Four Macro Major Banking Trends for 2024
And none of them are GenAI!
KPMG impresses with a blissfully short rundown of the major banking trends for 2024.
What I like about them is that they are macro and don’t dwell on GenAI like many others. I find that refreshing!
👉TAKEAWAYS
A challenging growth environment
The banking sector faces headwinds in 2024: Macro and microeconomic challenges, conflicts, and a US presidential election year. Interest rates are high, and stock prices are low leading to rising fund and deposit costs, pressuring bank earnings.
A continuation of digital transformation
Banks will continue to enhance customer service and soldier on in modernizing their technology platforms. Generative Al is making its way into banking with personalization, but there will be slower adoption of Al in banking due to regulatory and risk concerns.
Regulatory intensity is here to stay
The financial services industry is experiencing a level of regulatory intensity rarely seen before - combining a high volume of regulatory issuances, complexity, and breadth of regulatory supervision.
Meet and exceed workforce expectations
According to a KPMG CEO survey, 84% say their organization's business success, including growth objectives, depends on their company having a strong ethical culture. In 2024, the banking industry will continue to be at the forefront of the return-to-office trend.
👊STRAIGHT TALK👊
This is going to be an uphill year for banking. KMPG calling it “challenging” is being far too kind.
I will say what KPMG cannot. We are all afraid of a significant escalation of the conflicts in Ukraine and Gaza. The closure of the Red Sea to merchant ships is precisely the kind of stressor that can lead to greater conflict.
Do I even need to bring up the US elections and what a “wild card” they will be? I don’t engage in right-left diatribe here, but let’s face it, it will be a mess!
What KPMG missed was the continued hangover that banks face from assets acquired in a zero-rate environment, and it is clear that banks will have to work for their money. Watch as commercial real estate comes in for a crash landing this year.
But with M&A highly reduced and gains in high-growth Asian markets tempered by China’s slowdown and China-US brinksmanship, it’s hard to see where the money will come from.
So sure, GenAI is great, but when compared with other macro trends, I can understand why some banks may be less than thrilled to dump big money in the sector.
Can you blame them?
Thoughts?
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