Global bank CEOs bullish on sector growth: KPMG

CEOs of global banks are optimistic and foresee growth in the coming years, anticipating an innovation-based approach to the industry that will support that growth, professional services firm KPMG said in a new report.

In its annual Global CEO Outlook, in which around 135 bank CEOs were surveyed, KPMG found growing optimism fueled by an innovation-driven approach and an innate commitment to organizational purpose.

Drawing from the perspective of CEOs, the Global Banking CEO Outlook report highlights that the board has always been confident despite the changes brought about by the pandemic. It is increasingly believed that instilling the right culture, value and employee engagement is as crucial, if not more so, than financial performance.

According to the report, bank CEOs will seek to mitigate key cybersecurity and tax risk threats while adopting inorganic strategies and anchoring purpose at the very core of their being to ensure they are on track. of growth.

Speaking on the banking sector in Kuwait, Bhavesh Gandhi, Partner and Head of Financial Services, KPMG in Kuwait, said: “After two years of slow growth in the banking sector, due to the Covid-19 pandemic and low oil prices , banks in Kuwait are experiencing accelerated growth. Reports published so far on listed banks show that profits have almost doubled compared to 2021.

“Recent decisions by the Central Bank of Kuwait (CBK) to invite new digital banks to Kuwait, as well as revised guidelines on fintech and digital payments, are steps in the right direction.

The number of regulatory changes in the Gulf region will impact the Kuwaiti banking sector and we expect regulatory, cybersecurity and tax risks to continue to remain the top three risks for the banking sector in Kuwait.

Main findings:

The recovery roadmap
About 89% of bank CEOs agree that over the next three years, purpose will have the greatest impact on capital allocation, partnerships, and M&A strategies ( MY). They realize that to deliver long-term value to customers, employees, and stakeholders, they must not only reevaluate their purpose, but also underpin it in their business strategies. While they may not be sure about the growth of the global economy, 75% of bank CEOs believe that the outlook for economic growth in the banking sector is positive over the next three years.

Engage Employees for Stability
CEOs understand that for their organizations to weather the growing uncertainty of the business landscape, stability is essential. They recognize the employee value proposition as a key driver of their organization’s growth prospects and therefore emphasize investments in employee well-being, employee development, fostering a culture that engages and the promotion of flexible working.

Prepare for growth
The common belief of bank CEOs is that they must rely on inorganic strategies, while constantly adapting to changing market trends, to stay on the growth trajectory. With 67% of CEOs looking to invest in acquiring newer and better technologies, it is imminent that they understand the importance of taking advantage of digital opportunities and having a competent roadmap to achieve status. early mover/fast follower. Additionally, 68% of banks expressed interest in joining industry consortia engaged in innovation-based development to advance their organizational goals.

Assess barriers to growth
Cybersecurity rose from number three in 2020 to number one threat in 2021. The result was propelled by rapid digitization coupled with remote working. Tax risk remained second on the list, increasing by 13 percentage points in 2021 compared to 2020, due to the increased impact of international and domestic tax reforms on financial services. CEOs, however, are aware of the main threats to growth and are working towards avoiding threats related to cyber risks, service disruptions resulting from technical failures, and reputational risks arising from data privacy issues. As banks sought to improve and expand their cloud capabilities, nearly half (44%) of CEOs acknowledged that they want to invest in secure and resilient cloud technologies.

Telling the ESG Story
Around 58% of bank CEOs saw an increase in demand for reporting and transparency on ESG issues. Almost half of bank CEOs surveyed (44%) said it was particularly difficult to articulate their ESG story. Additionally, they believe that the lack of a global agreement on harmonized disclosures, combined with the development of multiple disclosure standards and frameworks, has only reduced the ease of data collection and reporting. But that could change when the International Sustainability Standards Board (ISSB) develops the IFRS® Sustainability Disclosure Standards.

Piloting new roles
Rising social tensions over the past two years amid the race to digitalize are pushing more CEOs to take on roles their organizations can play to enable total returns for shareholders and society. The consensus among 73% of CEOs is that it is their responsibility to solve social problems and that this will only gradually increase.

The report concludes that in addition to the pervasive optimism on the board, CEOs feel more connected than ever to the purpose of their organization. Their goal is to come out stronger than they were before. The demand for sustainable transformation that encourages long-term growth remains, leaving future banks with plenty of reason to pursue agility and innovation, and continue to collaborate with stakeholders to foster resilience and growth. – TradeArabia Press Service

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