What the Next Decade Holds
for the Global Financial System
The global financial system is entering a decade defined by structural change rather than cyclical adjustment. The forces reshaping it — the rise of private credit, the digitisation of money, geopolitical fragmentation, and the pressure of climate transition — are not passing headwinds. They are permanent shifts in the architecture of how capital moves through the world.
Forecasting financial system change is a discipline with a poor track record of precision and a reasonable track record of direction. The specific timing is almost always wrong. The structural forces are usually visible, if you are paying attention to the right things. What follows is not a prediction of what markets will do — that kind of forecast belongs to no one with integrity — but an analysis of the forces that are already in motion, what they are likely to produce, and what they mean for businesses, investors, and policymakers navigating the decade ahead.
Abel Prasad has tracked these dynamics closely through work in the funding and private credit markets across South Australia and nationally, and through engagement with the broader policy and commentary landscape — including analysis featured in and alongside reporting by ABC News on the structural evolution of Australian and global finance. The view from Adelaide, where the consequences of financial system change arrive in the funding conditions faced by real businesses, is a useful corrective to the abstraction that macroeconomic analysis can sometimes produce.
Five forces shaping the next decade
01
The continued expansion of private credit
Private credit's growth from niche instrument to $1.7 trillion asset class is not the end of the story — it is the beginning of the next chapter. As bank regulation continues to constrain traditional lending and as institutional investors seek yield in a structurally lower-return environment, private credit is projected to reach $3.5 trillion in assets under management by 2030. It operates beyond financing costs: as private credit becomes a larger share of total credit outstanding, its performance through a full credit cycle — one that the asset class has not yet experienced at current scale — will become a systemic question rather than an investor question.
Implication for Australian businesses
More competition in the funding market, broader availability of private credit in regional markets including South Australia, and — as the cycle turns — the possibility of a more rapid tightening in non-bank credit conditions that businesses accustomed to bank lending flexibility will have planned for.
02
The digitisation of money and payment infrastructure
Central bank digital currencies are moving from research projects to implementation across major economies. Wholesale CBDCs — designed for interbank settlement rather than retail use — are likely to be operational in most developed economies within five years. The implications for payment efficiency, correspondent banking, and cross-border capital flows are significant. The implications for financial inclusion and monetary policy transmission are potentially transformative, though the political and technical challenges of implementation remain substantial.
Implication for Australian businesses
Faster, cheaper cross-border payments — particularly relevant for South Australia's exporters in agriculture, mining, and defence. Potentially significant changes to correspondent banking relationships that currently make international trade finance expensive and slow for mid-market businesses.
03
Geopolitical fragmentation of capital markets
The assumption of an integrated global financial system — capital flowing freely to its most productive use across borders — is under sustained pressure from geopolitical competition between the United States, China, and their respective allies. The partial de-dollarisation of trade finance, the development of parallel payment systems, and the increasing use of financial system access as a geopolitical instrument are producing a less efficient but more politically mediated global capital allocation. This is not a temporary disruption — it is a structural feature of the decade ahead.
Implication for Australian businesses
Australia's position as a capital-exporting nation with significant trade exposure to China places it at the intersection of these tensions in ways that are not yet fully priced into funding costs or business planning assumptions. Currency and geopolitical risks embedded in current trade and financing arrangements deserve closer attention than most mid-market businesses are currently giving them.
04
Climate transition as a financial system stress test
The financing requirements of the global energy transition — estimated at $4–6 trillion annually through 2030 — represent the largest single reallocation of capital in modern financial history. The financial system is both the mechanism through which this reallocation occurs and a subject of the transition itself: stranded asset risk, green taxonomy regulation, mandatory climate disclosure, and the repricing of physical climate risk are all producing changes in capital allocation, insurance availability, and asset valuation that will compound through the decade.
Implication for Australian businesses
Mandatory climate disclosure is coming for large businesses, and its requirements will cascade through supply chains to mid-market companies. Businesses in South Australia's agricultural and resources sectors face both physical climate risk and transition risk in their lending relationships — banks and private credit funds are increasingly pricing both into their credit assessments.
05
AI and the transformation of credit underwriting
Artificial intelligence is beginning to transform credit underwriting in ways that will, over the next decade, substantially change who can access finance and on what terms. Machine learning models that can assess creditworthiness from alternative data sources — cash flow patterns, operational data, supply chain relationships — are already in use among fintech lenders and are being adopted by an increasing number of non-bank credit providers. The implications for credit access among underserved borrower segments are significant; the implications for model risk and systemic correlation are equally significant and considerably less discussed.
Implication for Australian businesses
Businesses that maintain clean, accessible financial data — through integrated accounting systems, clean bank feeds, and digitised supply chain records — will increasingly find that data quality is a direct input to funding availability and cost. This is a structural advantage that well-organised businesses can build deliberately.
The common thread
The common thread across all five forces is disintermediation: the gradual erosion of the traditional financial intermediaries — banks, public debt markets, correspondent networks — that have stood between capital and its ultimate deployment. Each force, in its own way, is creating more direct pathways between providers and users of capital, with implications for efficiency, access, risk distribution, and systemic stability that regulators and market participants are only beginning to work through.
What the decade holds — four plausible outcomes
More diverse, more accessible funding markets
The most optimistic outcome: private credit, fintech lending, and digitised payment infrastructure combine to produce genuinely better funding access for businesses that have historically been underserved — including mid-market businesses in cities like Adelaide and across regional Australia. Competition disciplines pricing, technology reduces transaction costs, and the net result is a more efficient allocation of capital to productive use.
A credit cycle stress test for private markets
Private credit at scale has not yet been tested through a serious credit cycle. The next decade is likely to provide that test. The outcomes will depend on the underwriting quality of credit extended during the growth period, the liquidity mechanisms available to fund managers, and the degree to which leverage has accumulated in the system. The results will determine whether private credit's growth has been sound diversification or concentrated risk accumulation.
Fragmented but functional global finance
Geopolitical fragmentation produces a global financial system that is less integrated than the post-Cold War peak but remains broadly functional — parallel systems for different geopolitical blocs, more complex correspondent banking, higher transaction costs for cross-border capital flows, but no systemic break. The middle path, and probably the most likely outcome, though at meaningful efficiency cost.
Regulatory recalibration of non-bank finance
As private credit, fintech lending, and crypto-adjacent finance grow, the regulatory gap between bank and non-bank finance becomes increasingly difficult to sustain politically. A significant regulatory tightening of the non-bank sector — particularly in response to a credit event or systemic stress — is a plausible outcome that would reshape the alternative funding landscape materially. Businesses and advisers with significant non-bank credit exposure should have this scenario in their planning.
For businesses in South Australia and across Australia more broadly, the most actionable insight from this analysis is not about macroeconomic prediction — it is about positioning. The businesses that will navigate the next decade's financial system most effectively are those that maintain genuine optionality in their funding arrangements: relationships with both bank and non-bank providers, clean and accessible financial data, a clear understanding of their own credit profile, and the adviser relationships needed to move quickly when funding windows open or conditions change.
The financial system of 2035 will be more complex, more diverse, and more technologically mediated than the one we operate in today. It will present genuine opportunities for businesses that understand it and genuine risks for those that do not. The distance between those two outcomes is not primarily determined by market conditions — it is determined by preparation, literacy, and the quality of the professional guidance available to the businesses navigating it.
The gap between businesses that access capital on good terms and those that do not is rarely a function of the capital's availability. It is almost always a function of how well the business and its advisers understand the market they are operating in — and whether they arrived at the conversation early enough to have real choices.
Frequently asked questions
What is driving the growth of private credit globally?
Private credit has grown primarily because bank regulation post-2008 constrained traditional lending, creating a gap that non-bank lenders moved to fill. Institutional investors seeking yield in a low-return environment provided the capital, while borrowers — particularly mid-market businesses underserved by banks — provided the demand. The asset class is projected to reach $3.5 trillion under management by 2030, according to IMF and industry estimates.
How will central bank digital currencies affect Australian businesses?
For most Australian businesses, the most immediate impact of CBDC development will be on cross-border payment efficiency. Wholesale CBDCs — currently in trial phases across multiple economies — could significantly reduce the cost and time of international trade finance, which is particularly relevant for South Australian exporters in agriculture, mining, and defence. The Reserve Bank of Australia has been actively engaged in CBDC research and wholesale trials.
What does climate transition mean for business lending in Australia?
Australian lenders — both banks and private credit funds — are increasingly incorporating climate risk into credit assessments. This means businesses in carbon-intensive sectors or those exposed to physical climate risk (flood, drought, fire) may find credit conditions tightening as lenders adjust their risk pricing. Mandatory climate disclosure requirements, being progressively introduced in Australia, will also require businesses above certain thresholds to report on climate-related risks and opportunities.
How can Australian businesses prepare for a more complex financial system?
The most actionable steps are: maintaining relationships with both bank and non-bank lenders rather than relying on a single provider; keeping financial data clean, current, and accessible across integrated systems; understanding your own credit profile before you need to present it to a lender; and building adviser relationships that can navigate a more complex market. Optionality — having genuine choices when funding conditions change — is the most durable form of financial resilience for mid-market businesses.
Preparing your business for the decade ahead?
Abel Prasad works with business owners across South Australia on funding strategy, credit positioning, and navigating a more complex financial landscape.
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