It’s that time when we look back at what’s happened over the last twelve months and whether events unfolded as we expected.

As the year started thoughts were on whether Barbie or Oppenheimer would win big at the Oscars. By the summer everyone was Brat, we had the Paris Olympics and a new UK government, while autumn gave us a new US President. 2024 ended with the rise of memecoins such as Peanut the Squirrell (PNUT) and this summary being written by AI as we’ve all been replaced by machines.

It wasn’t. But you could be forgiven for thinking it might have been.

In April, OpenAI launched Sora, a revolutionary text-to-visual model designed to help visual artists, designers, creative directors and filmmakers. It followed that just a few months later with ChatGPT4o offering faster results and improvements on its capabilities across text, voice, and vision.

Another major story emerged in July when a software upgrade triggered a massive number of system failures. These disruptions hit businesses and organisations around the world, causing combined losses that could total billions of dollars.

That fallout suggests that for now, at least, the machines haven't taken over. Or if they have, they’re playing a very smart long game.

AI’s momentum was most apparent in the soaring demand for Nvidia’s GPUs and AI infrastructure products. For a short time in June, it became the world’s most valuable business with a market capitalisation of $3.34 trillion, putting it in the company of Apple, Microsoft and Alphabet.

In banking and payments, the use cases are still focussed on internal process efficiency including customer service, sales productivity, and report generation.

A recent Bank of England paper highlighted that 75% of surveyed financial services firms are already using AI, with a further 10% planning to use it over the next three years, an increase from 58% and 14% respectively from 2022. Respondent firms are using, and planning to use, AI across a wide range of business areas, with around 22% of all reported use cases, in operations and IT. That was twice the proportion of the next largest area retail banking with 11%.

The same report revealed that over the next three years, 36% of respondents expect to use AI for customer support (including chatbots), 32% for regulatory compliance and reporting, 31% for fraud detection, and 31% for optimisation of internal processes.

It will be fascinating to see how this develops from ideas and use cases to reality. In the meantime, you can read our summary of Money20/20 Europe to see what Microsoft, Nvidia, FIS and others had to say about its role in the future of banking and payments.

Sticking with the technology theme, SpaceX’s Falcon 9 continued to wow the world, reaching its 400th successful voyage. Unfortunately, another Falcon fell to earth with a bump.

On Friday, July 19, systems began failing, causing massive disruptions for airlines, health care service providers, retail and hotel payment systems. The widespread IT system outage was caused by a defective software update to cybersecurity firm CrowdStrike’s Falcon platform for Microsoft Windows host servers. Although it affected less than 1% of Microsoft's global Windows installation base, those systems were running critical operations. While CrowdStrike quickly deployed a fix, system recovery took hours and even days because many of the impacted systems had to be restored and rebooted manually.

Cloud insurance firm Parametrix estimated that the outage cost U.S. Fortune 500 companies a collective $5.4 billion or an average of $44 million each.

For financial services firms, the episode bought the issue of operational resilience sharply into focus as they prepare for EU member states to enforce the Digital Operational Resilience Act (DORA) in January 2025.

Much like rules around financial stability and soundness, DORA seeks to ensure the financial services industry’s resiliency in the event of a severe operational disruption. It recognises the financial services industry’s interconnectedness, with firms relying on numerous suppliers, all of which can affect its resilience.

You can read more about the impact and intent of DORA in our blog post.

Persistent macroeconomic uncertainty led to a subdued funding environment. While several fintechs were raising significant rounds, many more were forced to scale back their ambitions or defer expansion, and others closed part of their business.

Banking as a Service (BaaS) was under the microscope as the regulatory environment sought to strike a balance between fostering innovation and ensuring consumer protection. In the US, Synapse’s bankruptcy disrupted payments for fintech partners and saw customer funds frozen, raising concerns about the stability and reliability of the model.

The event raised questions about the security of consumer funds, even if it was largely seen as an isolated incident in the US rather than a sign of systemic issues. However, the full impact of that failure is still unknown as bankruptcy proceedings continue.

As a result, safe, well-regulated and profitable businesses have undoubtedly become more attractive to clients, investors and regulators. In the UK and EU, a driver behind BaaS growth was strategic partnerships between banks and fintechs. These collaborations enable banks to tap into the agility and innovation of fintechs, while fintechs benefit from the infrastructure and regulatory compliance of established banks.

The industry also saw banks increasingly viewing BaaS as a complementary model, triggering M&A activity that is likely to continue into 2025 as larger fintechs and banks look to acquire smaller BaaS providers. A clear example was seen in July, when Italian bank UniCredit acquiring Belgian digital bank Aion Bank and BaaS platform Vodeno to complement its offerings.

Around $17 trillion in stablecoin transactions were made in 2024, with payments accounting for an estimated $5 trillion of those transactions. Their increasing popularity and the growing number of projects underscore their potential to redefine financial transactions.

In October, Stripe’s acquisition of Bridge, a platform that offers services to help businesses accept payments in stablecoins, generated intrigue around potential stablecoin infrastructure and payment use cases. With the Markets in Crypto-Assets Regulation (MiCA), which institutes uniform EU market rules for digital assets, entering into application at the end of 2024, stablecoins had strong tailwinds heading into the new year.

Meanwhile, the UK surpassed 10 million Open Banking users in the summer and saw a 61% year on year increase in open banking payments. HMRC payments continue to grow and major commercial brands implemented PIS at the checkout including food delivery app, Just Eat and of Europe's biggest airlines, Ryanair.

This trend looks set to continue after UK Chancellor Rachel Reeves announced the Government’s National Payments Vision in November, setting out a plan to deliver further innovation and competition in the UK’s payments landscape. It recognised the role that open banking could play in delivering benefits to consumers, businesses and the broader ecosystem and referenced opportunities to make account-to-account payments a ubiquitous payment method.

Finally, in the US, the Consumer Finance Protection Bureau (CFPB) finalised a rule to implement Dodd-Frank Act Section 1033, which establishes a regulatory framework governing open banking. Once implemented, it will set new regulatory requirements on both depository and non-depository institutions, as well as tighten security around data sharing. That evolution of US open banking, alongside real-time payment rails, is a journey all the industry is monitoring with interest.

So that’s 2024, a year where AI was seen as the hero, or sometimes the villain, of the story. A story it could now conceive, write and generate a film from.

It was a pivotal one for ClearBank too as we hit new milestones for deposits, transactions and accounts. Plus, the little matter of getting our European banking licence and onboarding our first clients onto the T2 payment system.