PwC: Over-regulation and cyber risk top CEOs’ list of threats to banking & capital markets growth

Published at 10:49 AM on 16 February 2015

A PwC survey of 175 CEOs of Banking & Capital Markets (BCM) organisations across 54 countries shows 92% are optimistic about their growth prospects over the next three years, despite growing concerns over global economic growth, with only 43% expecting global economic growth to improve over the next 12 months, down from 56% in 2014.

Findings from the report Achieving Success While Managing Disruption, which forms part of PwC’s 18th Global Survey of over 1,300 CEOs globally, highlights that while there is a renewed sense of optimism about growth, BCM CEOs recognise the challenges are large, the risk of disruption is very real, and the pace of change is increasing.

PwC’s survey shows concerns about over-regulation have grown from 80% in 2014 to 89% in 2015, with 87% believing that changes in regulation will continue to have a disruptive effect over the next 5 years.

Kevin Burrowes, PwC’s UK financial services leader, commented:

“The ability to meet current and future regulation is hampered by lingering uncertainty over regulatory details and the potential for reactive and piecemeal implementation. It is vital for organisations to develop a proactive approach to regulation, headed by a regulatory leader responsible for liaising with regulators, assessing the strategic impact and co-ordinating the response.”

The survey also revealed that 79% of BCM CEOs consider cyber risk to be the top potential threat to business growth. Other perceived threats include speed of technological change (68%) and the shift in consumer spending behaviour (63%).

The perceived threat from new market entrants was 53%, up significantly from 32% in 2014. Moreover, BCM CEOs expect new competition to emerge from other industry sectors including technology (47%), communications (33%) and other areas of financial services (31%).

Kevin Burrowes, PwC’s UK financial services leader, commented:

“New market entrants are attempting to disrupt existing models, largely by better-serving customer needs. For example, crowdfunding offers new lending and deposit opportunities, payments innovation and makes transactions more convenient. New entrants are using technology to provide a better customer experience at a lower cost, unencumbered by a legacy infrastructure or business models.”


More key survey findings:

· 86% of BCM CEOs recognise the importance of the CEO being the champion of digital technologies in helping to make the most of their bank’s digital investments
· 93% of BCM CEOs see mobile technologies as being critical
· 89% view data mining and analysis as important not only to gaining a better understanding of customer needs, but also in driving operational efficiency and effectiveness throughout the organisation.
· More than 40% of BCM CEOs see joint ventures, strategic alliances and informal collaborations as an opportunity to strengthen innovation and gain access to new customers and new/emerging technologies.
· 63% of BCM CEOs have a strategy to broaden talent diversity and inclusiveness or plan to promote one. Such a strategy is viewed as important to attracting talent (89%), enhancing business performance (85%), strengthening brand and reputation (84%) and driving innovation (84%).


Kevin Burrowes, PwC’s UK financial services leader, concluded:

“Joint ventures, strategic alliances and informal collaborations are becoming an increasingly important way to extend reach and capabilities, especially as many banks are simplifying and refocusing themselves around a core set of products, customers and geographies. It is also a means of accessing people with skills and talent that otherwise might not want to work in a typical banking environment.”

ENDS


Notes to Editors:

PwC’s report ‘Achieving Success While Managing Disruption’, is based on the response from 177 Banking & Capital Markets CEOs in 54 countries. To see the full results of PwC’s 18th Annual Global Survey, please visit www.pwc.com/ceosurvey

Media Contact:

Katherine Howbrook, PwC media relations, Tel: 020 7212 2711, Email: [email protected]


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