Despite such challenges as high interest rates, a sluggish M&A market, and increased regulatory scrutiny, bank executives are feeling optimistic about the road ahead. That’s according to KPMG’s 2024 US Banking Industry Outlook Survey, published last month, which polled 200 senior executives at US banks of varying sizes in March 2024.
Two-thirds of respondents (66%) said they were confident their banks would grow this year, with a third (33%) stating that they were “very confident.” However, confidence levels varied sharply by bank size: 93% of respondents at banks with assets over $50 billion were confident about their growth prospects, compared with around half (48%) of those at banks with assets under $50 billion.
“We anticipate an upswing in the latter half of the year in the financial services market,” Henry Lacey, banking deal advisory leader at KPMG, said in the firm’s report. “It won’t be as fast and hard as we thought at the beginning of the year. But banks will see that bounce.”
According to the report, 6 in 10 respondents said they planned to increase headcount this year. KPMG predicts that most of that hiring will be for back-office and regulatory roles, rather than customer-facing roles, which are vulnerable to automation.
Cyber attacks pose a threat: Cyber attacks emerged as bank executives’ biggest worry this year. Almost half (45%) named it as the top threat to banks, more than did high interest rates (38%), disruptive technology (30%), or credit risk (28%). That’s perhaps not surprising, given that 39% of respondents saw increases in the number of attacks on their organizations in the past year.
News built for finance pros
CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.
“Cybersecurity stands out as the highest area of risk for the banking sector when viewed through every lens of our research,” Matthew Miller, US banking cyber security services leader at KPMG, said.
Cybersecurity regulation is also a chief concern for bankers; 8 in 10 (80%) respondents said they expect regulatory supervision of cyber risk to increase in the next 12 months, and 65% named cybersecurity as the top issue leading to regulatory uncertainty.
GenAI implementation continues: Banks have been quick to adopt generative AI, the survey results suggest; 65% of respondents said they were making the technology an “integral” part of their long-term strategies. They reported actively using or having pilot projects across a variety of functions, notably cybersecurity (67%), IT systems (56%), fraud prevention (51%), customer service and sales (41%), and compliance and risk (41%).
In findings that might give finance personnel pause, 50% of bank executives said that GenAI will be able to complete 1%–5% of their teams’ daily tasks before the year is out. And 37% said that GenAI would be capable of handling 6%–20% of tasks in that time frame.