As banks worldwide increase investments in emerging technologies, 81% of banking CEOs identify cybercrime and cybersecurity as critical threats to organizational growth over the next three years, according to KPMG’s recent Banking CEO Report. The rapid evolution of technology and artificial intelligence (AI) has heightened these concerns, with only 43% of CEOs confident that their cybersecurity strategies can keep pace with AI advancements. Consequently, 72% of respondents are increasing investments in cybersecurity to mitigate AI-related risks.
Focus on Generative AI and Preparedness
Generative AI (Gen AI) has emerged as a priority, with 81% of CEOs naming it a top investment area. While 53% feel prepared to tackle cybersecurity challenges, this marks a slight decline from 54% in 2023. The proportion of leaders feeling unprepared has significantly dropped to 3% from 21% last year, though 44% remain neutral about their preparedness, up from 23% in 2023.
“Your ability to work faster and meet evolving client expectations will be critical. Addressing technology challenges and building the right capabilities must be prioritized now,” said Francisco Uría, Global Head of Banking and Capital Markets, KPMG International. Uría emphasized the importance of data quality, governance, and workforce upskilling to fully harness Gen AI’s potential.
The survey also revealed that 76% of industry leaders believe experimentation is essential for unlocking Gen AI’s benefits, with organizations encouraging employees to participate in its exploration. Additionally, 66% are confident in their ability to upskill employees to maximize Gen AI’s advantages.
Talent Concerns in a Shifting Labor Market
While 66% of banking CEOs express confidence in growth prospects for the banking and capital markets industry over the next three years, talent acquisition and retention remain pressing challenges. This issue is compounded by geopolitical uncertainties and a skills gap in the global marketplace.
“The competition for skills and capabilities has intensified, not only globally but also in India. Banks are navigating a challenging labor market to support technology-enabled transformations,” said Hemant Jhajhria, Partner and Head of Consulting, KPMG in India.
The report also noted a decline in preference for hybrid work models, with only 10% of CEOs favoring hybrid arrangements, compared to 34% in 2023. 86% of leaders expect employees in traditional in-office roles to return within three years, and 92% are likely to reward office-goers with favorable assignments or promotions.
“Workforce attitudes have shifted, and next-generation talent values mobility, flexibility, and supportive workplace cultures,” Uría said.
Key labor market concerns include:
- Knowledge transfer between employees.
- Increasing retirements.
- Shortages of skilled workers to replace retirees.
- Diverging expectations between older and younger employees.
ESG as a Growth Driver
Environmental, Social, and Governance (ESG) considerations are also pivotal, with 58% of CEOs expecting significant returns on ESG investments within three to five years. The report emphasizes ESG as a critical factor shaping the banking sector’s strategies and investment decisions.
As banks invest in emerging technologies, navigate talent challenges, and align with ESG goals, the focus remains on building resilient, forward-looking organizations equipped to address the demands of a rapidly changing landscape.
