The investment banking industry both in India and globally is witnessing significant transformation marked by rapid technological advancements, fast-changing economic landscapes, and innovative new opportunities related to sustainability, customer engagement, portfolio diversification, and much more.
There are some key trends that are poised to reshape the landscape in 2024 with strong focus on capital markets, interest rates, private equity, transaction values and how can we forget inflation.
New Revenue Streams
While it has been talked about for a while, I believe 2024 will see a surge in alternative capital sources such as SPACs (Special Purpose Acquisition Companies), direct listing and digital assets, creating a paradigm shift in the industry.
With anticipation of lower interest rates, the equity capital markets may get a high creating a more robust capital raising environment. It is imperative to adopt new and evolving avenues and explore innovative ways for fund growth.
Deal-Making
With a lot of companies exploring new markets and unique partnerships, I believe 2024 is also going to witness increased momentum in strategic M&A deals and transactions, especially certain sectors like energy, technology, healthcare; of course, they will need to stay abreast with the latest industry trends and regulatory environment. Not to forget monitoring of inflationary trends as they will have a direct impact on interest rates, cost structures, pricing dynamics and valuation models.
Economy
According to a recent International Monetary Fund report, the world economy is expected to grow not more than 3% this year. While advanced economies such as US, Europe, Japan, UK, Canada will see moderate growth at around 1.4%, the emerging economies will witness higher growth on the back of strong consumer demand, younger demographics, and improving trade balances. India will be the strongest at 6.3% growth in 2024. In the same report, IMF predicts global inflation to go down to 5.2% in 2024 from 8.7% in 2022.
Technology
In 2024, we are sure to witness a surge in the adoption of advanced technologies such as artificial intelligence, machine learning, and blockchain. I truly believe that these innovations will streamline processes, enhance decision-making, and reduce operational costs. According to a report by KPMG, investments in fintech solutions are projected to grow in the second half of FY2024-2025.
Sustainable and ESG Investments
Environmental, Social, and Governance criteria are becoming increasingly important for investors. In 2024, investment banks are surely going to place a greater emphasis on sustainable and responsible investing. With governments worldwide focusing on climate change and sustainable development, investments in renewable energy, green bonds, and socially responsible projects are likely to witness a significant uptick.
IPOs
The IPO market will continue its momentum in 2024 if market conditions continue to be favourable backed by strong investor confidence.
Digital Assets
I think 2024 is going to be a landmark year for digital assets as bitcoins, other cryptocurrencies, in-game assets and non-fungible tokens are surely attracting a lot of investor attention. But it’s important to be cautious due to the volatility and price fluctuations.
My take
All in all, the investment banking landscape in 2024 and the year ahead is poised for a transformative journey shaped by the convergence of technological innovation, economic shifts, and evolving market demands.
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