Banking CEOs generally remain confident about the prospects for the global economy and their industry, according to KPMG’s latest Banking CEO Outlook survey although there has been a slight decline in their levels of optimism compared to last year. The survey covered 142 banking CEOs from countries in the Americas, Europe and Asia and aimed to get their perspectives on their business and the economic landscape over the next three years.
Concerns focus on both economic and technological risks
Overall, 70 percent were confident about the growth prospects for the global economy (compared to 72 percent in 2022) while 76 percent were confident about the prospects for their industry (compared to 84 percent in 2022). Challenges include continued market uncertainty and its effect on customer behaviour- a resounding 79 percent cited the rise in the cost of living as the single largest risk to their organisation’s prosperity. Cyber attacks are a growing concern, with only 54 percent saying they were well prepared for a cyber attack, compared to 66 percent in 2022, a reflection of the increasing frequency of such attacks on the world’s banks during 2023. Moreover, technological advances, while bringing opportunity, can also come with new risks which need to be addressed.
ESG is becoming a critical part of the business model
Banking industry leaders are increasingly realising that ESG is not merely a box to be ticked but an integral element of the business, which stakeholders, including employees, expect to be taken seriously. Moreover, many CEOs now see ESG as a valuable investment which is good for business. A total of 63 percent of those surveyed stated that they believe ESG is now fully embedded into their business as a means of value creation. In fact, 53 percent believe that they will see a significant rate of return on their ESG investments within three to five years, while 25 percent foresee that return in less than three years.
CEOs generally optimistic about AI
Most CEOs clearly understand the importance of an AI strategy, with 73 percent agreeing that it is the most important investment opportunity for their company despite economic uncertainties. The top benefits of AI were seen as increased profitability, stronger fraud detection and cyber-attack response, as well as new product and market opportunities. Moreover, 74 percent expect to see a return on AI investment within five years, while 23 percent predict a return within three years.
But employees are still vital
In spite of the attention given to AI, the survey nevertheless shows CEOs’ concern to maintain a high calibre workforce. Employee value proposition, to attract and retain the required talent, is a top operational priority. Moreover, the survey shows a slight increase in the proportion of CEOs who expressed readiness to direct more capital investment to develop the skills and capabilities of their workforce (46 percent, compared to 42 percent in 2022), while the number ready to place more capital investment to acquire new technology was down slightly (54 percent compared to 58 percent in 2022).
