AI and Generative AI solutions will proliferate
The proliferation of AI and Generative AI solutions is one of the most significant trends in 2024. At the heart of this recent GenAI explosion are large language models (LLMs). Still, it’s important to note the rapidly growing ecosystem of other technologies and tools needed to build complex AI-based solutions. These technologies are vital in providing new ways for payments companies to innovate and grow by enhancing their capabilities.
Advanced AI will continue to offer payments companies new ways to innovate and grow by increasing capabilities. ’Graph databases’, which store complex data structures (most commonly used for social networks), and which are very powerful when combined with Generative AI (GenAI), will come to the fore. Likewise, ‘vector databases’ which store, manage and index massive quantities of high-dimensional vector data efficiently, are garnering significant interest for their potential to create additional value for GenAI use cases and applications. According to Gartner, by 2026, more than 30% of enterprises will have adopted vector databases to ground their foundation models with relevant business data.
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The biggest benefits for businesses in all sectors will likely come from mass adoption of simple tools like ChatGPT and Microsoft Copilot-like assistants that work alongside popular Microsoft 365 apps like Word, Excel, PowerPoint, Outlook and Teams, to provide real-time intelligent assistance, enabling employees and users to enhance their creativity, productivity and skills. This could help automate processes around verification and minimise repetitive requests for information common in today’s payment systems.
But, as the use of AI proliferates, so too do fears about data safety, privacy and bias particularly within banking and payments. Generative AI can be used for nefarious purposes, creating huge volumes of spamming and phishing material. Fake requests for payments might seem eerily plausible as scammers pull on natural language networks to sound nearly indistinguishable from real actors. To allay these fears and develop safe, accountable AI solutions, effective governance is essential.
Application modernisation: Bridging business objectives with tech transformation
Organisations and banks globally face challenges with their legacy systems that can impede their ability to be agile and innovative. Gartner’s 2023 CIO and Technology Executive Survey indicates that midsized and high-tech organisations will increase their spending on application modernisation by over 40% – making it among their top priorities this coming year.
Application modernisation cannot be delivered by executing it only as a technical initiative, for instance, rehosting (“lift-and-shift”) an application to the cloud. It’s vital to have a thorough understanding of the underlying business drivers pushing for modernisation. These drivers include improving agility, stability, scalability, providing new user experiences, enhancing security, and cost reduction.
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By GlobalDataThese concerns are particularly acute in payments, where the demands of complying with open banking and pressure from consumers to provide real-time solutions mean firms need to be able to deliver innovation fast and at scale or risk being crowded out of a rapidly evolving market.
Platform engineering and the hybrid cloud
Product-centric platform engineering is emerging to help improve the developer experience. Gartner predicts that “By 2026, 80% of large software engineering organisations will establish platform engineering teams as internal providers of reusable services, components and tools for application delivery. Platform engineering will ultimately solve the central problem of cooperation between software developers and operators.” Governance will therefore need to digitise to keep pace with this emergence as hybrid models take hold.
Bespoke hybrid solutions allow businesses to use versatile setups based on their specific requirements; hybrid cloud platforms typically reduce costs, minimise risk, and support digital transformation. Since they are the engine enabling other innovation, it is important companies are engineered to support this model.
Data & analytics
Firms can unlock data from existing silos to create insights through analytics, something that is particularly acute in the data-rich payments industry.
A trending approach for this is ‘Data fabric’ – an architectural concept to facilitate the end-to-end integration of various data pipelines and cloud environments using intelligent automation. This makes data more flexible, scalable and enables more varied use cases – allowing data assets to be mapped out and recycled.
There is a new generation of analytic ‘data products’ optimised for quality, consumption and integration, and made available to internal data analysts. This requires as much focus on organisational and governance functions as it does on technical enablement. The creation of internal data marketplaces (which can be accessible either internal and/or external) requires the automation of key ‘data operations’ activities – so we will see a drive towards knowledge graphs, data observability, data contracts and active metadata as enablers for this.
For businesses looking to exploit AI effectively, clean, quality data – both from customers and other sources – will be required to improve efficiency and quality insight.
New technologies drive greater inclusion
Modern card issuing should be the catalyst for a digital-first approach in 2024. It’s predicted that the number of payment cards issued via digital platforms will reach 1.3 billion annually by 2027, up from just 500 million in 2023. Meanwhile, global wallets will drive a cashless society with the total value of digital wallets transactions rising from $9trn in 2023 to surpass $16trn in 2028, an increase of 77%.
The rise of Central Bank Digital Currency (CBDC) will enable greater financial inclusion in 2024. 130 countries, representing 98% of global GDP, are reportedly exploring a CBDC. Open Banking, Open Finance and Open Data initiatives are further expanding financial accessibility, with Global Open Banking payments transaction values expected to exceed $330bn globally by 2027, up from $57bn in 2023.
Conclusion
This is not a comprehensive list, and certainly as with generative AI last year, new trends will emerge from unexpected places. As always, it’s important that firms of all sizes consider which technology solutions will best serve the needs of their customers, while helping them to grow their business, achieve efficiencies and look confidently into the future.
David Sewell is CTO of Synechron
