Emerging Finance Trends: What to Watch out for in 2024

7 Jul 2024

The finance industry is constantly changing. Tech breakthroughs, economic twists, and evolving workstyles are all redefining the industry. Even accounting has significantly changed in the 21st century. To stay on top, you need to understand the latest trends in finance.  

We’re here to guide you through the latest in finance for the year. With this, you should have everything you need to navigate your journey halfway through 2024!  

Trends in Finance #1: AI in Finance is a Continuing Conversation  

In June 2024, Columbia Business School hosted a conference on Artificial Intelligence (AI) in Finance. With AI use continuing to be one of the key finance trends, the discussion focused on both the exciting possibilities and the potential pitfalls of AI in the world of finance. Two papers caught people’s attention for showcasing how generative AI is commonly used in finance.  

The first paper talked closely about Large Language Models or LLMs. Trained on massive amounts of data, LLMs can understand and generate human language. Think of popular chatbots like ChatGPT or Google’s own Gemini. 

J. Leland Bybee’s research focused on using LLMs to generate “beliefs” based on historical finance news. By feeding the AI articles from financial journals, Bybee simulated daily stock market predictions. The surprising result: the model’s predictions closely matched real-life surveys, even capturing signs of mispricing and overvalued stocks (bubbles) before they happened.  

Bybee found that relying on LLM caused major increases in U.S. rentals.  

The second paper, by Sophie Calder-Wang and Gi Heung Kim, took a fascinating look at how AI is changing the U.S. rental market. They focused on algorithmic pricing where AI programs automatically set rental prices.  

When there’s low demand (such as off-seasons) the program lowers rent to attract renters. But during peak times, it raises rent to meet higher demands. 

While convenient, the study found that algorithmic pricing can help balance supply and demand. The catch is, if too many homeowners use this system, it can lead to rent prices skyrocketing. The program doesn’t just consider local trends but takes competitor prices into account, this leads to rentals being consistently higher than if humans set the prices themselves.  

The Solution to Proper AI Use: Regulation!  

Forbes’ panel on AI in the financial industry featured leading figures in banking who tackle challenges and potential solutions for proper AI use.  

One key takeaway came from Kira Vuppu, Chief Product Officer for Commercial Banking at Wells Fargo. Vuppu emphasized that the financial industry is built on a foundation of regulations, especially when it comes to adopting new technologies. He assured audiences that AI use will be subject to the same rigorous oversight and transparency, especially when it comes to impactful financial decision-making. 

This aligns perfectly with the research by Calder-Wang and Kim. They too concluded that regulations are necessary before the mass adoption of algorithmic pricing to prevent potential issues. 

The message is clear: both industry leaders and researchers recognize the need for a balance. Financial institutions are excited about the potential of AI, but they understand the importance of responsible implementation. By ensuring transparency and proper oversight, AI can become a powerful tool for financial institutions while safeguarding consumers.  

Trends in Finance #2 Sustainable Investing in 2024  

A recent study by the Morgan Stanley Institute for Sustainable Investing reveals one of the trends for finance investors. A staggering 77% of global investors now express interest in companies or funds that prioritize positive social and environmental impact. This interest is translating into action, with over half of respondents planning to increase their allocation to sustainable investments by 2025.  

Investors are now increasingly prioritizing positive social and environmental impact.  

Climate action is at the forefront of this movement, with investors ranking it as their top sustainable investing focus, followed by healthcare. However, the focus goes beyond specific initiatives. Investors are keenly interested in a company’s carbon footprint and their commitment to reducing greenhouse gas emissions. They seek proactive planning for decarbonization strategies and how businesses will adapt their models to align with climate science requirements.  

Sustainable Investment Concerns: ESG Data Transparency and Greenwashing  

We all want to partner and work with companies and investors that mirror our own values. However, the study reveals two significant sustainable investment hurdles: ESG transparency and greenwashing. 

First, Environmental, Social, and Governance (ESG) reports detail a company’s sustainability efforts, social impact, and governance practices. Investors find them difficult to use due to a lack of transparency and consistent reporting standards. In turn, this lack of transparency and availability of reports makes it challenging to compare and assess companies’ commitment to ESG principles.  

Second, the study also identified greenwashing as a persistent obstacle to sustainable investing. Greenwashing occurs when companies mislead the public about their environmental efforts, often promoting unsubstantiated solutions to the climate crisis.  

The United Nations highlights common greenwashing tactics that investors find deceptive:  

  • False ESG Claims. Companies exaggerate or fabricate their environmental, social, and governance practices.  
  • Opaque Operations. Companies lack transparency regarding their operations and production processes, making it difficult to assess their true environmental impact.  
  • Misleading Labels. Companies use vague or unsubstantiated terms like “green” or “eco-friendly” without real commitment to sustainability.  

The UN advises investors and consumers to be wary of these tactics, prioritize responsible spending, and seek companies with transparent and verifiable ESG initiatives. 

Trends in Finance #3: Competition for Finance Talent 2024  

Talent is one of the largest trends in finance for every business. The accounting profession faces a significant challenge in attracting and retaining qualified individuals. Recent trends in the U.S. and the UK highlight this growing concern:  

  • Based on the previous article, master’s degree completions in accounting also declined in the U.S.  

This decline is creating a talent shortage, as Jamie Lyon, ACCA Global Head of Skills, Sectors, and Technology, points out: “The shortage of talent and cost of meeting pay rise demands… means that attracting and retaining talent presents a huge ongoing challenge for employers.” With this said, what’s a key factor in retaining financial talent?  

Diversity, Equity, and Inclusivity Practices is a Deciding Factor for Finance Talents  

The Global Talent Trends 2024 Survey by the Association of Chartered Certified Accountants (ACCA) shines a light on the growing importance of Diversity, Equity, and Inclusion (DEI) in attracting and retaining talent within the finance sector. The survey reveals a strong correlation between a company’s DE&I practices and its appeal to potential employees. A significant 73% of respondents indicated that a robust Diversity and Inclusion culture significantly influences their choice of employer.  

Talents in the finance sector want organizations that practice DEI initiatives.  

This finding underscores the critical role DEI plays in today’s job market. Financial professionals are increasingly prioritizing workplaces that foster a culture of inclusivity and diversity. 

The Key Takeaways for Finance Trends 

There are 2 primary takeaways from the current 2024 trends in the finance sector:  

The rise of Sustainable Investing and the increasing use of AI in finance are reshaping the skills needed for success in the field. While strong accounting expertise remains essential, organizations now require talent with a broader skillset. Specialization beyond financial knowledge is key. With a growing demand for expertise in areas like ESG and digital literacy, Organizations need to now invest in recruitment toward these specialized skills.  

Second, the growing trend of specialization makes recruitment even harder amidst the existing global talent shortage. In today’s workplace, fostering a welcoming and inclusive environment is no longer a nicety, it’s essential to attracting incredible talent. This is why organizations need to demonstrate a strong commitment to DEI or partner with providers who do.  

Our solution – partner with an offshore provider like HGS Offshore Staffing Solutions for an offshore finance or accounting team:  

  • Expand Your Talent Pool. HGS OSS goes beyond local limitations, connecting you with a global network of top financial professionals. 
  • Direct Your Recruitment Efforts. Our offshore recruitment strategy lets you take control of the recruitment process to find the best fit for your team.  
  • Embrace Diversity and Inclusion. HGS’ global DEI initiatives showcase our dedication to inclusivity, a quality highly valued by finance talents.  

Through HGS OSS, you gain access to the best financial talent without diverting resources from your core functions. This way, all you need to do is manage your finance team towards new and incredible heights. Contact HGS OSS today.