The world of finance is evolving rapidly. Disruptive technologies, an increasingly connected financial landscape, and global uncertainty are challenging traditional finance models. The financing trends that have shaped previous years are evolving, while innovative new products are forcing businesses to rethink their approach to funding.
So, what are the trends in financial services that will shape the rest of 2024 and beyond? We explore six 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, often associated with cryptocurrencies, extends beyond digital currencies to a range of industries and users.
In 2024, its application for supply chain management in small-to-medium-sized businesses is gaining traction. Blockchain-based invoice financing is transforming cash flow management by offering 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 Co-CEO, Brett Isenberg. “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, Brett 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, there has been an even greater uptake of these tools with AI-driven supply chain management tools being used to help businesses predict disruptions, optimise logistics, and manage inventory more effectively.
“AI and data analytics have transformed the finance industry,” says Brett. “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 Brett. “The technology is also enabling more accurate and dynamic credit scoring by considering a much broader range of factors.”
3. Global growth has remained weak
In late 2023, the resilience of the global economy exceeded expectations, but global economic growth continues to face challenges in 2024. Political tensions, interest rate fluctuations, and economic policies are impacting financial services worldwide. China’s recovery has been weaker than forecast, global core inflation is rising, and high public debt continues in many countries. These factors had led the OECD to project lower global growth in 2024 compared with 2023.
In Australia, the Reserve Bank has kept interest rates on hold since November 2023, despite political pressure for cuts.
“This decision reflects ongoing concerns about inflation and economic stability”, states Brett. “Globally, many countries have cut rates to stimulate growth, but Australia’s unique economic conditions have led to a different approach.”
As such, businesses of all sizes must navigate these complexities to manage their cash flow and investment strategies effectively.
4. Increasing cybersecurity concerns
As financial transactions become more complex and frequent, cybersecurity remains a critical concern.
In 2024, Australia has seen a significant rise in data breaches, with notable incidents affecting millions of individuals. The Office of the Australian Information Commissioner (OAIC) reported a 9% increase in data breach notifications in the first half of 2024 compared to the previous six months.
Enhanced cybersecurity measures, such as multi-factor authentication and advanced threat detection, are essential to protect assets and maintain trust in financial services.
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 Brett. “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
The banking industry is facing challenges from a slowing global economy, divergent economic conditions and disruption to their general business models. evolving financial landscape. Traditional banks must adapt amid higher interest rates, stricter regulations, climate change and technological advancements. Banks are now having to invest in robust platforms and adopt open banking requirements to collaborate with third-party providers. This shift is essential for improving customer service and engagement, helping banks retain important business customers.
“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,” explains Brett. “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.”
Brett says banks are increasingly being forced to improve their customer service and engagement to retain important business customers.
The future of finance
The banking industry is facing challenges from a slowing global economy, divergent economic conditions and disruption to their general business models. evolving financial landscape. Traditional banks must adapt amid higher interest rates, stricter regulations, climate change and technological advancements. Banks are now having to invest in robust platforms and adopt open banking requirements to collaborate with third-party providers. This shift is essential for improving customer service and engagement, helping banks retain important business customers.
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.
You can also unlock additional working capital to expand operations, acquire new assets or consolidate existing debt by activating an Octet Term Loan as part of your Debtor or Trade Finance facility.
Discover how Octet’s team of working capital specialists can help power your business growth today.
Disclaimer: These 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.
