What to expect in financial services in 2024 with i2c’s Serena Smith

In today’s episode, we dive into the dynamic world of financial institutions and their strategies for the year 2024. I’m thrilled to have had the opportunity to sit down with Serena Smith, Chief Client Officer at i2c, whose next-gen platform empowers financial institutions and fintechs of all sizes with no-code building block technology.

Throughout our conversation, Serena shared insights garnered from her extensive experience and global perspective in the industry. From navigating the challenges faced by fintechs to addressing legacy technology obstacles within traditional banking, we explore the ever-evolving landscape of financial services.

Serena’s expertise sheds light on the trends shaping 2024, including the significance of real-time payments, the role of AI in financial services, and the critical need to meet the expectations of younger, digitally native generations like Gen Z and Gen Alpha.

We also unpack i2c’s innovative approach with a unified tech stack, empowering financial institutions to streamline their services across diverse geographies.

Check out i2c’s recent report on how younger customers make credit decisions. Download it here.

Join us as we delve into the opportunities, challenges, and transformative potential that lie ahead for financial institutions in the fast-paced world of 2024.

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The following excerpts were edited for clarity.

2024 trends and challenges: Fintechs, banks, and new technologies

When I think about the client base and challenges that they have, one, I think still coming out of the challenges of 2023 is fintechs. A lot of the money’s dried up from the fintech perspective, a lot of trying to find profitability. I think that will continue as we start 2024.

From an FI space, banks will continue to look at their own tech stacks to determine what they need to do to continue to stay relevant in the markets, especially as the younger generations keep getting older, and they’re looking to consume more and more of the products. As these new technologies continue to roll out, everyone is trying to figure out the best use cases and how to really take advantage of them.

Banks’ tech stacks and real-time customer view

Especially the larger banks, as they built up, they have different tech stacks, different vendors — it’s just a very diverse product stack that exists within these banks and all for various and good reasons why they built it that way. But that’s been years and years of progress that’s happened. And so in a lot of cases, you have banks that have been trying to figure out how do I look across and pull all of that data together to truly get that customer 360 view — so that you can personalize the services that you’re providing.

And quite frankly, I don’t think any of them have figured it out. And as we think about data, banks are so rich with data and they have so much data that exists within their various products that part of the difficulty is what do you pull out? Part of the challenge is how you put that into a consumable data repository that is then valuable and accessible for you so that you truly can see what’s happening.

The other key part of this is, how do you do it in real-time? What’s happened from a social media perspective, and as Gen Z and Gen Alpha get older, that personalization, that need for real-time immediacy of those products becomes even more and more important. We’ve been talking about this for a long time, but I don’t think we’ve completely cracked the nut yet on how we actually pull all that together.

I think with the advent of AI, and that becoming more and more prevalent in this space, and being more acceptable to be utilized, I think we’re going to start seeing some changes around how that’s able to be pulled together. But I still think we have a lot of work to do.

Point solutions vs. big changes

For a lot of the folks that have been doing this for a long time, the first thing that comes to mind is I have to go rip out and replace, and I have to go find a brand new vendor to do this. I think those days are gone. I think now it’s more of a conscious decision of looking at what you have, and how you augment this technology in order to provide those services that you really need to provide to that consumer base. Or how do I pull out what I need in order to provide that functionality or that feature?

I don’t think that banks necessarily need to rip out their core. I think, over time, the cores are going to just become more of a ledger versus more of that complete function — that heart and lung of the bank. And as you put these point solutions on top of them, you’re still able to provide those services.

Real-time payments: Use cases and strategic considerations

It all started with Zelle. When we think about Zelle, it was really real-time presentment, not real-time posting. So when you think about real-time payments, and you think about FedNow, I think about real-time posting and the actual immediate movement of that money. The thing that comes to mind for me, as we continue to evolve, is what are the use cases for those real-time payments?

One of the use cases, for example, that we talk about quite a bit is about small businesses. They need to purchase supplies for whatever project they’re on or for whatever service they’re providing. So my husband does construction, and a lot of times he’ll have to go to the lumber yard, and he’ll have to make a purchase in real time for lumber. I think that’s a great use case for real-time payments. In fact, there are particularly large purchases of supplies for a small business that needs to purchase those in real time because then the lumberyard knows that they’ve got paid in real-time.

Think about gig workers and you think about those real-time payments that need to come from that or you think the Uber drivers of the world. As I think about financial institutions, one of the things that I always question is who do you want to service? And what services are you interested in providing? They’re all going to be a little bit different depending on the use case their consumer base is looking for.

I think real-time payments can make a lot of sense. It’s really a matter of how FIs want to present that to their customer base.

i2c’s unified tech stack

I’ve grown up in this space. I’ve worked with banks and servicing banks my entire career. And I will tell you, the thing that I get most excited about, as I think about it, is the tech stack that we built here at i2c. It truly is a single tech stack that has the capability to offer all of your card issuing services, whether that’s credit, debit, or prepaid, along with all of the service components that go around that like fraud, chargebacks, and all of those. There’s also a core banking component that’s built into that tech stack.

When you think about having all of that within a tech stack, think about the ability that you have to consume all of that information about those consumers in the same tech stack. We talked a bit about big banks and the dispersed systems that they have for all of their different products, whether that’s credit, mortgages, loans, or debit. Having that all together in a single tech stack, not only do you have the data that’s sitting within that same tech stack, where you can offer those personalized, real-time use cases and services to clients, but you also have the ability to offer new products. Think about a customer who may be applying for an unsecured credit card, and they don’t necessarily get approved for that. You may approve them for a secured credit card. So within that same tech stack, you can actually offer them multiple products, and you don’t have to go to a different tech stack in order to service them — that all can be done within that same tech stack.

The other thing that I find so exciting about i2c is the ability to move around the globe with our customers. We have customers today who are in over 200 different territories and countries throughout the world on the same tech stack. What that means is their customer, no matter where they are in the world, is going to transact, and it’s all going to look the same. And from a client perspective, the reporting is all going to look the same. So the feature functionalities are the same, all of that is the same. Previously, depending on which tech stack you chose, each country would depend on the feature functionality offered there and the reporting looked different. But today, we can move around the globe with you.

AI’s role in financial services

I think everything that we do going forward has to have AI, at least as part of the conversation. We need to be talking about how we can use AI to provide some function of the service, or if there is a capability that we can add AI to be a part of that.

For example, we’re using AI quite extensively in our fraud capabilities as we look at how we continue to get ahead of fraudsters because we’ve been talking about it for years, they’re not getting dumber — they get smarter every single year. We’ve got to get smarter and get ahead of them. And so we all are employing AI technology to continue to enhance our fraud capabilities and our fraud rules.

As we think about new feature functionality, we’ve got to do that by always asking ourselves the question, does AI make sense in this capability? Is it something that we can utilize? When we talk about data, I think AI has a lot of potential to allow us to utilize the data and create personalized services. Gen Alpha came around 2010. That was when the iPad was launched and Instagram started. Even today, as I watch my grandkids play with my phone or with the iPad, they have zero tolerance for ads. Everything’s immediate. They get frustrated if something takes too long to load. And so when you think about the expectations that have continued to grow, as we look at different generations, Gen Alpha is going to throw us for a loop as well.

We already need to be thinking about how we are going to serve this generation because there is going to be no loyalty or patience. There is going to be this expectation that things will be personalized for them and that they can have immediate access to stuff. And so we’ve got to build that now in anticipation because we’re going to blink and they’re going to be the next consumer who is shopping or transacting or opening up a bank account.