Future of Finance Study by SIX: Here Are 4 Selected Findings That Will Surprise You

Senior executives in the global banking and finance sector are bullish about their future growth prospects, even as central banks predicted a decline in GDP and technical recession. This is a key finding in the Future of Finance Study from SIX.

More than 90% of business leaders believe that their organization is positioned for strong or moderate growth over the next three years, with US respondents the most optimistic about their growth trajectory. What’s more, 66% expect the economic environment for their business to improve by the end of 2023, while an even greater number (more than 70%) believe that inflation rates would slow by the end of the same year.

This positive sentiment was perhaps not to be expected, but these four selected study results are almost more astounding:

The positive outlook described in the introduction can be seen around the world, with little notable difference in attitude among companies in the US, the UK, Switzerland, Spain, Germany, Singapore, and Hong Kong.

However, younger age groups tend to have stronger growth expectations than their older colleagues (see graphic). Indeed, the older the respondent and, potentially, the more periods of economic uncertainty they have experienced professionally, the more cautious their expectations tend to be. Once again, however, it must be noted that those with positive growth expectations greatly outnumber those with negative views, regardless of age.

More than two-fifths of financial institutions surveyed (44%) say that ESG-related capabilities and new offerings for clients are either critical to everything they do or are integral to most of what they do. That is twice as many who say that ESG capabilities are on the radar but not yet a priority (22%), and three times more than those who say it is not important at all (14%).

Quite surprising is the main reason cited for developing ESG-related offerings: Nearly one-third of participants cite improving brand reputation. Superior long-term returns, client demand, new business opportunities, and regulatory risk management are also in the top positions (see graphic). The regulatory development can be expected to move up even higher on this trajectory going forward. However, for financial institutions in Hong Kong and Singapore, competitive pressure is still the main driver.

The shortage of relevant skills is one of the biggest challenges facing financial institutions in the immediate future. More than half (55%) say the skills shortage is a significant challenge that is already having an impact on their business. That number rises to 74% among respondents in Switzerland. A further 25% of all respondents say it is extremely hard to find the talent they need.

One way to attract talent is to offer more flexible working options. It’s striking how strongly remote working plays a role here. Nearly threequarters of financial institutions have either transitioned to a hybrid model or are offering a possibility of fully remote working. They expect hybrid or remote working to significantly or positively affect their ability to attract talent. Less than 20% of financial institutions believe that more flexible working options will make no difference and aim to return to fully on-site working (see graphic).

Interestingly, some curiosity around distributed ledger technology (DLT) emerged from the survey. More than half (56%) of all respondents consider it to be very relevant to their business over the next three years. An additional 28% say it will be even critical, while those that say it is not relevant at all amount to just 2% of all survey respondents.

Yet, the most widespread technological challenges that organizations will focus on over the next three years are capturing value from data & analytics, followed by incorporating and supporting hybrid work and moving legacy applications to the cloud (see graphic).

Among banking institutions, however, the adoption of DLT is also seen as one of the major technology challenges to be addressed. Nearly half (48%) of financial institutions in the US see capturing value from data & analytics to be the most meaningful challenge. In the UK, moving legacy applications to the cloud is considered important by over 40% of companies, while over half (52%) of German respondents are focusing on hybrid work, and Spain is looking to DLT (44%).