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Financial services CEOs are considerably less confident about their industry prospects over the next three years than leaders in other industries. The global banking expansion undertaken over recent years appears to have ground to a halt.
Risk: Perception is not reality
The management of risk is likely to be under scrutiny as never before, since it has become clear that risk management systems across the financial services sector are inadequate or flawed. This is particularly true of banks and asset managers, and, to a lesser extent, of the insurance sector.
CEO perspectives
Stephen Green, Group Chairman, HSBC Holdings plc, UK
Michael Smith, CEO, Australia and New Zealand Banking Group Ltd (ANZ), Australia
Changes to the regulatory environment
Financial services CEOs are bracing for adverse changes in the regulatory environment. Governments have taken significant holdings in financial services companies or provided increased guarantees for deposits, and will therefore have far greater influence over financial services activities than in the past.
Expect a new level of scrutiny
Asset managers are also likely to face tighter controls on their activities. Unregulated or lightly regulated funds such as private equity and hedge funds may well be subject to future stringent rules on their governance, structures and trading activities.
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Talent and key skills
Banks and asset managers have already made deep cuts to their staff pools, and these are likely to continue for as long as markets remain in turmoil. Many institutions are now searching for viable ways to better link risk and reward over the longer term-both to assuage public opinion and to provide better value for shareholders and improved service to clients. They are ahead of the pack when it comes to reallocating human resources to areas where they can create the most value for the firm and its clients.
A shift in focus
There is less emphasis now on short-term returns and trading activities, and more on relationships and adding value. Banking CEOs are less likely to rate recouping the cost of investment "as soon as possible" as critical/important. In light of the crisis, banks and assets management CEOs recognise the need to reform their operations.
Related research from PricewaterhouseCoopers
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