Investing in Gen AI remains a top priority for 81 percent of banking and capital markets CEOs. A majority (65 percent) expect to see a return on these investments within three to five years, with particular enthusiasm for AI’s potential in fraud detection, cybersecurity, data analysis, operational efficiency, and customer service, according to a KPMG survey
A new KPMG survey of 120 banking sector CEOs worldwide reveals a high level of confidence in the growth prospects of the banking and capital markets industry, driven by significant investments in emerging technologies like Generative AI (Gen AI). Despite ongoing economic uncertainty and geopolitical challenges, 66 per cent of CEOs are optimistic about their organizations’ growth over the next three years, and 81 per cent view Gen AI as a top investment priority for transforming business operations.
However, concerns around talent acquisition, cybersecurity, and an unpredictable geopolitical and macroeconomic landscape remain top challenges for banking leaders. With the rapid digitization of financial services, 81 per cent of CEOs identify cybercrime and cybersecurity as the most significant risk factors that could hinder organizational growth in the coming years.
Sustainability also continues to be a high priority for banking CEOs, as they view Environmental, Social, and Governance (ESG) investments as crucial for future growth. Fifty-eight per cent of the surveyed executives anticipate a significant return on their ESG initiatives within three to five years, underscoring the strategic importance of aligning business practices with sustainable goals.
While the banking sector continues to embrace digital transformation, the outlook for global economic growth has dimmed slightly. Confidence in the industry’s future has declined, with 66 per cent of CEOs expressing confidence in their organization’s prospects—down from 82 per cent in 2023. This reflects broader caution among financial leaders, with half of the CEOs forecasting earnings growth of 2.49 per cent or less over the next three years.
Francisco Uría, Global Head of Banking and Capital Markets at KPMG noted, “In a higher interest rate environment, CEOs have felt more pressure to deliver a return for their investors. As interest rates begin to decline, they must strike a balance between maintaining robust capital provisioning, investing in future capabilities, and meeting the expectations of authorities and communities.”
Key risks and challenges highlighted by CEOs include economic uncertainty, geopolitical complexities, and the race to integrate Gen AI into business operations. Cybersecurity remains a dominant concern, with a third of CEOs citing it as the most pressing risk to their growth. Other significant risks include the cost of living and evolving trade regulations, with 80 to 83 per cent of leaders predicting these factors will negatively impact their organizations in the next three years.
Despite banking CEOs expressing confidence in their organization’s risk management programs, there is growing unease regarding newer risks, particularly those tied to artificial intelligence and digital transformations. Phishing attacks, ransomware, and cloud-based threats have become more frequent in the past year, intensifying concerns around cybersecurity.
Operational priorities for banking CEOs over the next three years include accelerating business digitization, enhancing connectivity, and driving ESG initiatives. Implementing and understanding Gen AI, along with improving employee value propositions to attract and retain talent, are also key focal points.
In pursuit of growth, nearly half of the CEOs (48 per cent) indicate that mergers and acquisitions (M&A) or strategic alliances will be the most important strategies, as they seek to expand capabilities and market share, particularly in high-priority sectors like asset management, wealth management, and private banking.
Investing in Gen AI remains a top priority for 81 per cent of banking and capital market CEOs. A majority (65 per cent) expect to see a return on these investments within three to five years, with particular enthusiasm for AI’s potential in fraud detection, cybersecurity, data analysis, operational efficiency, and customer service. However, despite their excitement for Gen AI’s transformative potential, CEOs express concerns about the successful integration of these technologies. Fifty-four per cent are confident about deploying AI with robust governance frameworks, but only 37 per cent believe their workforce has the necessary skills, and just 32 per cent feel their data is prepared for safe and effective Gen AI integration.
The survey underscores the complex landscape banking CEOs face, balancing the need for innovation and digital transformation with the critical challenges of cybersecurity, talent management, and geopolitical uncertainty.
