Deloitte 2024 Financial Services Industry Predictions: AI Expected to Transform Retail Investing, Increase Banking Fraud and Drive New Insurance Market; Climate Change Expected to Further Increase Insurance Costs for Commercial Real Estate
Deloitte's 2024 Financial Services Industry Predictions reports highlight trends that have the potential to impact innovation and growth as well as risk and resiliency
"The seismic shifts we will see in financial services as a result of emerging technology and innovation will likely be transformative and provide new opportunities for growth," said
Highlights of Deloitte's 2024 Financial Services Industry Predictions include:
Retail investors may soon rely on Generative AI for financial investment advice: Deloitte predicts GenAI-enabled applications will likely become the leader in advice mind-space for retail investors, growing from its current nascent stage to 78% usage in 2028 and could become the leading source of retail investment advice by 2027i.
Generative AI expected to magnify the risk of deepfakes and other fraud in banking: Hyper-realistic fake content has never been easier to create—or harder to catch. As threats grow, banks should invest in AI and other technologies to help detect fraud and prevent losses. Deloitte predicts GenAI could enable fraud losses to reach
Providing insurance coverage for AI may be a blue ocean opportunity: Regulatory guidance, large losses and market demand may drive the need for AI insurance, and some insurers and insurtech startups are already developing products in this space. While the opportunity is massive, insurers will likely also face difficulties in assessing and pricing the complex and evolving risks of AI. Deloitte predicts that by 2032, insurers can potentially write
Climate change to increase US commercial real estate insurance costs: The links between climate change, extreme weather and insurance costs will likely remain for the foreseeable future. Deloitte predicts that the average monthly cost of insurance for a commercial building in the US could increase from
Climate change and homeowners' insurance: Similarly, climate change and severe weather events are also dramatically affecting the profitability and sustainability of the US homeowners' insurance sector. Deloitte predicts that if insurers, in partnership with government agencies and policyholders, invest
Additional trends included in the report that are expected to shape the financial services industry:
In-app payments expected to take social commerce to the next level: Social media platforms are transforming into the new "storefronts" for consumers, who can discover and buy products within the apps. Deloitte predicts that in-app payments on social media sites could grow at a compound annual growth rate of about 30% from
US real estate industry workforce faces a retirement cliff: Compared to other financial services and commercial industries, there is an impending retirement cliff in the US real estate industry, which could create a leadership gap and a loss of institutional knowledge. Deloitte predicts that 59% of existing CRE executive leaders, or around 761,000 people, will reach the age of retirement over the next 10 yearsvi.
AI can accelerate the portfolio valuation process: AI can help private investment firms increase the frequency and transparency of their portfolio valuations and attract more retail investors. There will be benefits and challenges of using AI for portfolio valuations, such as mitigating the denominator effect, satisfying limited partners' information needs and complying with regulatory requirements. Deloitte predicts as many as 25% of private equity firms will be using AI to augment their portfolio valuationsvii.
"As financial services firms face an ever-changing landscape, they should think about what's on the horizon," said
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Deloitte provides industry-leading audit, consulting, tax and advisory services to many of the world's most admired brands, including nearly 90% of the Fortune 500® and more than 8,500
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a
i Sources:
ii Sources: IC3 and
iii Sources: IC3 and
iv The Deloitte Center for Financial Services' forecast bases weather-related insured losses on Swiss Re's growth rate estimates. Our analysis also factors in research from the
v Sources:
vi Real estate leadership age data was collected from BoardEx and includes individual leader information from public and private real estate companies across
vii Source:
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SOURCE Deloitte
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