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      12 December 2023, Hong Kong (SAR), China (“Hong Kong”) – Most banks recognise that employees are critical to deliver an excellent client experience and the top operational priority for banking CEOs to achieve growth objectives in 2023 is attracting and retaining the necessary talent in a tough labour market, according to KPMG analysis.

      KPMG 2023 Banking CEO Outlook surveyed 142 banking CEOs, to collect their perspectives of their business and the economic landscape over the next three years. Deep insights were gained from this diverse cohort of banking leaders from across the Americas, Europe and Asia. These CEOs lead institutions which cover all the banking sub-sectors.

      When asked about their top operational priorities for the next three years, an increasing number of CEOs (29%) highlighted their employee value proposition as a means to attract and retain talent. While CEOs have maintained a steady year-over-year commitment to improving the customer experience and achieving organic growth (11%), they showed a marked, declining focus on advancing the digitalization and connectivity of their company’s functional areas (down 9 ppt). This shows that banks around the world have been on the digital enablement journey for a decade now, and most of them are a long way down the path. 

      Jianing Song Jianing Song, Head of Banking and Capital Markets Sector, Hong Kong, KPMG China, says:
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      In this time of global economic and geopolitical movement, the world’s banking leaders are facing a myriad of complex challenges. Despite the challenges, the main sentiment among banks CEOs is cautious optimism and they are taking a purpose-led and proactive approach to build organizational resilience and pursue pragmatic growth.

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      When asked to indicate the single largest risk to their organization’s prosperity over the next three years, a resounding 79 percent stated the cost of living. CEOs also listed disruptive technology (76%), regulatory demands (74%), talent (74%) and cybercrime (71%) as key risks.

      Siew David Paul McSheaffrey, Senior Banking Partner, Hong Kong, KPMG China, says:
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      With most stakeholders now expecting companies to have an ESG strategy embedded into their business models, bank CEOs appreciate the importance of investing to achieve their stated ESG and net-zero commitments, particularly in the areas of climate change and Diversity & Inclusion. Many are going beyond compliance demands for a longer-term return.

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      In a shifting and uncertain environment, banks will need to invest significantly in the areas that will help them and their clients to adapt and thrive, including ESG, digital technology and AI. With an appreciation that an ESG strategy has become a requirement of their organization, 63% of CEOs stated that they believe ESG is now fully embedded into their business as a means of value creation. They also expressed the view that their ESG strategy will have the greatest impact on building customer relationships (29%), shaping capital allocations, partnerships and M&A strategy (20%) and driving financial performance (17%).

      While most banks have made net-zero commitments, they recognize that it is difficult to drive change and measure their progress. Almost a third (28%) of survey participants stated that the greatest obstacle to doing so is either the complexity of decarbonizing their supply chains or the lack of skills and expertise to implement solutions.

      Business leaders across sectors are focused on investing heavily in disruptive technology and bank CEOs are no exception, since 73% agree that generative AI is the most important investment opportunity for their company despite economic uncertainties. In fact, when asked to cite the top benefit of applying gen AI, they most often pointed to the promise of increased profitability, stronger fraud detection and cyber-attack response, and new product and market opportunities.

      Banking CEOs are also cognizant of the challenges associated with implementing gen AI, with more than half (55%) noting technological capabilities and AI skills and the cost of implementation (55%) being highly challenging. A majority also noted that ethical challenges and a lack of regulation within the space are highly challenging.

      -Ends-

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