Trends Shaping Financial Services This Year and Beyond

What’s ahead for the financial services industry is always a source of speculation. Will regulatory compliance pressures ease? How will global economic and political issues affect the sector?

Absent a crystal ball, most of these questions cannot yet be answered. On the other hand, certain trends seem likely to gain further momentum.

Following are five trends shaping the outlook for the financial services industry this year and beyond.

1. An ongoing focus on regulatory compliance

Accounting and finance leaders don’t anticipate compliance demands easing anytime soon. Almost all (98 percent) of the U.S. financial executives surveyed for Benchmarking the Accounting & Finance Function from Robert Half and Financial Executives Research Foundation believe their regulatory compliance burden will either increase or, at a minimum, stay the same in the near future.

Aggressive enforcement actions pertaining to anti-money laundering (AML) regulations, enhanced capital requirements and other regulatory pressures have led financial institutions to increase their hiring of risk, compliance and internal audit professionals. Another way some financial institutions are responding to heightened regulatory scrutiny is by taking steps to reduce their risk profiles, which may involve shedding certain products or services that introduce added risks without sufficient payoff.

2. Increased lending

With the healthier economy and job market, banks are expanding lending across the board. Bright spots include commercial real estate lending, as well as an expansion of consumer credit.

The mortgage market also remains strong, spurred by both new loan origination and refinancing activity. In addition, continued low interest rates and the likely easing of underwriting standards may further fuel mortgage lending and refinancing to consumers at all income levels.

3. Disruptive technologies

The financial services industry continues to face disruptions to traditional ways of doing business. The growth in smartphones and other mobile platforms has made banking on the go commonplace.

In addition, the emergence of mobile payment solutions and digital wallet services are reducing reliance on traditional currency and credit cards, as well as introducing new competition in payment and lending services. Companies that move quickly to capitalize on the market opportunities presented by new technological tools are more likely to survive and prosper in this rapidly changing environment.

4. Information security concerns

Mobile technologies, cloud computing and other emerging tools offer innovative new ways to do business and improve the customer experience. Yet, they also present additional challenges for protecting sensitive data. Financial services firms, which are especially vulnerable to information security threats, must find better ways to effectively manage these risks. 

5. Hiring challenges

As the needs of financial services firms have evolved, hiring professionals with the requisite skills has become increasingly challenging. Like their counterparts in other industries, financial services CFOs continue to experience recruiting difficulties.

To address talent shortages and access in-demand skills, banks and other financial institutions are commonly working with consultants and project professionals who can provide specialized subject matter expertise and support key business initiatives. Organizations also are finding they must offer improved compensation packages to attract and retain top performers.

Photo creditThe Wall Street Bull, by herval