These are turbulent times for the banking world. The business odds could shift dramatically based on how the following issues pan out.
Moving money around isn’t easy. It takes an entire industry, including Sportsbooks banking, to send those gigantic volumes of cash from one place to another, across a gazillion daily transactions, without the vast majority of it falling into the hands of thieves.
Speaking of which, there are competing narratives out there when it comes to how bad a problem theft has become in the United States. But if there’s one thing people love stealing more than anything else, it’s money – and that’s why theft will always be the No. 1 issue on the banking industry’s plate.
What changes, at least to some degree, is how that money gets stolen. The challenges that bankers face today are both brand-new and as old as cash itself; let’s dig deep, peel back the layers, and see how the following three developments could re-shape the financial odds for years to come.
1 Politics
When Donald Trump was the U.S. president, his attacks on the Federal Reserve were relentless. According to The New York Times, should he regain power this November, “several people” in Trump’s circle want to restrict the Fed’s ability to set interest rates without interference from the White House, which is a key topic on political betting sites for the 2024 elections.
That’s just the tip of the iceberg when it comes to America’s central bank. Trump wants to bring the Fed (and the Justice Department, and other independent agencies) under his thumb as much as possible; he’ll almost certainly fire Fed chair Jerome H. Powell in 2026 and appoint someone who will do Trump’s bidding.
Meanwhile, a second Trump presidency would likely bring about another round of bank de-regulation. The first round in 2018 may or may not have led to the collapse of Silicon Valley Bank and Signature Bank, depending on who you talk to, but the Congressional Budget Office (another non-partisan entity) warned at the time that Trump’s de-regulation would “increase the likelihood that a large financial firm with assets of between $100 billion and $250 billion would fail.” Expect more of the same if Trump wins another term in office.
2 Data Breaches
The banking sector has always had problems hiding sensitive information from prying eyes – but not like this. DDoS attacks, ransomware, phishing, and even basic web application attacks are all on the rise; even these pale in comparison to “data compromise incidents,” which rose 330% between 2019 and 2023 according to Statista.
Data breaches are even more problematic than that number would suggest because just about anyone can be a “bank” these days. Any business where you load money onto a card, and then use that card to buy stuff, is essentially a bank – like Starbucks, which has suffered multiple data breaches involving hundreds of thousands of users. Don’t get me started on the Tim Horton’s credit card.
3 AI
Artificial intelligence doesn’t steal from people; people steal from people. But AI makes just about everything easier – stealing included. According to Deloitte’s 2024 Financial Services Industry Predictions, the U.S. banking sector could lose $40 billion to fraud by 2027, up from $12.3 billion in just four years. The driving force behind this theft? Generative AI, which alone represents about $11.5 billion in losses.
Pretty much any bad actor can go on the “dark web” and buy some AI phishing software for about $20. These programs will let you copy a bank’s website and write convincing e-mails; with a little more cash and effort, you can create fake audio and video clips that are so lifelike, Berkshire Hathaway CEO Warren Buffett (who has been deepfaked himself) says they have an “enormous potential for harm.”
AI can also be the solution to this problem – like the large language model JP MorganChase uses to scan their emails for instances of data compromise. But as Buffett told shareholders last month at Berkshire Hathaway’s annual conference, “we may wish we’d never seen that genie” once it gets out of the bottle.
