Australian financial services heads are optimistic about their growth prospects, yet are concerned about growing regulatory burdens and maintaining and building trust, according to analysis released jointly by PwC and the Financial Services Council.
A solid 82 per cent of chief executives polled by PwC and FSC are feeling confident of growth over next 24 months, with nearly half nominating building or restoring trust as critical to their agenda over the same period.
Not surprisingly, regulation also ranked highly on their agendas.
“It’s fantastic to see there is optimism around growth, but there’s also a clear sense among CEOs that there are significant headwinds to be navigated in order to genuinely deliver on this positive sentiment, particularly around regulation, trust, and attracting talent” said PwC.
“Successfully navigating these challenges will involve doing things that are hard and potentially uncomfortable like genuinely embracing the regtech and innovation, seeking out and fighting for people with diverse talent and skills, and understanding at a practical level what can be done to rebuild trust. However, there is significant upside for those organisations that tackle these challenges and embrace the opportunity.”
Sally Loane, the head of the FSC said: “The findings of the report align with what we’ve been hearing from our members in that they’re confident of growth but getting it, and meeting an ever-rising regulatory bar, is going to be tough. It’s also encouraging to see that the restoration of trust is high on CEO agendas - we know that our members have been working extremely hard on issues around conduct and we foresee the industry continuing to make strong, positive inroads in this domain.”
A perceived increasing regulatory compliance burden was nominated as the top area of concern facing the industry, ahead of investment market performance, and low economic growth.
A solid 40 per cent of the respondents said the rapidly changing regulatory environment is increasing the risk of their organisation not complying with relevant laws and regulations.
“Regulation and compliance requirements are not going away, if anything they’re intensifying, but that doesn’t mean they should always be seen as a burden,” said PwC, adding that regulation can be beneficial if it results better customer outcomes.
“Enlightened companies will see regulation as an opportunity to create value for customers and earn their trust. Now is the time for CEOs to challenge whether their organisation is doing enough to think differently about responding to regulatory demands and rising community expectations. Embracing regtech solutions may prove to be a differentiator in that regard.”
According to the consultant, nearly three-quarters of respondents said trust is critical or important to their organisation’s future success, ranking trust among the five biggest issues facing the industry. “The results show that trust is no fleeting concern,” said PwC “The challenge is for CEOs to convert awareness to action and, given the complexity of measuring and repairing trust, that’s no small task.”