After showing remarkable resilience over the last two years, the financial services industry is expected to witness continued growth, thanks to solid corporate and consumer spending on financial services and the growing adoption of digital technology. Moreover, financial institutions generally benefit in a rising interest rate environment as it helps them boost their profit margins.
Amid this backdrop, investors could watch financial stocks First American Financial Corporation (FAF – Get Rating), Everi Holdings Inc. (EVRI – Get Rating), and Digital World Acquisition Corp. (DWAC – Get Rating) witnessing solid momentum.
In recent years, the financial services industry has demonstrated its ability to navigate unprecedented levels of macroeconomic uncertainty successfully. From real estate to insurance to investment management to banking and capital markets, financial services organizations are well-poised for continued resilience and growth, driven by sustained demand for financial services.
According to a report by The Business Research Company, the global financial services market is expected to grow to $37.48 trillion by 2027 at a CAGR of 7.5%.
Moreover, financial services companies are expected to benefit from the current high-interest rate environment. Last month, the central bank raised interest rates by 0.25%, lifting the fed funds rate to a target range of 5.25%-5.5%, the highest level in 22 years, in its fight against persistent inflation.
While price increases have eased over the past year, dropping the inflation rate from 9% in mid-2022 to 3.2% in July this year, it is still well above the Fed’s target of 2%. Further, Fed minutes released last Wednesday from the most recent meeting showed that Fed officials expressed concerns about the pace of inflation and said more rate hikes could be required.
Furthermore, digital transformation plays a significant role in reshaping the financial services sector by bringing numerous growth opportunities. Adopting digital technology is pivotal for organizations to remain competitive, meet changing customer expectations, and drive operational efficiency.
For instance, with digital channels, customers can access their accounts, make transactions, and seek help anytime, anywhere, enhancing customer experience. By adopting advanced technologies like…
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