digital and cryptocurrencies transformed the BFSI domain completely

Traditionally, the central bank of a country has been given the sole authority to print currencies and issue legal tenders. Thus, by issuing currencies and legal tenders, a central bank dictates monetary policies through the financial institutions operating in the country. However, the advent of cryptocurrencies has completely changed this system. These currencies use blockchain technology and hence are decentralized, i.e., there is no central authority that issues them. As the popularity and use of cryptocurrencies have increased in the past few years, several countries are bringing in legislation and laws to regulate the use of these currencies. Many governments have even allowed banks to establish crypto ATMs and launch crypto payment gateways to facilitate easy transactions. These trends are projected to reshape the BFSI domain in the coming period.

Technological advancements like open banking open new avenues of growth in the domain

Open banking refers to a model that allows banks and financial institutions to share their customers’ financial data through application programming interfaces (APIs) with third-party service providers. The growing demand for transparency and accountability is expected to help the open banking market flourish in the coming period. Since this new model of banking allows customers to take control of their financial data, many people are opting for specifically those financial institutions that offer this advanced banking option. Due to this factor, the open banking industry is estimated to gather a revenue of $123.7 billion by 2031 with a CAGR of 22.3% in the 2022-2031 period.

To sum it up, the BFSI domain is predicted to undergo huge changes in the second quarter of 2024. The increasing penetration of the Internet and smart devices like mobile phones, laptops, and tablets has led to an intense rise in the pace of digitalization of financial services. Furthermore, the gradual shift toward investments in green initiatives and the adoption of emerging technologies such as Artificial Intelligence is anticipated to expand the scope of this sector in the years to come.

For more tips and recommendations on how businesses can establish their dominance in the BFSI domain, feel free to contact us.

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