With a new year ahead, the financial services industry is reaching an inflection point with a mixture of optimism and challenges.
According to a survey of 1,600 executives globally by Deloitte’s Center for Financial Services, the financial services industry finds itself in entering 2022 with questions regarding digitization and technology, and how to attract and retain talent. The answers to those questions will play out against a backdrop of COVID and the gradual reconfiguration of the post-pandemic economy.
In the short term, inflation looms as a challenge for all players in the finance sector.
In the Valley, Wells Fargo & Co. Market Executive Jake Ganajian said that inflationary pressures are unique for every client, but that the broad theme will have an impact on clients’ bottom lines if they are not consistently thinking about how to manage it.
Stephen Davis of Davis Group at UBS in Westlake Village, noted that during 2021, the Federal Reserve kept interest rates low to sustain the economy during the pandemic. And in 2022, “we’re going to have the first half of the year with strong growth and high inflation,” Davis said.
However, as the industry works through obstacles, it is also finding itself with new opportunities to serve clients. For example, companies that properly implement new digital technologies for accounting or financial management can gain a competitive advantage. Likewise, companies that win at talent recruiting will pull ahead in the marketplace. This has led to what Monica O’Reilly, leader for the U.S. financial services industry at Deloitte, called in a podcast “buoyed optimism.”
The opportunities also include improving loan growth and rising premiums, according to the survey by Deloitte. The survey also marks the current moment as a point for the industry to invest in environmental, social and corporate governance efforts.
But these developments will come in an environment of uncertainty.
“A lot of these things obviously are outside of our control, so you just have to make sure you build a business strong enough to withstand volatility and surprises,” Christopher Farrar, chief executive of commercial mortgage lender Velocity Financial Inc. in Westlake Village, told the Business Journal in one of these profile on the following pages.