Most bank CEOs plan to enhance their digital offerings this year and develop further partnerships with fintechs, according to a new survey by KPMG.
One-third of those surveyed said enhancing their digital offering is a high priority, with 10% saying that this has already been done and a further 27% saying it is a medium priority.
64% of respondents said they intend to further develop partnerships or alliances with fintechs as a priority.
CEOs also acknowledged the lower regulatory burden faced by fintechs, which allows them to be more agile.
64% ranked lower regulatory burden as either first or second in a list of potential threats from fintechs.
Agility and ability to outpace the banks was identified as the second biggest threats posed by fintechs, with digital capacity, costs/pricing and versality coming in at third, fourth and fifth respectively.
Negative interest rates are continuing to affect banks heavily - with 27% saying they are having a 'very high' impact and 46% a ‘high’ impact.
Almost two-thirds of banking CEOs expect inflation to be stronger in 2022 than 2021, with 27% believing it will remain the same and only 9% stating that it will reduce from 2021 levels.
54% believe inflation will negatively impact their strategy either moderately or significantly.
Banking CEOs also stated that their costs in relation to regulatory burden and retaining talent are high, with two-thirds of CEOs expecting higher regulatory costs in 2022 and over one-third stating they expect employee costs to rise.
The findings reveal that banks have largely fared well throughout the pandemic, with a majority of banking CEOs stating that the pandemic has either not affected them at all or only on a limited basis, with only 27% stating it had affected them 'quite significantly' and 18% stating ‘moderately’.
Almost two-thirds of bank CEOs see stakeholder demands relating to Environmental, Social and Governance (ESG) significantly increasing in 2022.
64% of respondents said they were 'somewhat' ready to manage external ESG requirements.
On the topic of remote working, none of the banks surveyed expect their staff to return to working a five-day week in the office.
The preferred model of working outlined by CEOs is a hybrid model, with expectations that C-Suite executives and department heads would spend the most time in the office, at least two to three days, while other less senior staff are expected to spend more time working from home.
Perhaps as a direct consequence of this, 64% of bank CEOs stated their intent to reduce their geographical footprint in 2022.
"CEO priorities vary by bank given different stages of the operating lifecycle," said Ian Nelson, Head of Banking and Capital Markets at KPMG Ireland.
"It is absolutely clear however that regulatory compliance and ESG stand clear as the top two items receiving most attention as we look out into 2022 - with a clear imperative to maximise talent retention in order to deliver against these objectives", he added.
