2024 is poised to be a transformative year for the Financial Services industry. It will demand innovative communication strategies and require public relations professionals to stay informed and nimble. In this blog, we’re outlining three trends savvy financial services communicators need to know to drive effective media strategies.
Trend 1: Regulation crackdown
The Consumer Financial Protection Bureau recently proposed rules for Big Tech’s digital payments and smartphone wallet services, and it’s only one of many policies impacting the fintech industry. As the sector matures, new technologies, geopolitical turmoil, economic uncertainty and many other factors have created a tenuous risk environment. It’s a challenging one for public relations pros to navigate that requires transparent and informed communications.
Despite facing ongoing pressure, the Financial Services industry has demonstrated impressive growth, which is another reason for increased regulatory activity. Recent data from McKinsey forecasts that fintech’s share of the banking industry will grow 15% annually by 2028, accounting for a $400 billion share of the market and significantly outpacing the 6% annual growth rate of banks.
In addition to the more unpredictable factors outlined above, there are also cyclical forces that communications professionals should monitor to stay ahead of fintech regulation. Bloomberg Law reporters David Portilla and Gabe Rosenberg explored the impact of this year’s election, arguing that the uncertain results and contentious candidates might motivate regulators to push through policy before new appointees prevent them from doing so.
Communications professionals can help steer fintech companies through this constantly evolving landscape by partnering with strategic public relations advisors that understand the regulatory landscape. Doing so will support nimble reactions to regulatory changes balanced with the capitalization of a booming industry.
Trend 2: Fundraising and IPO drought
While shifting macro factors like elections have driven increased activity in certain areas like regulation, we’ve also seen depressed activity in others like the fundraising and IPO market. Deal volume dropped from about 250 deals valued at $97.53 billion in 2021 to just 53 deals valued at just over $20 billion in 2022. There have been glimmers of hope with slightly increased volumes in 2023 and anticipated interest rate cuts, but neither are accelerating quickly enough to inject sustained momentum in the market.
When we spoke with Ryan Hibbison at Venture Capital Journal, he said fundraising has taken a hit because the capital raised during the 2020 and 2021 boom is only gradually being deployed. Importantly, the COVID pandemic extended the average investment lifetime for VCs thus creating misalignment in the market between LPs and GPs. As LPs grapple with less distributions, GPs are looking to raise more funds and get capital calls.
Hibbison expects that the markets will normalize in 2024, but it's still important that public relations professionals remain aware of the broader industry trends and market shifts to craft informed messaging that highlights fintech’s strengths in spite of rapid changes in the market.
Trend 3: The age of AI
In speaking with Hibbison, we also learned that the intersection of generative AI and fundraising is top of mind for investment firms. Hibbison believes this signifies a platform shift that, once fleshed out, will usher in a year of continued growth in the Financial Services space.
The data backs up his expectation of continued growth driven by generative AI, with a WEF survey of 227 fintechs finding that 70% believe the emerging technology is poised to be a crucial factor influencing fintech development in the next five years.
As the fundraising and IPO markets eventually heat back up, we’ll see advancements in areas like fraud detection and code development that will unlock increased efficiency and accuracy.
Business leaders will not only have more time to focus on higher-level, strategic tasks, but they’ll also see their roles extend into different disciplines. For example, finance leaders are increasingly also serving as technology leaders. 96% of senior bank executives indicated heightened involvement in technology and IT purchase decisions due to the growing interest in generative AI.
Financial Services companies need public relations partners with fluency in technology communications as the industry navigates rapid digital transformation. As these trends continue to unfold in 2024, it's important that communication professionals stay on top of the latest regulations, consumer trends and technological innovations to seize storytelling opportunities.
Highwire’s Financial Services Practice can help communication professionals navigate the nuanced and fluid industry to create differentiated narratives. Reach out today to learn more.
