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Survey: Bank CEOs foresee recession, layoffs

Written on Oct 28, 2022
A new survey of bank CEOs shows that 85% believe the U.S. is headed for recession in the next 12 months. 

The data is from KPMG’s annual CEO Outlook and also reveals roughly 60% of the 141 bank CEOs surveyed said the recession would be mild and short.  

About 71% of banking respondents have planned for an upcoming recession, and nearly half (49%) see layoffs in the next six months, the outlook found. 

Roughly one-third of bankers said advancing digitization and connectivity across their business is their top operational priority over the next three years, while 20% said their top priority was adapting to geopolitical issues, and another 20% said they sought to increase their employee value proposition to attract top talent. 

Despite immediate recessionary woes and worries, 87% of bankers said they are confident in the growth prospects of the U.S. economy over the next three years, and 82% expressed confidence in the growth prospects of their companies. 

More than half of bank industry respondents said mergers and acquisitions likely will play into their strategy within the next three years. Another 30% said it “might.” 

When asked what strategy will be most important for goal achievement in the next three years, bank CEOs ranked strategic alliances with third parties the highest, followed by organic growth by way of tools like innovation, research and development, capital investments, new products and recruitment. Roughly seven in 10 said they have an aggressive digital investment strategy — banks are either buying or launching their own digital tools — aimed at securing first-mover or fast-follower status, KPMG found. 

When it comes to hurdles in their business transformation, CEOs said their top three challenges were deciding on the right technology (67%), managing risk and compliance of the transformation (65%) and managing the cultural impact (63%). 

As the spotlight continues to shine on ESG, bankers told KPMG that increased or frequently changing regulations and accessing the necessary technology to measure and track ESG initiatives present challenges in delivering on ESG promises. Access to capital to make good on ESG promises also poses a challenge to banks, the survey found. 

While the latter challenge may be exasperated if the economy goes into a recession, banking executives can’t lose sight of ESG and its value, report authors noted. “Pressing the [brakes] on ESG could be costly for brand reputation and stakeholder perception, ultimately casting a shadow on long-term growth.”