By Robert Turner, Senior Vice President and General Manager of U.S. Financial Services at Kyndryl

The financial services industry is undergoing a transformation driven by new technologies and changing consumer behaviors. Digitally-savvy customers are accelerating the move away from physical currency, creating a cashless economy. What’s more, they demand convenience at every step, particularly during the payment process.

For financial institutions, keeping up with the latest tech trends is essential for remaining competitive and improving customer satisfaction. It’s no secret that artificial intelligence (AI) is reshaping the financial services industry. It has the power to help organizations improve customer service, streamline back-office operations and deliver innovative solutions. At the same time, increasing regulations, rising cyber threats and a growing need to modernize core system technology must also be addressed.

Here are four important technology trends that financial services companies must be aware of — and the strategies to consider for thriving in a digital society.

Trend #2: Embedded finance

Embedded finance integrates financial services like payments or lending into non-financial apps and platforms. Think of a rideshare app with payment options or digital wallets linked to rewards programs. The embedded finance trend shifts focus from traditional banking to direct interactions with customers through apps they already use. It enables businesses to offer multiple services in one platform, increasing customer engagement, while banks and lenders benefit from more business volume, often without direct customer interaction.

Action to take

As more data flows through these integrated systems, it’s crucial for financial firms to manage data securely, comply with increasing regulations and give users control over their personal information. In addition, companies will need to adopt cybersecurity solutions, potentially powered by generative AI, to vigorously protect consumer data and ensure compliance.

Trend #4: Cybersecurity

Cybersecurity is crucial for the financial services industry, especially with the rise of digital banking and cross-border transactions, as well as more data breaches. The EU's Digital Operational Resilience Act (DORA) is setting new cybersecurity standards for financial institutions. And U.S. institutions, meanwhile, are starting to prepare for similar regulations that may come to the U.S.

Action to take

Businesses that don't keep up with software updates, hardware maintenance and application security risk being attacked. As cyber threats grow, organizations must invest in better cybersecurity to protect data, comply with regulations, focus on vulnerability management, use the NIST framework and shift spending to security to avoid costly violations.