Over eight out of ten Irish financial services organisations are confident about the prospects for the economy and their own businesses. This is demonstrated by their anticipated revenue performance in the year ahead - over three-quarters are expecting growth. A similar proportion expect net profit growth and nearly half expect to increase headcount. Key growth opportunities are in domestic and foreign markets and nearly a fifth see product innovation as a key growth area. Over one in ten plan an M&A or joint venture. With an election just around the corner, three-quarters (76%) reveal that political change is a key business threat. These are key findings from PwC's Irish Financial Services CEO Pulse Survey.
Despite all of this confidence, the survey highlights significant challenges for financial services organisations. Over nine out of ten cite over-regulation as a threat for growth. With our new regulatory environment, striking the balance between efficient resource management and continuing to provide the products and services clients demand will require careful attention. A move to a fact-based, data-driven organisation will enable greater transparency around key business KPIs including how the organisation is maintaining compliance with its obligations.

As digital becomes embedded in everything we do, it is not surprising that 86% of financial organisations view cyber threats and data security as key concerns. Similar to the global experience, over three-quarters (78%) are concerned about the availability of key skills, with one in five saying skills shortages are significantly impacting business performance.

More disruption
The survey reveals that nearly one in six feel that organisations will increasingly compete in sectors other than their own. An overwhelming majority (85%) said that changes in industry regulation will lead this disruption, followed by changes in customer behaviours and distribution channels as well as increased numbers of competitors.

The survey highlights that financial services organisations have some more work to do in leveraging bottom line return from digital. While nearly two out of three financial organisations view digital technologies as creating value in the area of building trust including cyber trust, just one in two feel that digital creates value in key areas such as operational efficiencies, innovation capacity, distribution capacity and brand/reputation. Digital technologies that are viewed most strategic to their businesses are cybersecurity, data mining and analytics and mobile technologies.

Financial organisations are racing to master technologies that could revolutionise their efficiency if they get them right, or cost them substantial amounts of business if they are beaten to it by technology-savvy newcomers such as payments innovators and FinTech players. There are big challenges to meet new customer demands and to deliver ultra convenient products 24/7. The threats of new entrants is very real and there is a growing sense that new entrants could get the cream and expose high legacy, high cost base organisations. There may be fears of high costs, highly-commoditised processes and not much growth. Financial services organisations will need to have the ability to meet the 'complex needs' of corporates while at the same time become more 'nimble', focusing on instant services, instant lending for example.

While Ireland's economy is seeing robust growth, real growth for financial services will also depend on meeting new customer demands and leveraging digital. Increasing competition also means that financial organisations may struggle to increase revenues as anticipated, leaving cost-cutting as the only option to boost profits. Financial institutions need to embrace a customer and regulator-centric world to shape their future and prosper. They should do this by defining their purpose and building on the goals of leveraging technology, the creativity of people and the value of brand.