2024 financial services industry outlooks (2024)

FAQs

What is the finance industry outlook for 2024? ›

Key Findings. The federal funds rate is expected to drop by 150 basis points (1.5%), from 5.3% to 3.8%, by the end of 2024. Commercial lending rates are almost certain to drop alongside the federal funds rate, providing an opportunity for borrowers to refinance high-interest loans.

The financial services (FS) deals market is likely to remain muted for the remainder of 2024, marked by continued uncertainty stemming from challenging macroeconomic conditions and geopolitical tensions. In this environment, mega deals, in particular, face obstacles.

They'll also need to focus on what's coming next. In 2024, the technological turbulence—including generative AI, transition to the cloud, increased fraud and cyber risk, and blurring of industry lines, such as the embedded finance trend—will require financial services leaders to be much more agile than ever.

Growing deposits is the top strategic priority for all financial institutions in 2024 and 2025. In fact, 72% of bank CEOs say growing deposits is paramount. As expenses put downward pressure on net income, banks rolled into 2024 with greater urgency around improving operational efficiency – the second top priority.

Booming Opportunities in Financial Advisory Services

Financial advisors are set to see a surge in opportunities throughout 2024. According to the Bureau of Labor Statistics, employment of personal financial advisors is projected to grow 13 percent from 2022 to 2032, much faster than the average for all occupations.

Global growth is forecast to slow from the 3.1% 2023 pace to 2.9% in 2024 and rebound to 3% next year. Inflation is expected to continue to cool, although in many countries the price pressure will take longer to unwind than it took to emerge.

Like digital, the Age of AI is likely to have a transformative impact on the industry, affecting roles in virtually every part of the bank. Not only is the rapid adoption of gen AI the most important trend for banks in 2024—it's also shaping the other nine trends.

In 2024, the fintech market size will exceed $340 bn, and by 2032, this figure will increase almost fourfold and reach $1,152 bn. Such rapid growth will provide a staggering compound annual growth rate (CAGR) of 16.5% and will push the rise of new fintech sectors and banking services.

As a whole, analysts are optimistic about the outlook for stock prices in 2024. The consensus analyst price target for the S&P 500 is 5,090, suggesting roughly 8.5% upside from current levels.

What are the biggest threats to financial services industry? ›

The financial services industry is a very attractive target to ransomware gangs because of the valuable customer information they possess. The threat of leaking this data on the dark web, and the resulting reputational damage, compels many financial services organizations to comply with ransom demands.

The financial services sector is accelerating its adoption of digital technology. Paying with cash, participating in in-personal meetings with financial consultants, and even using an ATM are all fading facets of financial services.

The Global Economy in a Sticky Spot

Global growth is projected to be in line with the April 2024 World Economic Outlook (WEO) forecast, at 3.2 percent in 2024 and 3.3 percent in 2025. Services inflation is holding up progress on disinflation, which is complicating monetary policy normalization.

The banking sector is at a turning point. There will be a significant need for banks to undergo fundamental transformations in the future, driven mainly by technology such as artificial intelligence, machine learning, augmented reality, and open banking platforms.

The Board published its Strategic Plan 2024–27, which outlines the organization's priorities across five goal areas to maintain the stability, integrity, and efficiency of the nation's monetary, financial, and payment systems: Monetary Policy and Financial Stability. Supervision and Regulation.

In 2024, banks are expected to increase their volumes of supply-chain finance assets significantly. This strategic shift will respond to the evolving global trade-finance landscape, which is moving away from traditional documentary credit methods towards greater reliance on open-account trading.

As inflation slows and the effects of the projected policy rate cuts feed through the economy, real GDP growth re-accelerates to average 2.4 percent at an annualized rate by 2025H2. Calendar-year GDP growth registers 2.6 percent in 2024 and moderates to 2.1 percent in 2025.