Bank CEOs are a worrisome bunch, and really, who could blame them? It’s the role of a CEO in any industry to manage necessary business risks and eliminate unnecessary ones. Financial institution CEOs have to do so in an environment that’s fraught with risk from multiple sources.
PWC’s 20th CEO Survey illustrates the worries financial industry CEOs must cope with:
- Just 40 percent said they are “very confident” about revenue growth over the next 12 months.
- The banking and capital markets sector was among the three sectors most affected by disruption and change.
- Sixty percent are worried about regulation threatening their institution’s growth.
The risk that worries CEOs most
Technology is particularly concerning for CEOs, with more than a third saying they’re concerned about the speed of technological change and 84 percent predicting technology will either completely reshape, or at least greatly influence, the banking industry over the next five years.
The driving force behind this digital transformation is the need to find new ways to do things in an ever-changing, increasingly digitized marketplace. Of course this level of change comes with inherent, unavoidable and — hopefully — ultimately beneficial risks.
With many community bank CFOs taking ownership of driving digital transformation at their financial institutions, finding a way to help CEOs understand and embrace the change — and feel better about risk — has become a key aspect of the CFO role.
Knowledge is power
Risk-averse CEOs need information to feel better about the risks their financial institutions must face in order to continue to grow. To provide that information, CFOs need to ensure their CEOs have adequate and accurate monitoring and performance management tools that enable them to:
- Model asset and liability risks;
- Strategize responses to threats and opportunities;
- Assess assumptions against actual performance and outcomes;
- Access real-time data for key performance indicators.
Risk management is no longer something financial institutions can afford to silo; it needs to be intrinsic to each component of the organization so they can all work together effectively to maximize opportunities and minimize risks. Check out our webinar called “Proven Strategies for Creating a Performance-Driven Culture in your Institution” to learn a little more about how other CFOs are creating a new culture driven by access to data to drive improved performance.