Fazzaco Exclusive: A 2024 Pan-Financial Industry Outlook

As we approach year's end, Fazzaco offers a glimpse into the 2024 pan-financial industry, drawing on a wealth of information and deep analysis from 2023.

Amidst a global economy struggling for growth and persistent inflationary pressures, 2024 heralds a fresh investment landscape. Uncertainty continues to dominate, with oil price volatility and the looming U.S. presidential election poised to add layers of complexity to the market.

The future always holds surprises, as seen three years ago when no one predicted a global economic downturn due to a pandemic, despite expectations that the 2020s would be a decade of digitalization driving global economic growth.

Global Economic Trends in 2024: Areas to Watch

Financial trading is swayed by a host of macroeconomic factors, with energy playing a pivotal role. This year's latter half saw a crunch in traditional energy supplies, a dip in infrastructure investments, and geopolitical tensions in the Middle East leading to a drop in crude oil production, all intensifying the global energy crisis. The crisis is expected to persist into 2024.

On November 2nd, the Bank of England opted to maintain its interest rates, keeping the key rate at a 15-year peak of 5.25%. With inflation yet to be tamed, the UK's economy teeters on recession. The Bank of England's outlook for 2024 is bleak, predicting a 50% chance of recession and stagnant GDP growth. The UK's economic woes could spell a period of stagflation for Europe in 2024.

In the first year post-pandemic, China's economy showed signs of cooling across various sectors, including real estate. With hefty bank debts and significant government economic stimuli, the economic forecast for mainland China in 2024 remains clouded with uncertainty.

Forex Market in 2024: Navigating Through Volatility

The first half of 2023 saw a synchronized implementation of global monetary policies, leading to subdued forex market volatility. However, as central banks of some nations, particularly in emerging economies, gear up to ease monetary policies in 2024, and with entities like the US Fed in wait-and-see mode, forex volatility may spike again. This uptick in volatility could align with a resurgence in forex arbitrage trading strategies.

The U.S. dollar's trajectory in 2024 is rife with uncertainty. Conventional wisdom suggests that if the Fed slashes rates early next year, the monetary policy hiatus could extend, preserving the allure of the U.S.'s real interest rates. Hence, the dollar is unlikely to weaken next year, and a deteriorating global economy may further entrench its strength.

This year also witnessed a rebound in the currencies of some Latin American and Asian high-yield nations in the forex market. However, with emerging markets gradually lowering interest rates, we may see a repeat performance next year.

Fintech: The Rise of AI

2023 was crucial for the development of Central Bank Digital Currencies (CBDCs), with dialogue and cooperation between regulators in different countries strengthening. Therefore, 2024 is expected to be a year of robust growth for CBDCs, with the pace of change set to grow exponentially once government agencies begin formal adoption of digital currencies, as more cross-border and B2B payment use cases emerge.

Generative AI, represented by ChatGPT, became a hot topic in 2023 and greatly changed the way we work. In the coming years, as the availability of client data increases and competition intensifies, generative AI is expected to become an important interest point for international financial institutions. More financial institutions will use the technology to provide users with more personalized and user-friendly experiences.

Global digital identity applications are expected to grow by 86% from 2024 to 2026. As early as 2021, the European Commission put forward a series of proposals, including the EU ID Wallet (eIDAS2), which allow users to store credentials and identity information. Therefore, digital identity may experience explosive growth by the end of this year or early 2024, triggering a massive adoption wave in the EU.

In terms of regulatory technology (regtech), global regtech spending is expected to grow by 150% from 2023 to 2028. Many banks are still struggling to cope with complex compliance requirements, and new technologies, especially AI, can help banks comply with Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) regulations. These technologies can also simplify and enhance Customer Due Diligence (CDD) and KYC processes to respond more quickly to threats.

Bull Market Prospects for the Crypto Market in 2024

2024 will be an important year for the crypto market, especially for institutional traders. The global macroeconomic situation has had a significant impact on institutional trading, and recent geopolitical conflicts, pandemics, trade protectionism, and supply chain disruptions have created a mature environment for alternative investments, with cryptocurrencies becoming a strong contender for such investments for the first time.

Additionally, Bitcoin is scheduled to halve in April 2024. History shows that each halving has triggered a substantial price increase, forming a substantial bull market. Therefore, next year's Bitcoin halving plan may trigger another bull market, attracting the attention of institutional traders.

It can be said that the convergence of regulatory developments, Bitcoin halving, and favorable macroeconomic conditions lays the foundation for the application of digital assets and the increase in mainstream acceptance. With growing institutional interest, the industry will experience higher liquidity, stability, and the possibility of explosive bull markets.