Demica: Banks Respond to Rising Rates with Asset Diversification

Leading fintech and supply chain finance platform Demica has released its 2024 Benchmark Report, finding that 55% of global banks have seen asset growth negatively affected by rising interest rates. 

In addition, 44% of global banks studied noted geopolitical risk as having an adverse effect on their organisation’s asset growth. 

To reverse course and fuel growth, Demica says banks are diversifying their assets with a focus on risk distribution. 

Demica: Banks diversifying investments for asset growth

Per Demica’s report – which surveyed 169 supply chain finance professionals across 31 countries – the majority (52%) of global banks are planning to move into new product lines in 2024 – compared with 41% last year – in a bid to generate asset growth through less conventional avenues. 

Of the global banks seeking new lines of investment, some 27% identify Trade Receivables products as showing the most growth potential, overtaking Payables products for the first time since Demica’s first annual Benchmark Report three years ago. 

And, of the supply chain finance professionals surveyed, this year marked the first time the majority (62%) had personal involvement in an ESG-focused transition, highlighting a growing trend at major banks as they revamp transition plans to a more sustainable future post-pandemic. We outlined the Top 10 most sustainable trends in fintech, financial services and banking earlier this year. 

What’s more, while macroeconomic headwinds are driving banks to shake up their asset portfolios, promise in new asset lines – like Trade Receivables – mean many global institutions remain cautiously optimistic about improved asset growth.