PwC: Banking CEOs optimistic about revenues

More than half expect to take on more staff in the next year

SINGAPORE, 3 March 2014 – Research from PwC has revealed that 90% of banking & capital markets CEOs are confident that their revenues will increase over the next three years. PwC’s 17th annual CEO Survey, which includes responses from 133 banking CEOs in 50 countries, also found that the number who believe that the global economy will improve over the next 12 months has almost tripled since last year - 56% now compared with 19% last year. This buoyant outlook is reflected in the fact that more than half plan to take on more staff over the coming year, with most of those anticipating headcount increases of at least 5%.

Over-regulation, slow or negative growth in developed markets, and the response of governments to fiscal deficits and debt burdens pose the greatest challenges to their prospects with eight in ten CEOs seeing their operating costs rising and half believing that their ability to pursue market opportunities and innovate are hampered as a result of regulation.

Karen Loon, Singapore Banking Leader, PwC said:

“Banking & capital markets CEOs are markedly more optimistic about the global economy and their prospects for growth than they were this time last year. To position their organisations to take advantage of this growth, they can’t afford to fall behind the accelerating pace of change in their marketplace.”

Another interesting finding from the survey highlights that more than 70% of banking and capital markets CEOs see cyber insecurity as a threat to their growth prospects.

Antony Eldridge, Asia Pacific Banking Leader and Singapore Financial Services Leader, PwC said:

“This finding is one especially relevant to Singapore, in light of recent incidents. In both the banking and non banking industries, there is growing concern about the state of cyber security. Banks should take the necessary precautions and have the right controls in place to mitigate the risk of cyber incidents from taking place.”

The survey also highlights that limited availability of talent continues to be a concern, with 61% citing it as a threat to growth globally.

Antony Eldridge, Asia Pacific Banking Leader and Singapore Financial Services Leader, PwC said:

“The lack of talent is not unique to the banking sector, with other industry leaders and CEOs stating the same concern. In Singapore, the limited availability of talent is an increasing concern, and it is likely that we will see a continued effort to balance the need to attract global top talent with nurturing local talent. At the end of the day, talent, and its development and retention, is absolutely key to continued growth in the industry..”

Other findings from the survey include:

  • Nearly 60% see the speed of technological change as a threat to their growth prospects.
  • 86% of banking & capital markets CEOs identify technological advances as the trend that’s set to have the greatest impact on their businesses and two thirds cite demographic shifts as likely to have a transformational impact.
  • CEOs see building on their existing market share as the main opportunity for growth, with product and service innovation close behind.

The rapid growth in the banking and wider financial services markets of South America, Asia, Africa and the Middle East (‘SAAAME’) make them a keenly contested area for both international and domestic institutions. China and Brazil are in the top three markets targeted for growth by banking & capital markets CEOs. The other is a resurgent US and there is also a strong focus on Indonesia. But alongside the growth potential comes the challenge of how to price risks and assets in markets where data may be limited and business practices may be unfamiliar.

Customer service, IT, HR and marketing departments will all be closely involved in addressing market changes, but less than two out of five of banking & capital markets CEOs feel their teams are well-prepared for the task and less than 40% have begun initiatives to upgrade talent, technology, distribution, data analytics or innovation capacity.

Our survey shows strong backing for a change in attitudes, approach and objectives. More than 70% of CEOs believe that satisfying societal needs, balancing the interests of all stakeholders and protecting the interests of future generations are important to their businesses.

Karen Loon, Singapore Banking Leader, PwC said:

“Industry leaders see technology, including the digital economy, social media, mobile devices, big data and other developments, as likely to transform their businesses over the next five years. More than 60% also pointed to the impact of global shifts in demographics and economic power. But most CEOs say they have yet to set in train initiatives to capitalise on these transformational trends in the key areas of talent, technology, distribution, data analytics, and innovation capacity. Many continue to cite the need to deal with regulatory upheaval as one of the factors that is making it difficult to deal with these longer term trends.

“The organisations that will come through the shake-up in the strongest position to compete will be marked out by leaders who can manage through uncertainty and complexity as they seek to deal with regulatory upheaval while preparing for the future. This in turn demands a clear sense of who their key customers and markets are going to be. It also requires a forward looking view on how regulation will interact with the other transformational trends they face and how these developments will reshape customer expectations, how they go to market and the talent, systems and organisational capabilities they will need to meet these demands.”

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Note

To explore the data further or download a copy of the report, please visit www.pwc.com/ceosurvey


Media Contacts
Candy Li, PwC LLP Singapore (Tel: +65 6236 7429 Email: candy.yt.li@sg.pwc.com or pwcpress.sg@sg.pwc.com)