From the collapse of Silicon Valley Bank to sky-high interest rates, 2023 was a roller coaster year for financial services. In 2024, there’s hope for greater calm as leaders try to maintain customer satisfaction, industry trust and stability.
Bringing about a sense of calm while maintaining business integrity requires a plan that harnesses strategy and technology. In today’s fast-changing world, combining analytics and machine learning strategy with old-fashioned business acumen is necessary to grasp the trends as they shift.
To understand how industry leaders are approaching 2024, Martim Rocha, Director of Risk Management Industry Consulting at SAS, sat down with Heng Li Koon, Managing Director and Head of Group Balance Sheet Risk Management at United Overseas Bank (UOB), a multinational financial institution based in Singapore.
Here are three takeaways from the conversation.
1. Early detection of financial change is crucial.
The interest rate hikes of the past year show that even a slight rise in costs can result in disruption, from the failure of Silicon Valley Bank to a dramatic drop in home sales.
While individual consumers may assess their financial situations differently and respond with spending changes or other tactics, organizations face these disruptions differently, according to Heng. One way to manage the ebbs and flows of the market is by utilizing asset and liability management (ALM) solutions, which detect such changes early on. While the response to every crisis is different – requiring a different prescriptive approach – having the right tools helps ensure that financial managers can respond before it’s too late.
2. Artificial intelligence will provide some guidance.
Advances in artificial intelligence (AI) have taken hold in the business world over the past year, and the financial services industry is no exception. Machine learning models can now detect developing trends, while large language models (LLMs) can provide contextual recommendations.
“There are many use cases for AI in financial services,” said Heng. “You can use it to understand behavioral profiles and understand why people act the way they do.”
As AI evolves further in 2024, so will best practices for detecting market changes. Yet Heng also noted that while new solutions can plot trends, human judgment still matters.
3. When in doubt, look back at the balance sheet.
Heng’s final point highlights the uncertainty of the financial system. Going forward, the industry’s biggest challenge may be the future itself, said Heng. While analysts and pundits can speculate, predicting what lies ahead can be challenging.
Despite these difficulties, the balance sheet remains a tried-and-true indicator.
“That’s where the answers will always lie,” said Heng. “As long as the traditional finance structure can mesh with technology, things can work.”
Protect yourself from financial volatility
2024 promises more uncertainty, yet there is also hope for relief. Whatever happens, it’s always a good idea to protect yourself and your organization’s finances with the help of Microsoft and SAS.
