The competitive landscape is rapidly changing and increasing in complexity across the financial services industry.
Our focus is on the future of financial services (FS) effectively working with clients as they shape their businesses and execute their strategies, with a strong focus on productivity in everything we do internally and in what we advise our clients. Our staff are continually upskilling in all things digital and this benefit is passed on to our clients.
We advise on key issues such as the impact of risk and regulation, financial crime, innovations in digital technologies, and the changing face of the customer. Using proven methodologies to design and execute business transformation, backed by blueprint designs that are used as accelerators, we have invested heavily in building our technology capabilities, focusing on the areas that we believe bring the most value to our clients, including data and analytics, technology transformation and cyber.
The financial services (FS) industry has a pervasive problem with its workforce. In PwC’s 2019 Global CEO Survey, 54% of FS chief executives said that skills shortages hindered their firm’s ability to innovate effectively. These companies are investing vast amounts of money in digital technology.
They are compelled to change, if only because of the disruptive threat of new digitally enabled competition. FS firms are thus modernising their technology systems, boosting innovation, automating to drive down costs and adapting the user experience to meet the rapidly changing expectations of their customers. Yet no amount of digital investment can help them fully attain their new financial and productivity goals when the workforce is stuck in analogue.
This comprehensive report is for leaders of the financial services industry, who need to think about every aspect of workforce transformation.
We conclude with foundational steps for workforce transformation in the financial services industry, explaining how your business can start right away to raise its capabilities and ensure that it is fit to compete.
Broadening financial inclusion has been a social, economic and political priority in South Africa since 1994, but we recognise that meaningful inclusion goes way beyond ensuring someone simply has a bank account. The promise of digital channels and digital transactions is that they will truly democratise the financial system for the benefit of all. The potential impact of this kind of technologically-enabled transformation has been noticed at the highest level, with President Cyril Ramaphosa’s announcement of the establishment of the Presidential Commission on 4IR.
As part of the South African modernisation journey, an industry study tour was conducted to countries that would be of interest and relevance to South Africa. BankservAfrica and the Payments Association of South Africa (PASA) requested PwC to host the industry study tour to pursue learning from a regulatory level down to transition pathways, infrastructural and technological options selected and understanding how the markets respond to and interact with these new capabilities and products. Read more in PwC's 2019 Payments study tour report.
In our report titled: The productivity agenda – moving beyond cost reduction in financial services, PwC sets out the important challenges and opportunities facing the financial services industry and the ways in which senior executives should respond if they wish to move beyond simple cost cutting and improve profitability in the long term.
With banks struggling to improve their return on capital, many institutions are being forced to restructure and cut costs. Cost-cutting will only deliver so much. If financial institutions are to improve profitability in the long term they need to fundamentally improve the productivity of the enterprise.
Pieter Crafford, Financial Services Advisory Leader for PwC South Africa says: “A number of external factors have put significant pressure on the financial services industry in recent years, leaving many organisations with increased pressure on cost structures. Traditional cost reduction measures can only deliver limited results. Financial services organisations need to tackle the productivity challenge heads on in order to move to a sustainable and low-cost business model.” Read more about Cost reduction in financial services here.
The stakes are high. It’s time to change the way we do business - if we fail to change we will fail to survive. The shift in business models - finding new ways to commercialise products and services, new ways to go to market and getting closer to your customer - has seen a tremendous amount of change at a pace faster than we have seen before and accelerating all the time.
But let’s understand the challenge, we aren’t merely changing one part of the business, we are changing everything. This is a complex challenge, with many inter-linking parts. That requires a combination of business skills to re-imagine new ways to buy, produce and sell goods and services. It also requires technology skills so that organisations can make best use of technology advancements, as well as the ability to wrap these new business services, supported by technology in an experience that employees and customers want. Learn more about customer experience here.
Financial services firms are facing more complex regulations and greater risks than ever before. Risk management has never been higher on our clients' agendas, and regulatory compliance and alignment to emerging risk management practices are seen as imperatives by each of the large banks and insurers.
Risk- and regulatory-driven change programmes continue to intensify, and there are no signs of this trend abating in the short to medium terms. While many see this large-scale change as a problem, we see it as an opportunity – an opportunity to shine, to grow and to build trust. Read more about financial services risk and regulation here.
Banking and capital markets CEOs confident about growth, while costs have to be cut further and faster than ever before
Banking and capital markets CEOs are positively optimistic about their growth prospects in the year ahead. Less than half (40%) are very confident that they’ll achieve revenue growth over the coming 12 months, up from 31% last year.
These are the main findings from the report ‘Setting the bar higher’, which is part of PwC’s 20th Global Survey of 1,379 CEOs globally and highlights the threats to banks’ prospects. 206 banking and capital markets CEOs from 60 countries participated in the survey.
Costa Natsas, PwC Africa Financial Services Industry Leader, says: “Financial services organisations are striving to get to grips with a new competitive era in which the bar for customer expectation and innovation has been raised, while costs have to be cut further and faster than ever before.”
Apart from the 40% of banking and capital markets (BCM) CEOs who are very confident about revenue growth, the survey shows a further 45% of the industry CEOs are at least somewhat confident. Explore more by reading the banking and capital markets press release here.
Imagine having advanced business analytics that give you the ability to see and predict everything, everywhere. Every interaction with customers. Every moving part in your supply chain. Every financial transaction, anywhere in the world.
Imagine a data architecture that lets you process all that information instantly, to improve customer insights, build products faster, or spot fraud.
Now imagine using predictive analytics that give you the ability to react to events before they happen. To stop customer churn. Prevent accidents. Predict the impact of medical treatments. And imagine if analytics could help you to drive business innovation and open up totally new revenue streams to create products and offers you haven’t even dreamed of yet.
It would be like having a superpower.
The good news is, data is an asset you already own. We’ll help you to analyse your current state, develop a strong data foundation, and then monetise that data and harness the power of the information you hold to optimise business performance and commercialise data opportunities.
Companies are managing a wider range of risks and complexities than ever before. Commodity trading, foreign exchange (FX) volatility, market complexity and changing regulations impact businesses in different ways, placing CFOs under increased pressure to stay on top of current and emerging issues. Organisations must understand the importance of managing uncertainty and other variables affecting financial performance.
Explore more about treasury and commodities here.
Partner, Financial Services Industry Leader, PwC South Africa
Tel: +27 (0) 11 797 4105