Banks around the world are spooked by technological change

29 Mar 2016

The City of London - 81pc of the world’s top bankers say the speed of technological change concerns them

Spooked by technological change, CEOs of global banks fear they are staring extinction in the eye if they fail to keep on top of trends, according to a new PwC report, which found that 81pc of the world’s top bankers said the speed of technological change concerns them.

The latest PwC survey of 176 banking and capital markets (BCM) CEOs across 62 countries cites cybersecurity and fast-moving entrepreneurs nimbly grasping the new opportunities emerging from technology as key risks.

In particular, BCM CEOs see over-regulation (87pc), the speed of technological change (81pc) and geopolitical uncertainty (76pc)  as really impacting their banks.

The combination of higher capital charges, liquidity demands and compliance costs is forcing many to abandon what had once been profitable mainstays in their business.

More than 66pc plan further cost cutting over the next 12 months.

Technology is transforming customer expectations, lowering barriers to market entry and opening up growing competition from fintech entrants.

“New technology development should help those banks who embrace the technology to foster a more engaged relationship with customers,” said Ronan Doyle, banking leader at PwC in Ireland.

“It will also cause radical changes to operational processes.  Some banks are already acting fast on this, while others seem barely to have started. Executing on this successfully should be front of mind for all banking CEOs.”

Data is the new capital

In terms of technologies banks are likely to be investing in, the survey revealed that customer relationship management (CRM) systems (80pc), data analytics (75pc) and social media communications and engagement (56pc) are the top three areas of technology that will yield the greatest returns in terms of engagement with wider stakeholders.

“The ability to analyse more data, more quickly and with more predictive capabilities than ever can also ensure a faster, more targeted and more forward-looking response to customer demands and capital market developments,” explained Ciarán Kelly, head of advisory at PwC Ireland

Nearly three-quarters (72pc) of BCM CEOs view the limited availability of key skills as a threat to growth.

The impact of technology requires more people with both banking and digital skills, but few, as yet, possess these hybrid capabilities.

Competition to attract for talent isn’t just coming from traditional peers, either, but also fintech start-ups and technology groups looking to develop their presence within the BCM and wider financial services market.

As well as skills barriers, nearly three-quarters of BCM CEOs see cyber threats as a barrier to growth.

“Driving delivery of technology and innovation will be critical in delivering the choice, service and pricing bank customers want,” said Doyle.

“The pressures of economic conditions, regulation, costs, risk management and increasingly cybercrime remain.  Getting this right now, though, has never been more crucial for the sector. As one of the CEOs we surveyed noted – the world needs banking but not banks.”

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years