CEO survey: Banks ‘over-regulated’ according to PricewaterhouseCoopers
The perceived over-regulation within banking and capital markets is the biggest concern for 87% of the sector’s chief executives.
Business leaders consider the regulatory constraints imposed upon them in the wake of the financial crash to be a bigger hindrance than technological developments or geopolitical uncertainty.
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, according to PricewaterhouseCoopers’ (PwC) Global CEO Survey.
The fallout from the global financial crisis saw a range of new regulations introduced across the world, such as the Dodd-Frank reform of Wall St in the US and MiFID II in Europe, as well as a number of record-breaking fines.
However, European banks have grown frustrated with the lack of clarity around proposed additional reforms.
More than eight in 10 financial chief executives are also concerned about the impact of technological change on their business with a range of new financial technology companies having emerged.
While banking services will remain critical in consumers’ lives, traditional banks may be increasingly displaced as the dominant providers of those services, according to PwC Ireland banking leader Ronan Doyle.
“New technology development should help those banks who embrace the technology to foster a more engaged relationship with customers,” said Mr Doyle.
“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 CEOs.
“Driving delivery of technology and innovation will be critical in delivering the choice, service and pricing bank customers want. The pressures of economic conditions, regulation, costs, risk management and, increasingly, cyber [attack] 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.”
Opportunities remain for banks that embrace technological advancements, according to Pwc Ireland head of advisory Ciarán Kelly.
The survey shows that chief executives see potential returns from investment in customer relationship management systems (80%), data analytics (75%), and social media and other engagement (56%).
More than 66% of firms operating in banking and capital markets are planning further cost-cutting initiatives in the coming year, according to the report.
