In a survey involving almost 200 banking and capital markets CEOs around the world, PwC’s Driving Change report reveals that threats to IT infrastructure and data have replaced over-regulation as the main concern for business leaders in the sector.
An overwhelming majority (89%) are worried about their cybersecurity. A similar proportion (93%) will be investing more heavily in cybersecurity in 2018.
The report is part of PwC’s 21st Global Survey, and highlights the findings of interviews with 188 banking and capital markets CEOs around the world.
PwC Ireland’s Advisory leader, Ciaran Kelly said: “There are two types of banking and capital organisations – those that have experienced a major cyberattack and those that will. Unsurprisingly, nothing is more likely to keep their CEOs awake at night. The importance of cyber protection to customer trust underlines the extent to which cyber threats are a strategic rather than just an IT risk.
“Developments such as the EU’s General Data Protection Regulation (GDPR) make the need for more proactive safeguards, better coordination and more systematic response planning even more important.”
Other threats which banking and capital markets CEOs have identified include the pace of technological change (85%) and the related impact of changing consumer behaviour (73%). Less than half (44%) of Banking & Capital Market CEOs are clear about how robotics and Artificial Intelligence (AI) can improve customer experience.
David Lee, PwC Ireland Technology Partner, said: “As the findings highlight, the big differentiator is digital transformation. Breakthroughs in innovation and the boost to growth that stem from it. Get this right and there are opportunities to transform your customer experience and put clear blue water between you and your competitors.
“However, driving change is proving to be exceptionally challenging. In our experience, Banking & Capital Market organisations that have tried to bring in technologies such as robotic process automation (RPA), blockchain and artificial intelligence (AI) without at the same time streamlining and rationalising their core processes have quickly come unstuck. Technology can’t reinvigorate innovation and returns without new ways of working, like human and machine collaboration, and a rethink of how to connect with clients.”
In spite of concerns around technology and cyber threats, the CEOs interviewed were positive about the prospects for the economy, if not for their own organisations. PwC Ireland Banking Partner, Ronan Doyle, said: “Banking and capital markets CEOs are bullish about economic growth. 57% believe it will improve over the next 12 months, compared to 30% in 2017. However, their optimism about the economy hasn’t translated into increasing confidence in the prospects for their own organisations. Only 38% are very confident about their companies’ ability to boost revenue growth over the next 12 months, down from 40% in 2017.”
The relatively low level of perceived disruption coming from new competitors (23% for Banking & Capital Markets compared to 26% for Technology CEOs; 37% for other industry CEOs) suggests that the heat from FinTech is easing off. Rather than a potential rival, we see FinTech businesses being seen as a valued partner for innovation and talent.
Capitalising on the potential of new technologies is as much about talent as tech itself. People rather than systems drive innovation and realise its full commercial potential. As the CEO Survey findings highlight, attracting digital talent is notoriously hard – less than 20% of Banking & Capital Market CEOs see it as easy. While much of the focus is on bringing in app developers, robotics engineers and other specialists, it’s just as important to ensure that tech awareness permeates throughout the organisation, including senior leadership.
Within the workforce itself, employees may be concerned about losing jobs to automation or resist new ways of working. Banking & Capital Market organisations need to address common anxieties about the impact of automation and AI. When asked whether they are creating transparency over the impacts of automation and AI to help build trust within their workforces, nearly two-thirds of respondents said yes and a further 10% plan to do so in the next 12 months. However, more than 20% aren’t addressing this issue and have no immediate plans to do so.
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