At bpesearch, we have operated in the financial services sector for many years. On a daily basis, we talk with key players in the industry looking at future trends, the state of the market and where there is further opportunity for business growth. Now that Q1 is complete, in this blog post, we’re going to outline our key predictions for the financial services sector and what we believe the remainder of the year holds.
The state of play: a challenging market
A poll from KMPG saw that 87% of financial services leaders are “confident” of business growth in the first quarter of 2024, rising to 89 % in banks. However, given the landscape we have been operating in since 2020, we believe the market will still remain challenging. Despite these challenges, 73% of those surveyed were confident that the UK could maintain its global financial centre status over the next three years with banking bosses especially confident as 84 % were optimistic.
Financially, there has been an improvement since the second half of 2022 when a significant market downturn began. However, we believe that the sector isn’t in an overly confident state yet and fintech startups may continue to struggle to find funding in 2024 as investors remain cautious.
There are, however, certain areas we anticipate massive growth in such as sustainable finance, generative AI and customer experience.
AI
The financial services sector has been fairly quick to adopt AI procesess, catapulted by the closure of bricks and mortar banks. We expect to see more banks adopting chatbots as a key mechanism in customer communications which can even stem as far as executing banking operations such as the opening and management of accounts. PWC’s 24th Annual CEO Survey shows that 56% of CEOs in financial services are planning to significantly increase investment in digital transformation highlighting how high up the agenda this is.
Efficiencies will also improve with the introduction of AI technology. Back office processes, which are often currently carried out manually can be automated to improve speed, reduce overheads through reducing the number of employees required and consider factors such as compliance.
AI also allows for improved levels of personalisation which is crucial when it comes to creating a value proposition for a younger target audience. Data analytics and AI will allow financial institutions to offer personalised services tailored to individuals needs delivering highly targeted and relevant offerings.
However, with the introduction of more disruptive technology into a business comes the risk of increased fraud and cyber security which is something that will need to be at the top of the agenda, too.
Sustainability
Sustainability and green credentials have never been more important as businesses continue to prioritise the ESG policies of not only their organisation, but those they work with. This means the financial services sector needs to look into investment in how they can improve their carbon footprint. In fact, businesses within the sector are now seeing their ESG policies being assessed to the same level as their financial performance so we foresee businesses investing significantly in meeting net zero targets.
This is also reflected in the fact that consumers may now want to see their funds invested in companies that have a negative impact on the environment or society itself which adds another layer of ESG considerations to those working in the financial services sector.
Customer Experience (CX)
The introduction of customer centric tech and authentic ESG policies both play into the customer experience. With the introduction of disruptors into the financial services market, more traditional businesses are having to step up and seriously put improving customer experience at the top of their agenda. Customer experience is a top consideration in buying decisions. This combined with a decrease in customer loyalty amongst certain demographics, CX has a huge role to play in the financial success of businesses in 2024 and those that don’t take this seriously, risk being left behind.
Over recent years, the way consumers pay for products has changed significantly and we predict we are on a trajectory that is not going to change any time soon. In 2021, global social commerce sales reached $492 billion which is predicted to triple by 2025 to $1.2 trillion.
We have also had the introduction of social commerce. Social media platforms, such as TikTok, are becoming increasingly popular platforms to promote and sell (including the checkout process) of products and services, revolutionising the shopping experience. Social commerce is more interactive than traditional ecommerce, further reinforcing the customer-centric strategy financial services organisations need to adopt.
bpesearch is a UK based executive search firm delivering search mandates at board and functional leadership level across the UK and Western Europe. Our clients range from owner-managed, VC or PE backed businesses to major plc multinationals. We’re at our best supporting change or transformation agendas where new thinking and diverse talent is part of the brief and company vision.
We’re committed to promoting diversity and we are working hard to improve the landscape for our colleagues, candidates and clients. There is much more for us to do, but we’re proud to report that women have secured 50% of all assignments we have led since the beginning of 2018. Over the same period, the proportion of successful candidates from under-represented ethnic groups has increased from 3% to 7%.
If you would like to discuss this article, your talent needs or personal situation with any of our team, please don’t hesitate to get in touch for a confidential conversation.
