The Financial Outlook of 2024: Impacts and Opportunities for Small and Medium Enterprises
We continue with our challenge in predicting the year we are about to begin.
I know for certain that this challenge has similarities to gambling because the variables are millions of millions, if not billions of billions.
At the same time, we do not equip ourselves with a crystal ball but use current trends and events to draw a plausible line and then be ready to make the necessary changes.
Today, let’s talk about finance, money, banks, and the entire world around which business orbits. 2024 is shaping up to be a pivotal year for the financial services sector.
With interest rate increases predicted in some nations, stalling in others, and a probable attempt at reduction by the USA, coupled with a rapidly evolving banking landscape, small and medium-sized enterprises (SMEs) face new challenges and opportunities. Let’s look in detail at the sector trends and their implications for SMEs.
Interest Rate Stagnation and Impacts on Banks
The predicted stagnation in interest rates will have significant repercussions on the banking sector. Many banks are expected to see a decrease in profits due to reduced net interest income and losses on commercial property portfolios.
This scenario could particularly harm American lenders, affecting their ability to offer loans and other essential financial services to SMEs.
The Situation of Banks in the EU and Asia
Banks in the European Union (EU) will see a decrease in bad debts after a difficult 2023.
This situation could lead to greater stability for European SMEs, who may benefit from more favorable lending conditions.
At the same time, Asian banks, especially in China, will record stronger growth, thanks to extended support to the struggling real estate market.
Asian SMEs could leverage these conditions to expand or consolidate in the local market.
Transition to Digital in the Banking Sector
The reduction in the number of bank branches and ATMs signals an acceleration in the transition to the digital banking system.
SMEs will have to adapt to this transition, leveraging digital technologies to manage their finances more efficiently and securely.
European banks are exploring stablecoins, while Brazilian banks support the introduction of their digital Real.
These developments could offer new opportunities for transactions and access to innovative financial services.
The Downsizing of Fintech and the Rise of Stock Markets
Despite the downsizing of the fintech sector, with investors demanding higher profits from startups, stock markets are expected to grow.
Emerging markets and technology stocks will be the main drivers of this growth.
SMEs might therefore consider investments in these sectors as part of their diversification strategy.
New Financial Regulations
The tightening of financial regulations, including the implementation of Basel III rules, will impose new challenges on SMEs.
The increase in banking capital requirements in the United States and new regulations for insurers, particularly related to climate compensation claims, will require SMEs to be more attentive in risk management and financial planning.
The Black Swan
Beware of BTC. If the queen of cryptocurrencies rides what appears to be the perfect storm of 2024, everything we have just seen could change significantly.
We are very close to the end of the old financial world that will soon, very soon, be completely replaced by the great illusion of decentralized finance.
Many believe that cryptocurrencies will be the end of bank seigniorage when, in fact, we will find ourselves facing the total end of financial freedom for SMEs.
Therefore, utmost attention!
Conclusions
SMEs in 2024 will have to navigate a rapidly changing financial landscape, characterized by challenges but also significant opportunities.
Adapting to an increasingly digital world, understanding new banking and market dynamics, and adjusting to evolving regulations will be key to success.
As the sector evolves, SMEs capable of adapting and strategically leveraging these changes will not only survive but also thrive in this new context.
What to do?
In this huge maelstrom, I feel I can give only one important piece of advice.
Purchase a book, even just one, on decentralized finance to understand well that it is not enough to think of replacing the ATM with a BTC transfer to your company wallet.
It is necessary to understand how the new financial system works philosophically, culturally, legally, and operationally before being overwhelmed by it.
In the end, it’s like learning to surf. Some are overwhelmed by the big wave, while others ride it with great joy.
Author: Koan Bogiatto
Koan Bogiatto has explored approximately 123 countries around the world and, after living in Italy, Spain and then in the USA, Florida. He is the only Italian to have received the prestigious Green Card for Extraordinary Achievement and Outstanding Individual from the U.S. Government, in the fields of education and coaching. In the past Koan has served as a consultant for eBay, INA Assitalia, Wind, 21st Century, Alviero Martini, Politecnico di Torino, IUM Monaco, Sai, De’Longhi Group, and Il Sole 24 Ore. “He is the founder of several successful companies in various fields, including coaching, education, real estate, and cryptocurrency trading, to name a few.”
