3 Big 2024 Predictions for Financial Institutions

Financial institutions face an evolving landscape in 2024. From emerging technologies to shifting regulations, banks and credit unions must adapt to new challenges. Here are three key predictions financial institutions should prepare for.

PCI COMPLIANCE FORCES ATM EVALUATIONS

Payment Card Industry (PCI) compliance standards continue to be updated, with a big keypad and software change taking effect on January 1, 2025. It’s estimated that 50% of ATMs currently in operation fall short of meeting upgraded PCI regulations – requiring anything from basic software and keypad updates to a complete equipment swap. The pressure to upgrade to meet security and compliance standards will have many financial institutions reevaluating their ATM fleets in 2024.

Banks and credit unions have three options: upgrade ATM hardware and software to achieve compliance, reduce or eliminate their fleets, or outsource ATMs to a reputable provider. Upgrades require significant capital expenditures on machines that are often already nearing end-of-life. Eliminating ATMs hurts banks and credit union’s ability to provide account holders with the convenience and service they have come to expect. 

However, partnering with a reliable ATM outsourcing provider solves these challenges. Independent ATM outsourcing providers, like Paramount, can take liability and responsibility for managing upgrades, security, cash loading, and maintenance across an institution’s entire fleet. This resolves PCI and other compliance issues without the capital expenses all while retaining account holder access to cash.

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LOWER INTEREST RATES IMPACT OPERATIONS

With inflation slowing, many experts predict interest rates will start to trend downward in 2024. But the outlook is not all rainbows. Lower rates will force banks and credit unions to make some important decisions when it comes to product offerings and account holder retention.

Lower rates may have the benefit of allowing financial institutions to attract new customers through cheaper loans. However, moderately increased loan demand may not offset reduced interest income. As a result, financial institutions will need to evaluate their lending practices and portfolio balances to adapt.

At the same time, consumers may move deposits to competitors with higher rates. This could pressure banks to keep rates elevated, which compresses net interest margins. Financial institutions must find the right balance between loan generation and deposit products.

ARTIFICIAL INTELLIGENCE RESHAPES OPERATIONS

Artificial intelligence (AI) will continue advancing within banking in 2024. AI applications include predictive analytics, fraud detection, customer service chatbots, options to communicate with account holders more effectively, and more. Properly implemented AI can reduce costs, boost staff efficiency, and enhance account holder experiences.

However, financial institutions must be cautious in adopting AI programs, especially those that integrate with their core system. Risks around data privacy, security vulnerabilities, and algorithmic bias exist. Banks and credit unions should fully evaluate AI systems before deployment. A deliberate approach ensures AI technology achieves its potential while minimizing dangers.

THE ROAD AHEAD

While challenges await in 2024, preparation empowers financial institutions to find success. Evaluating ATM fleets, interest rate strategies, and new technologies now will enable banks and credit unions to navigate evolving landscapes. With proactive planning, financial institutions can meet the opportunities and obstacles ahead and leverage 2024 as a steppingstone for future success.