How will the Finance Industry change in 2024?

Within the financial landscape last year, we saw high inflation and interest rates trouble the UK and the entire global economy. Alongside this we saw the rapid development of technology, such as Artificial Intelligence, being used greatly across various sectors, especially finance.

Let's look at what trends we might see in the finance industry this year and what it might bring with it.

The focus from inflation may be shifted to growth concerns by policymakers

As we see inflation and interest rates reach their peak, financial experts suggest that policymakers may be left with no choice but to focus on reviving struggling parts of the economy to drive investment and spending.

Finance expert, Louis Coke commented; "The economy won't heal itself. Policymakers have huge influence through incentives for business investment, public investment, and supporting key industries, Tax breaks, grants and targeted support will be vital with rates set to stabilise, Coke explains. However, pre-election uncertainty may delay investment next year."

Whilst we see inflation declining from pandemic-era highs, UK-specific factors may be able to keep it above target until late 2024, with household and housing impacts from rate hikes yet to fully emerge.

According to KPMG, growth in the UK is expected to slow going into early 2024. Concerns around productivity and long-term growth are also expected to linger. Demands will be faced by the Chancellor from social programmes to climate action, even as borrowing costs begin to rise. Being able to resist quick fixes in favour of long-term solutions will be a challenge but also critical.

Economist Yael Selfin comments; "The temptation will be to plug short-term gaps. But the economy would benefit more by tackling long-term issues like productivity, climate costs and fiscal sustainability

"The temptation will be to plug short-term gaps. But the economy would benefit more by tackling long-term issues like productivity, climate costs and fiscal sustainability,"

How will this affect my role?

With the current economic landscape marked by an increase in inflation and rising interest rates, roles are set to be significantly influenced within the finance sector. Professionals in the financial sector face an environment where they must navigate the implications of these economic influences on financial instruments, investments and strategies. Policymakers will focus on revitalising sectors that are struggling to encourage investment and spending. Finance roles will be increasingly tasked with assessing the impact of policy changes on markets, businesses and consumer behaviour.

Banks will use AI to fight the impact of AI on cybersecurity

Last year we saw the rise of AI and how its capabilities have rapidly expanded across various sectors. It is expected that an arms race could emerge in 2024 between banks and increasingly sophisticated scammers using new fraud technologies.

Experts have been warning that deepfakes like cloned voices and AI-enabled synthetic videos could cause an increase in financial crimes. Scammers are starting to use readily available tools to imitate voices and faces to trick victims.

Barclays UK CEO Matt Hammerstein commented on the issue saying: "now the leading market for scams around the world". He said that it was "incredibly important" for banks to continue to invest in building up their defences to protect not just individual customers and clients but, ultimately, the economy.

Coming into this year, we will start to see global banks plan to invest further in advanced AI defences. An example of a bank already doing this is Wells Fargo, which has been training its systems to spot subtle signs of deepfakes. Deutsche Bank has rebuilt its monitoring tools to detect suspicious activity automatically.

How will this affect my role?

Professionals who specialise in risk management will face an increase in their responsibilities as they must adapt to the emerging threats posed by AI technologies. Professionals within these roles will need to develop and implement strategies that identify and counteract fraudulent activities by AI technology.

Data Analysts and AI Specialists

With the increase in reliance on AI-driven tools for fraud detection, the demand for data analysts and AI specialists will see an increase. Professionals will be tasked with developing and fine-tuning algorithms that recognise patterns of fraudulent behaviour within vast datasets.

Compliance Officers

Compliance officers will face the challenge of keeping up with evolving regulatory requirements surrounding AI and how it's used in finance. They will need to ensure that the use of AI in fraud detection complies with ethical and legal standards.

Cybersecurity Experts

As AI-based threats continue to evolve, cybersecurity experts will need to continuously enhance their knowledge and expertise to protect financial systems and data from increasingly sophisticated cyber attacks.

Firms in finance will have to come up with office perks to attract talent

Towards the end of 2023, we saw several major UK banks and insurers mandate employees to work from the office a few times a week. This will become an increasing challenge for larger employers who hope to retain their staff in a tighter labour market.

We have started to see finance companies using creative ways to bring their employees back into the office such as free food and parking. Industry insiders in finance say that this trend looks like it will continue to grow coming into 2024, as we start to see organisations stop employees working from home.

What could employers offer to incentivise employees to come into the office more?

Head of Regulatory Policy at Deutsche Bank, Scott Robinson, says focusing on workplace wellbeing will be crucial for employers. He said that by providing employees with a 'safe space' that will cater to their needs. finance employers can not only ensure that their employees enjoy coming to work, but also promote their wellbeing. By doing so, this can create an increase in productivity amongst employees.

A major obstacle for employees is commuting which affects their productivity and daily expenses. A study conducted by SpareMyTime found that commuting costs are increasing by 12%, which is higher than the inflation rate. This rise is attributed to factors such as:

• 32% increase in fuel prices.

• 6% increase in train ticket prices compared to last year.

In the study, they found that London has the highest commuting costs, which has an average of £6,278, twice the national average.

Senior Investment Advisor Rana Maristani commented: "Commuting expenditures have long been a point of contention, and absorbing these costs may provide the impetus employees require,"

How will this affect my role?

Transitioning back to office-based work in the finance sector and the challenges associated with it are expected to significantly impact various roles within the industry:

Human Resources

HR professionals will play a pivotal role in strategizing and implementing initiatives to facilitate the return to the office. This may involve managing flexible work arrangements, addressing concerns about workplace safety, and devising employee engagement programs to ensure a smooth transition and maintain employee satisfaction.

Facilities Management

Professionals responsible for office facilities will need to adapt workspaces to meet new health and safety standards. This could involve redesigning office layouts, implementing sanitation protocols, and ensuring compliance with regulations to create a safe and comfortable work environment.

Technology and IT Support

The return to the office might lead to an increase in demand on IT departments as employees readjust to office systems and technologies. IT professionals will need to provide support for technical issues, facilitate seamless integration between remote and office setups, and ensure network security as more people access office networks.

Finance and Budgeting Specialists

With the potential introduction of new incentives or benefits to encourage employees to return to the office, finance professionals will need to assess the financial impact of these initiatives. They'll be responsible for budgeting, cost analysis, and managing expenses related to workspace modifications and employee incentives.

As we start to unfold 2024, the finance world will keep adapting to changes in the economy, technology, and work environments, promising a year filled with both challenges and opportunities for finance professionals and organisations alike.