Global banking industry outlook 2024: Navigating complexities and seizing new opportunities

    Also watch on:

The RadioFinance session on the Global Banking Industry Outlook for 2024 provided deep insights into the challenges and opportunities in the banking sector. Leading economists joined the discussion and focused on economic growth prospects, technological advancements, and sustainable finance.

They dissected the prospective banking landscape for the year amid increasing global economic and geopolitical uncertainties, technological disruptions and displacements, and the pivot towards climate change and sustainable development goals. This RadioFinance session was held on 18 January.

Global and regional economic growth prospects
Global economic growth in 2024 is expected to continue to face significant headwinds and the drag of higher interest rates in the fight against inflation. The International Monetary Fund forecasts a third consecutive year of global slowdown to 2.9% in 2024, with a soft landing in major economies with inflation pressures and interest rates anticipated to ease in the second half of the year.

Selena Ling from OCBC highlighted the resilience of the banking sector across economic cycles, commenting that major distress in large banks was notably absent during the pandemic. She offered insights on potential geopolitical fallout, especially relating to the Taiwan election, suggesting that such events often do not lead to immediate drastic changes and are not in the long-term strategic interest of stakeholders.

Louis Kuijs from S&P Global Ratings provided insights on the Asia Pacific banking sector’s preparedness for potential policy shifts and market conditions. He addressed the likely impact from the Bank of Japan’s monetary policy shifts and abandonment of yield-curve control. He highlighted the importance of understanding the central bank’s objectives, particularly its focus on achieving sustainable inflation and wage growth. Kuijs also discussed the importance of focusing on the broader implications of any policy changes, especially the impact on fiscal sustainability and corporate debt levels despite the short-term movements in the financial markets.

Alicia García-Herrero from Natixis commented on the geopolitical decoupling between China and the United States and the West in general, and the former’s reduced contribution to global growth. She posited that China may no longer be the major contributor to global economic growth and development as it had been in the past decade. She suggested a shift in the economic landscape of China, moving from a period of inflation to a phase where disinflation, and potentially deflation, become more prominent concerns. This change is significant given China’s substantial role in the global economy. She highlighted the need for banks to be agile during such geopolitical and economic shifts.

Roberta Gatti from the World Bank discussed the economic growth prospects in the Middle East and North Africa (MENA), noting that despite poorer growth in 2022 and 2023, the region might fare relatively better in 2024. She noted that the slowdown in China’s economic growth and a potential deflation of its economy will have far-reaching consequences on emerging economies, including those in MENA, and stressed the need for diversification and restructuring in the oil and commodity-dependent economies

Harnessing technology for innovation, efficiency and growth
Ling emphasised the role of artificial intelligence (AI) and technology in enhancing banking services. Together with Garcia-Herrero, she stressed the importance of balancing technological innovation with ethical and regulatory considerations.

Kuijs cautioned against the overreliance on powerful emerging technologies like AI, and especially applications that replace human reasoning and decision-making.

Transition through climate change and sustainable finance
Sustainable finance and the banking sector’s role in combating climate change were pivotal themes. Ling discussed the emerging opportunities in green technologies and renewable energy financing, emphasising the growing consumer demand for sustainable banking products.

Gatti concurred, saying that the MENA region would need to adapt to climate change and restructure their economies for a sustainable future.

Kuijs warned about the commercial implications of climate change and environmental, social and governance (ESG) transition, and that the banking industry must take a “hard-nosed” approach, including managing the risk of stranded assets.

García-Herrero discussed the broader implications of geopolitical changes on sustainable finance, emphasising the ongoing adjustments in global economic contributions, particularly from China, and its implications for sustainable finance.

The session highlighted that while economic, technological, and environmental challenges loom large in 2024, they also present significant opportunities for growth and transformation in the global banking sector. The panellists agreed on the importance of agility, innovation, and a strategic approach to sustainable finance in navigating these complex times.

Invited guests include:


Keywords: Global Banking, Banking Outlook 2024, Economic Growth, Sustainable Finance, Geopolitical Uncertainties, Climate Change, Higher Interest Rates, Pandemic Resilience, Asia Pacific Banking, Technology Innovation, ESG
Institutions: Natixis, OCBC, S&P Global, World Bank

Search

View Past Sessions View all

Image
Finance Vietnam 2024 frames dialogue on the future of agile and resilient core…

Industry leaders at The Asian Banker Finance Vietnam Leadership Roundtable 2024 discussed modernising core banking and payment systems to boost operational resilience, financial stability, and hybrid cloud adoption to address legacy system…

Image
Asset tokenisation and digital assets are unlocking new financial opportunities

During this RadioFinance session, we explored asset tokenisation and the digital asset world from the perspective of the global banking industry, highlighting key trends and challenges and how it is helping evolve finance.

Image
Cross-border payments thrive on interoperability, innovation, and enhanced infrastructure

At a recent roundtable hosted by The Asian Banker, industry experts from banks and financial institutions across Asia offered a comprehensive overview of the current challenges and potential solutions in cross-border payments.

Image
‘Banks can make money in the digital asset space’

Heads of digital asset banks and Hong-Kong based virtual asset exchanges discussed the future of asset tokenisation at the closing session of The Asian Banker Summit 2024 held on 23 May at the Conrad in Hong Kong.

Image
HKMA to launch regulatory for GenAI solutions in banks this year

The Hong Kong Monetary Authority is launching a regulatory sandbox for generative AI this year to allow banks to deploy solutions in a controlled environment