2023 threw some tough challenges at investors, from the threat of stagflation to global tensions and environmental issues. But gearing up for 2024, Sharegain’s team of experts are all about the silver linings, and predicting changes ahead, thanks to new technologies, evolving regulation and shifts in how markets operate.
In this article, eight Sharegainers break down what’s on the horizon for 2024.
Saul Dawes, head of Sales for EMEA: “2024 requires a new revenue engine”
As trading volumes fall, deposits slow and as pressure on fees continues to mount, revenues are under significant pressure. It’s no secret that in 2023 the biggest revenue engine for banks and brokers was net interest income. But in 2024 they will require a new source of income.
Over the last couple of years, we’ve seen a surge in retail investor participation across all areas of capital markets. Within our market – securities lending – this has translated into a deeper understanding of the opportunities it presents as well as clear expectations and practical guidance from the regulators.
In 2023, a number of online brokers across Europe seized the opportunity to launch the service to retail clients for the first time in their market. In 2024, I expect this to accelerate – with more retail and private firms offering securities lending as a competitive differentiator and a means of generating passive income for their clients.
Alena Ingvarsdóttir, senior compliance officer: “An era of private investor protection and transparency”
As new areas of capital markets become more accessible to retail investors, the trend for greater transparency will lead to a significant rise in regulatory requirements. Building on the groundwork laid by initiatives like the SFTR in Europe and Rule 10c-1a in the US, global markets are poised to adopt similar reporting regulations, aiming for increased openness, efficiency and stability.
Within securities lending, regulatory authorities, like ESMA in Europe and the FCA in the UK, will continue to strengthen their commitment to protecting consumer interests, promoting best practices and giving private investors full control over their lending activities.
Samuel Tuliebitz, head of Business Development: “Demand for institutional-grade advice offerings will increase”
The wealth management landscape is undergoing a significant shift, bringing private investors ‘closer to the action’ on a large scale. Individuals are increasingly engaging with digital advice platforms, utilizing technology to actively manage their portfolios. This shift is not just a passing trend; it’s molding the expectations and behaviors of clients for the long haul.
Private investors now have a taste for institutional-grade services, both through enhanced self-directed experiences, and indirectly through collaboration with their advisors. AI technology will be key in making complex trading and data insights more accessible, enhancing personal investment strategies and redefining financial management standards in 2024. In order to remain competitive, firms must be able to adapt, providing a wide range of services and solutions aligned with their clients’ financial goals and their evolving expectations.
Sadaf Tahir, legal assistant: “Mentorship programs and educational outreach will be a key driver of DE&I in fintech”
Building on the momentum of recent years, the industry is poised to embrace greater gender diversity in Fintech – with an increased focus on skills beyond coding like business development, customer insights, and creativity.
The growing importance of emotional intelligence in fintech will further bolster women’s roles, leading to more inclusive and equitable work environments. Mentorship programs, and educational outreach, encouraging more young women to explore and excel in fintech careers will be higher up the agenda – driving innovation and setting new industry standards.
Anup Patel, head of Customer Success: “Staying competitive means staying personal”
In 2024, nothing will eclipse the importance of face-to-face interactions. However, these interactions will be greatly enhanced by data tools – empowering firms to provide deeply customized experiences at every touchpoint of the customer journey and seamlessly aligning with individual needs and preferences.
Artificial intelligence (AI) and machine learning will play a crucial role in processing data, enabling the delivery of these highly personalized client experiences at scale. Despite the ever-increasing integration of technology, the value of direct human-to-human interactions will remain significant. Striking the right balance between technology and personal engagement will be imperative for firms seeking to drive client satisfaction, build trust, and stay competitive in 2024.
Ben Smith, head of Product: “Natural Language Processing will revolutionize the industry”
The next major leap in the industry will be driven by advancements in Natural Language Processing (NLP). Securities lending currently relies heavily on human-to-human interactions for tasks like collateral agreement and settlements troubleshooting. NLP has the potential to revolutionize these processes. By developing intuitive systems that understand both the securities lending market and the thought processes of its participants, we can achieve unprecedented levels of efficiency and accuracy. This technological evolution will benefit all market participants.
Matt Barnett, head of Operations: “Regulation will continue to drive the seeking of pre- and post-trade efficiencies globally”
The move to the T+1 settlement in the US will inevitably continue to be a focus on the securities lending landscape in 2024 as the go-live draws nearer – raising the question of whether EMEA will follow suit. This shift will have significant implications for global market synchronization and efficiency. Additionally, the Basel III Endgame and resulting capital constraints will bring innovation in market practices, and perhaps an increased focus on central counterparty clearing and collateral management. I also see a continued push towards enhancing pre- and post-trade efficiencies, with a growing emphasis on standardization and the adoption of best practices, the removal of existing friction and increased automation as trade margins continue to be squeezed.
Ahikam Finkel, VP R&D: “Datafication will be a capital markets imperative”
The industry is shifting towards datafication, transforming how we operate. Effective data storage and management are becoming a coveted specialization in our industry. We’ll see an influx of innovative products powered by everyday operational data, unlocking deep insights. Datafication is not just emerging; it’s rapidly becoming a capital market imperative, shaping new business ventures. This paradigm shift places data at the forefront of innovation, significantly altering our approach to industry dynamics.