Four Trends that Signal Growth in the Financial Services Industry

The Great Recession hit the financial services industry – and the ARM companies that serve it – the hardest. Even now, this segment is still recovering; new regulatory policies are forcing banks to shift some of their focus toward compliance, taking resources away from business-growing practices.

However, there’s good news. Although the market seems depressed right now, Kaulkin Ginsberg’s   market research team has identified four economic trends indicating the financial services industry will reach 2008’s business levels in the next five to seven years:

• U.S. Census data projects the number of households is expected to increase at an average rate of 1.1% to 126 million households by the end of 2015. This mirrors broader economic recovery, which is slow in the short-term and moderate in the long-term.
• The unemployment rate is expected to level out through 2021. When this happens, there will be an uptick in disposable income.
• Disposable income is forecasted to grow at an annual rate of 2.5% through 2020. This is important for financial services and ARM companies because it will drive growth in consumption of borrowing, and it also increase a debtor’s ability to pay on time or pay off delinquent debts.
• The University of Michigan’s Consumer Sentiment Index shows that consumer confidence is on the rise, which is great news for financial services and ARM companies. It likely implies an increase in consumer willingness to purchase homes and automobiles, or use credit.

Overall, the data suggest a slow rate of growth for the financial services industry, with the greatest spike occurring between 2017 and 2020. Going forward, it will be important to monitor the labor force participation and federal funds rates; these two areas also have a profound impact on the financial services industry, and they could hinder recovery if they don’t increase in the coming years.

KG Prime’s latest market intelligence series on financial services closely examines this industry and identifies the best opportunities for ARM. To download the report’s executive summary, click here. For more information about KG Prime, email hq@kaulkin.com.