The world of finance is changing. Disruptive technologies, an increasingly connected financial landscape and global uncertainty are challenging traditional finance models. The financing trends we’ve seen shape previous years are evolving, while innovative new products are forcing businesses to rethink the way they approach their business funding.
So, what are the trends in financial services that will shape 2024 and beyond? We explore 6 key trends that could change the way we all do business.
6 financial services trends in 2024 and beyond
1. Blockchain technology in financial services is on the rise
Blockchain technology is most commonly associated with cryptocurrencies, but its applications extend beyond the realm of digital currencies to a range of industries and users.
The use of blockchain tech in financial processes will rise in 2024, including supply chain management. Blockchain-based structures offer increased transparency, security and efficiency, which can lead to a reduction in costs and a streamlining of processes.
“A prominent application of blockchain technology is decentralised finance,” says Octet’s Supply Chain Finance Manager, Joe Donnachie. “In traditional centralised finance, consumers and businesses borrow from a bank or via a broker. Decentralised finance challenges this by allowing peer-to-peer exchanges.
While blockchain tech is currently used in the finance sector, Joe believes its use will increase exponentially in the years to come.
2. The industry is embracing AI and data analytics in financial services
Artificial intelligence (AI) and machine learning (ML), which provide insights and solutions at unprecedented speeds, are being used in tasks such as research and fraud detection. In 2024, we expect to see an even greater uptake of these tools.
“AI and data analytics have transformed the finance industry,” says Joe. “AI algorithms can analyse large data sets to identify anomalies that detect fraudulent activities and measure risks with greater accuracy than ever before.”
These technologies will also be increasingly used to enhance efficiencies, make decisions and improve customer service. “AI-powered chatbots and virtual assistants are getting better and better,” adds Joe. “The technology is also enabling more accurate and dynamic credit scoring by considering a much broader range of factors.”
3. Global growth to remain weak
In late 2023, the resilience of the global economy exceeded expectations, but challenges persist. China’s recovery was weaker than forecast, global core inflation is rising, and high public debt continues in many countries. These factors led the OECD to project lower global growth in 2024 compared with 2023.
“Looking at Australia, our GDP for 2023 was predicted to be 1.8%. For 2024, it’s forecast to be 1.3%. That’s a significant slowdown,” says Joe.
He adds that while previous interest rate rises are having a cumulative effect, he doesn’t believe those rates will come back down quickly in 2024. “As such, businesses of all sizes are going to be really conscious of their cash flow and the levers they can pull to become more streamlined.”
4. Increasing cybersecurity concerns
As the number and complexity of financial transactions online increases, so too do cybersecurity concerns. It’s estimated that cybercrime around the world is costing $8 trillion a year, and that figure will only rise. In the coming years, enhanced cybersecurity measures will be essential to ensure businesses can preserve their assets.
When combined with disruptive technologies such as AI and a shift to cloud-based systems, financial service providers will have to become more adaptable to protect their customers and offer the best services. Business leaders are being compelled to develop new strategies and explore innovation to counter challenges to security systems.
5. Innovative financial products are more readily available
While challenges are increasing, so too is innovation. The range of financial products available to businesses and consumers is growing, and as more businesses and consumers adopt digital solutions, new technologies and financial services have emerged.
“For example, a growing environmental awareness has increased the focus on sustainable financial products. So, there are now green bonds and sustainable investment funds,” says Joe. “Healthcare supply chain financing is an emerging area too.
“Another innovation is the tokenisation of assets, which involves converting real-world assets into digital tokens on a blockchain. This has led to the creation of tokenised securities and other asset-backed tokens.”
6. Banks are being forced to embrace change
Deloitte predicts that in 2024, the banking industry will face challenges from a slowing global economy, divergent economic conditions and disruption to their general business models. Traditional banks must adapt amid higher interest rates, stricter regulations, climate change and technological advancements. The shocks of 2023 have again forced the banking industry to change to better serve customers and manage risk.
“Traditional financial institutions have obviously been embracing tech for years, but it’s only in more recent times that it’s really pervaded certain products based upon business demand,” says Joe. “At Octet, we have fundamentally changed the way buyers and sellers engage with each other on one platform — both in a local and international trading context. Traditional banks are also starting to invest in robust platforms and adopt open banking requirements to collaborate with third-party providers.”
Joe says banks are increasingly being forced to improve their customer service and engagement to retain important business customers.
The future of finance
The disruptions experienced in the finance sector are unprecedented, but they’ve given rise to innovation and more choice for business customers. As we move into 2024, businesses can stay ahead of the curve by embracing the financing trends that will define their future. Partnering with an intelligent finance provider who is ahead of the current trends in finance is essential.
Our innovative working capital solutions help you unlock the power in your business to thrive. Need a cash flow injection without the need for personal asset security? Our Debtor Finance facility allows you to convert up to 85% of your unpaid invoices into immediately available funding.
If it’s a revolving line of credit you’re after, our Trade Finance facility offers up to 60 days interest-free and 120-day repayment terms to pay local and international suppliers.
Our Supply Chain Accelerate product is a highly innovative finance solution that frees up working capital by paying your supplier invoices immediately while giving you up to 90 days to repay.
Discover how Octet’s team of working capital specialists can help power your business growth today.
Disclaimer: The following comments are only our views and should not be construed as advice. You should act using your own information and judgment. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgment as at the date of publication and are subject to change without notice.