The Irish financial services industry has more to do to reach potential, this is according to the latest 2019 CEO survey from PwC. The analysis includes the views of 67 participating Irish financial services CEOs and 661 global financial services CEOs.
The survey finds that while confident about future revenue growth, Irish financial services organisations have more to do on innovative collaborations compared to their global counterparts. For example, just a quarter (25%) of responding Irish financial services CEOs reported that they are planning to collaborate with entrepreneurs or start-ups as a means of driving revenue growth in the year ahead compared to 30% for their global counterparts.
Irish financial services leaders are also less likely to embark on new strategic alliances and joint ventures (22%) compared to their global counterparts (37%). They also see less potential for new mergers and acquisitions.
At the same time, the report shows a renewed emphasis on efficiency and cost reduction in the Irish financial services industry but global counterparts are making greater strides. The survey reveals that six out of ten (60%) Irish financial services respondents plan to drive operational efficiency as a means to drive margin growth in the year ahead, compared to nearly three-quarters (72%) for their global counterparts.
The availability of key skills is a top concern (84%) for Irish financial services leaders and is more acute than for their global counterparts (76%). Despite the majority (61%) planning to increase headcount in the year ahead, a significant proportion of Irish respondents reported that it has become more difficult to hire people (70%) and is substantially higher than the global experience (59%).
The survey confirms that, not only is the skills deficit prompting higher people costs in Ireland (70%) compared to global counterparts (59%), it is also holding back innovation and growth targets.
As financial services organisations become more reliant on technology and data, they will need to limit the dangers of cyber threats. Cybersecurity is viewed as the top threat to business growth for financial services leaders in Ireland (88%). Other business concerns include: geopolitical uncertainties (81%); the extent of regulation (76%); increasing tax burdens (73%) and uncertain economic growth (67%). Irish financial services leaders are much more concerned about real estate costs (61%) compared to global counterparts (41%).
A large majority (71%) of Irish survey participants reported that key information about important business disciplines such as competitor performance, supply chain, technology trends, customer preferences, business risks and employees’ views is critical for determining future strategy. But, on average, just 19% of Irish financial services leaders confirmed that the information they receive for key business decision making is adequate. The primary reason given for such inadequate data is the lack of analytical talent.
Speaking this week, Advisory Leader at PwC Ireland, Ciarán Kelly said, "Collaborations with innovative start-ups are often a good way to access new talent, technology, markets and products as well as countering fee pressures. Fintechs, for example, often present opportunities to team-up, matching their culture of innovation with an established financial services firm’s brand, distribution and regulatory expertise."
He added, "There is also a growing interest in InsurTech and Blockchain capabilities, for example, often in partnership, as a source of talent and innovation. These platforms can not only introduce new innovations but can also vastly improve effectiveness and efficiency, especially in cost-intensive areas such as the customer facing front office."