3 Key Priorities For Investment Banks In 2024: Report Details Strategies For Success

As the financial landscape continues to evolve, investment banks and capital markets firms are gearing up to tackle the challenges and opportunities that 2024 presents.

Investment banks in 2024 face a landscape characterized by modest growth, technological advancements, a heightened focus on sustainability and potentially lower interest rates.

Deloitte’s 2024 banking and capital markets outlook report highlights three key priorities for the investment banks and capital market firms to navigate challenges and capitalize on opportunities that 2024 may present:

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1) Embracing Restructuring Services

In 2024, investment banks are expected to witness modest growth, driven primarily by the global economic recovery gaining momentum. According to Deloitte, a significant area of focus will be restructuring services, with particular emphasis on sectors such as Commercial Real Estate (CRE) and technology.

The CRE sector, in particular, is expected to be a hotspot for restructuring efforts, as businesses reassess their real estate needs in the wake of remote work trends. Refinancing activities, sustainability-led initiatives, and event-driven acquisitions are anticipated to drive issuances and boost advisory revenue.

Wells Fargo & Co WFC has by far the biggest exposure to CRE lending in the U.S., followed by JPMorgan Chase & Co JPM.

2) Strategic Integration Of AI

To stay ahead of the competition, Deloitte believes that investment banks need to strategically embrace generative artificial intelligence (AI). The bet is that it will enhance productivity across front and back-office functions.

As the buy side also ramps up investments in AI technologies, large investment banks must differentiate their machine-learning models by fine-tuning their input data. By investing in AI, banks can gain a competitive edge, streamline operations, and deliver enhanced value to their clients.

JPMorgan is capitalizing on its interest in AI. In early 2023, it advertised for more than 3,600 AI-related jobs. It is also in the process of developing a ChatGPT-like software service that leans on a disruptive form of AI to select investments for customers.

The Goldman Sachs Group Inc GS and Morgan Stanley MS are also testing AI for internal use. Word on the street is that Goldman Sachs is developing GenAI tools internally to assist its developers in code writing.

3) Championing Climate Innovation

In 2024, investment banks have a unique opportunity to contribute to climate innovation. They can offer products and infrastructure that lend credibility to nascent carbon markets.

With sustainability becoming a focal point for businesses and investors alike, banks can play a pivotal role in financing and supporting projects that align with environmental, social, and governance (ESG) goals. That includes creating financial products that promote sustainability, such as green bonds and climate-focused investment vehicles.

Morgan Stanley, HSBC Holdings Plc HSBC, Goldman Sachs and JPMorgan Chase have already announced individual sustainable finance targets for 2030. The targets range from $750 billion to $2.5 trillion.

In 2024, banks that strategically focus on restructuring services, embrace AI, and champion climate innovation, could emerge as winners.

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