Australian Financial Services CEOs are optimistic about their growth prospects, yet are concerned about growing regulatory burdens and maintaining and building trust, according to analysis released today by PwC and the Financial Services Council (FSC).
PwC and the FSC polled Australian-based CEOs representing the insurance, superannuation, funds and wealth management industries and associated sectors on their views on issues including growth, regulation, trust, talent and innovation.
82 percent of the CEOs polled are feeling confident of growth over next 24 months, with nearly half (47 percent) nominating building or restoring trust as critical to their agenda over the same period. Issues around regulation also ranked highly on CEO 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 Australia’s Insurance Leader, Scott Fergusson.
“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, FSC CEO, 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.”
Time to seize the regulatory opportunity
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. 40 percent of the CEOs surveyed said the rapidly changing regulatory environment is increasing the risk of their organisation not complying with relevant laws and regulations.
According to PwC Australia’s Superannuation Leader, Craig Cummins, regulation can be beneficial if it results better customer outcomes.
“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,” Mr Cummins said.
“Enlightened organisations 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.”
It’s still a matter of trust
Nearly three-quarters (71 percent) of 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 Australia’s Asset & Wealth Management Leader Anthony James. “The challenge is for CEOs to convert awareness to action and, given the complexity of measuring and repairing trust, that’s no small task.”
“In our view it will involve clearly articulating their organisation’s purpose and values and relentlessly aligning their organisation’s strategy and behaviours behind them. This includes understanding and addressing societal concerns on sensitive issues like executive remuneration and whether senior executives are truly accountable when poor conduct and other misadventures arise in the businesses they run.”
“Finally, how you act in the ‘moments that matter’ are critical - the financial services industry interacts with customers at the most significant times of their lives, from wealth events through to crises. How organisations respond in these moments plays firmly into the trust agenda.”
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