Local financial institutes are relatively upbeat about business prospects this year, with 50 percent expecting revenue growth, compared with 33 percent in other sectors, PricewaterhouseCoopers (PwC) Taiwan said yesterday, citing findings of an in-depth interview with local financial leaders.
The interview showed local financial service providers have emerged from two years of drastic monetary tightening and would focus their attention on artificial intelligence (AI) and sustainability to stay competitive.
The sentiment pickup came after major central banks put an end to steep interest rate hikes, and inflation and geopolitical tensions subsided, PwC said.
Photo courtesy of PricewaterhouseCoopers Taiwan via CNA
However, most companies remain cautious and financial institutes are no exception, especially in dealing with employment, it said.
Only 38 percent of financial companies plan to expand their payroll, lower than the 43 percent average overall, and 50 percent have no intention of using mergers and acquisitions to enlarge their scale in the next three years, it found, adding that another 44 percent have not yet formed an opinion on the issue.
Furthermore, financial operators display grave sensitivity to economic uncertainty and inflation given that the two issues run neck and neck as their topmost concern at 56 percent, it said.
Health threats and geopolitical tensions rank second at 50 percent, it said.
Almost all financial leaders sense the need and urgency for digital transformation and realization of social responsibility, PwC Taiwan financial services leader Richard Watanabe (吳偉臺) said.
That explained why 94 percent of them do not think that they can hold on to current business operations and remain profitable for another 10 years, much higher than the 76 percent for other sectors, Watanabe said.
The pressure to change stems from economic declines induced by the COVID-19 pandemic and drastic monetary policy measures major central banks introduced to stimulate economy and fight inflation, he said.
Financial institutes also assign great importance to tech imperative — the concept that new technologies are inevitable and essential and that they must be developed and accepted for the good of society, Watanabe said.
More than 80 percent believe that generative AI would force most employees to learn new skills and would sharpen competition within the industry, Watanabe said, adding that 75 percent would significantly change the way their companies create value.
Although generative AI would bring new opportunities, it would expose the industry to information risks and network threats, the consultancy firm said.
Embedded financial services have made cross-sector and cross-border transactions much easier and faster, but enterprises must be more agile and careful in protecting the rights and interests of all parties in the ecosystem, it said.
At the same time, more than 90 percent of financial business leaders are undertaking or have completed climate-related deployment moves, including boosting energy efficiency, developing climate-friendly products, services or technologies, and launching employee training programs, it said.
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