fintech digest
What Do Economic Shifts Mean for Digital Lenders & More
Research Team
19 April 2024
What do economic changes mean for digital lenders?
Lending acts as a fundamental driver of economic vitality, facilitating investments, consumer spending, and broader economic expansion. Its intricacies are closely linked with the prevailing economic climate, as fluctuations in key indicators—such as inflation, interest rates, unemployment rates, and GDP growth—play pivotal roles in shaping the lending environment.
These economic fluctuations exert a profound influence on the behaviors of borrowers, their ability to maintain creditworthiness, and the willingness of lenders to assume risk.
Geopolitics and the geometry of global trade
Global trade patterns are reconfiguring. More shifts are likely and businesses need to be aware of the potential trade-offs of different paths ahead.
Trade reconfiguration has been making headlines. In 2023, Mexico became the United States’ largest goods trade partner. Vietnam’s trade with China and the United States has been surging. European economies’ energy imports shifted dramatically away from Russia, while imports of some products from China, such as electric vehicles, boomed.
UK Government launches task force to propel open finance and SME lending
Bim Ofolami, the Economic Secretary to the Treasury, has established an open finance task force during aspeech at the IFGS 2024 conference.
According to Finextra Research, this move, eagerly anticipated following the publication of the Centre for Finance, Innovation, and Technology’s (CFIT) Blueprint report in February, aims to set a definitive path for the integration and implementation of open finance in the UK, particularly focusing on enhancing SME lending.
The Middle East is on the cusp of a digital payments revolution
Historically, countries in the Middle East have clenched to cash payments. However, digital payments are increasingly becoming more commonplace.
Thanks to the growth of fintechs, spurred on by a favorable regulatory environment throughout the region, cashless transactions are all set to become the norm.
One of the reasons for the switch to digital payments is the growth of the region’s e-commerce sector. Deloitte estimates the e-commerce sector in the Middle East will reach a market volume of $50 billion by 2025.
ETF investors keep riding the US tech wave
The opening months of 2024 extended a key message of the previous year: don't bet against big tech. That's evidenced enough by shares such as Nvidia (US:NVDA) continuing to soar ahead, with the funds and trusts backing artificial intelligence (AI) plays most heavily, such as Manchester & London Investment Trust (MNL), racking up their own hefty gains. Similar trends can be seen on a market level: the S&P 500 made a double-digit return in the first quarter of this year, putting it ahead of mainstream indices in Europe, the UK and Asia.