Finastra’s annual survey reveals investors’ interest in AI, BaaS, and embedded finance

Finastra recently published its annual State of the Nation Survey, which revealed the biggest interests of the financial services sector. According to the global survey, the majority of investments are going into innovative, emerging technologies, including primarily artificial intelligence (AI), Banking-as-a-Service (BaaS), and embedded finance.

Details of the survey

The data for the survey came from 956 industry experts, and it was collected earlier this year, between August and September. The data allowed Finastra to gain insight from some of the biggest financial institutions across multiple nations, including Germany, France, the UK, Saudi Arabia, UAE, the US, Vietnam, Singapore, and Hong Kong.

The results revealed that 87% of participants were excited about the fast pace at which the changes have neem coming. 83% of participants were open to new opportunities that the emerging technologies can bring to their financial organizations. Also, 81% of participants said that they are excited to see the changes that will take place across the entire industry.

The main point of interest is generative AI, which exploded in 2023 and quickly found its way to financial institutions, where numerous use cases were uncovered. The survey shows that 83% of respondents have stated that their industry is excited to deploy AI technology. 37% revealed that AI is already implemented, and their experience is overwhelmingly positive, with respondents saying that they improved their AI capabilities in the last 12 months.

Another 32% said that they intend to start using AI to improve customer experience and create a more customized service for their clients. Apart from customer service, AI has also found great use in ESG analysis, KYC, AML, automation, and risk-management procedures.

However, as big as AI has been this year, it is not the only technology that has brought excitement to the financial industry. The survey also found that BaaS has attracted massive interest itself, with nearly 50% of respondents claiming that they used BaaS or improved the existing BaaS systems throughout the year. The figure represents a major jump compared to the results from 2022.

Optimism and excitement surround emerging technologies

Furthermore, the survey also shows that most financial institutions (69%) are quite optimistic about their investments, expecting them to resume in H1 2024. These results are somewhat surprising, considering the instability that the tech sector has seen this year, but they are considered to be a positive sign for the future of the fintech sector.

Most respondents noted that they expect open finance to be a major game-changer in the financial industry. 46% of participants stated that about half of their users are using open banking-enabled services. With the demand already being that high, and expected to grow, open finance is likely to thrive further in 2024.

Finastra’s CEO, Simon Paris, stated that the economic climate has been challenging this year, but despite this, the survey results make it clear that AI, BaaS, and embedded finance are key priorities in the sector. They have been dominant in the past 12 months, and demand for their enhancement and further personalization of the customer experience confirms that they will remain the focus of the industry.

Paris added that Finastra shares the industry’s growing commitment to ESG initiatives, collaboration around open finance, as well as the excitement regarding the use of AI and other advanced technologies for the purpose of bringing new opportunities to the market.