Description
The events of the past year in banking have allowed even the casual industry observer to grasp the interconnectivity of this vital industry and the overall economy in which it operates. We have learned all too well that a healthy banking industry is critical to economic vibrancy, providing the essential credit, capital, and liquidity that support growth and profit.
Banking Industry
Outlook Survey:
Executives Seek Efficiency
Gains Amid Challenges
kpmg.com
KPMG LLP, the audit, tax, and advisory firm, surveyed C-suite and
other top-level executives in the banking and broader financial
services industry during the second quarter of 2012.
Participants were asked about business conditions in their sector,
the most significant revenue growth opportunities, and any barriers
to growth that may exist. They were also asked a variety of questions
about the economy, including factors they perceive might impede
or support their sector’s recovery as well as the impact of regulatory
reform on their businesses and potential areas of investment.
These responses were compared to the findings of a similar survey
conducted among executives in the second quarter of 2011.
KPMG’s
Industry Outlook Survey
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
Contents
Foreword ....................................................................................................... 2
Key Findings from KPMG’s Industry Outlook Survey .................................... 4
Slow and Steady Sector Progress ................................................................. 6
Business Conditions ...................................................................................... 6
Revenues ....................................................................................................... 7
Headcount ..................................................................................................... 8
Hope for Recovery Remains on the Horizon ................................................ 9
Pursuing Growth and Opportunity .............................................................. 10
Capital Spending and Investing ................................................................... 12
The Many Impacts of Regulatory Reform ................................................... 14
Risk and Regulatory Challenges .................................................................. 16
A Closer Look at M&A Activity .................................................................... 18
Data Analytics and Digital Marketing Channels ........................................... 19
Conclusion ................................................................................................... 20
KPMG: A Leader in Serving the Financial Services Industry ....................... 21
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
2 | Banking Industry Outlook Survey
Foreword
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
Banking Industry Outlook Survey | 3
The events of the past year in banking have allowed even the casual industry observer
to grasp the interconnectivity of this vital industry and the overall economy in which
it operates. We have learned all too well that a healthy banking industry is critical to
economic vibrancy, providing the essential credit, capital, and liquidity that support
growth and profit.
In order to gauge the momentum of the industry and better understand the
challenges it faces, KPMG LLP (KPMG) has again reached out to senior executives
across a broad swath of the industry. As a result, this report includes both a snapshot
of current conditions and impressions of what may lie over the horizon for an
industry that continues to wrestle with choppy growth and persistent political and
regulatory uncertainties.
Amid all of those uncertainties, however, is the growing realization that what’s worked
in the past may not work in the future, leading many executives to closely examine
how their business is organized, how it creates products and services, how it reaches
out to its customers in a sustainable manner—indeed, how it grows its top line and
builds revenue. While it may not be broken, senior executives at organizations large
and small are making sure they understand their organization’s business model,
as the industry navigates a landscape littered with ambiguous and sometimes
perilous contours.
On behalf of KPMG, I would like to thank those who participated in this survey. I hope
the findings are useful to you in addressing market challenges and opportunities.
I also welcome the chance to discuss this study and its implications for your business
in the year ahead.
Brian Stephens
National Sector Leader, Banking & Finance
KPMG LLP
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
4 | Banking Industry Outlook Survey
Key Findings from KPMG’s
Industry Outlook Survey
Against the backdrop of a complex and uncertain regulatory environment—
as well as a still-sluggish overall economy—a majority of the banking executives
in the Unites States who participated in KPMG’s 2012 Banking Industry
Outlook Survey say that growth, a reexamination of the business model, and
operational-process improvements are at the top of their agenda this year.
Given those conditions and priorities, the executives say they will continue
to focus on reducing costs, will be somewhat less likely to be involved
in a merger or acquisition (M&A) than they were a year ago, and will
concentrate on leveraging information technology (IT) to enhance
their business.
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
Banking Industry Outlook Survey | 5
Some of the key findings from the 2012 banking industry
survey include:
• Ninety percent said they are either examining or
reexamining their business model as part of their growth strategy.
• Regulatory reform continues to challenge the sector in
a variety of ways. More than two-thirds (69 percent) of
the executives surveyed view regulatory and legislative
pressures as the greatest barrier to growth over the next
year. While most respondents say they are generally
optimistic about their bank’s revenue and growth prospects,
the unstable economy has created an ambivalent
industry in terms of increasing headcount for the future.
About 40 percent of respondents say their organization has
reduced headcount this year, while about a third reported an
increase in headcount. More than a third (37 percent) don’t
expect their bank to boost headcount to prerecession levels.
• Continuing a trend from the previous year, spending primarily
will be focused on IT, including initiatives in such areas as
platform simplification, mobile payments, leveraging data
for regulatory compliance, and creation of a more integrated
view of customers.
• Compared to 2011, there was a significant decline
(14 percentage points) in the number of respondents
who said their bank would be involved on the buy side
(either likely or very likely). This year, 42 percent said they
would be likely buyers, versus 56 percent in 2011.
• More than half (69 percent) of the banking executives
surveyed expect some improvement in economic
conditions over the next year. However, they have pushed
back their expectations for a full U.S. economic recovery
until 2014 or later.
KPMG’s survey reflects the responses of 100 banking/
financial sector executives from large, U.S.-based companies
with $100 million or more in annual revenue. The majority of
respondents (54 percent) worked for institutions with annual
revenues exceeding $10 billion, while 23 percent represented
institutions with annual revenues between $1 billion to
$10 billion, and 23 percent worked for institutions with revenues
in the $100 million to $1 billion range. Eighty-two percent
of these institutions are publicly held and 18 percent are
privately held.
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
6 | Banking Industry Outlook Survey
Faced with regulatory reform challenges and a lackluster
economy, banking executives are focused on reexamining
business models and initiatives that increase operational
efficiency and reduce costs, according to the banking
executives in this year’s survey. Regulatory reform continues
to pose significant challenges for the sector and remains
a significant barrier to growth. Executives will rely on
traditional services and asset-wealth management as primary
drivers for revenue growth over the next year and consider
the mass affluent (top 10 percent of income earners) and
young professionals as key customer segments for growth
opportunities. While survey respondents expect modest
gains in revenues and the economy over the next 12 months,
their longer-term outlook is less certain, with the majority
believing a full U.S. economic recovery is still years away.
More than two-thirds of the executives surveyed believe the
economy will improve over the next year, which represents
a brighter outlook than in 2011, when 55 percent thought so.
Similarly, the number of executives who believe the economy
will stay the same over the next year dropped to 28 percent
from 36 percent a year ago.
Key
0
20
40
60
80
100
? Better next year ? About the same
? Worse next year
69%
55%
36%
9%
28%
3%
2012 (Q2) 2011 (Q2)
Slow and Steady Sector
Progress Business Conditions
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
Banking Industry Outlook Survey | 7
Driving revenue
According to 56 percent of the financial executives surveyed,
traditional services are still considered the primary driver
of revenue growth, down slightly from 59 percent in 2011.
However, a significant number of respondents also view
cross-selling of services (42 percent) and asset and wealth
management (40 percent) as key revenue drivers over the
next three years. This marks a shift from last year’s survey
responses, which identified M&A activity and trading activity
as having the most potential to drive revenue.
Biggest Drivers of Company’s Revenue Growth:
Next 1–3 years
?2012 (Q2) ?2011 (Q2)
0
10
20
30
40
50
60
T
r
a
d
i
t
i
o
n
a
l
s
e
r
v
i
c
e
s
1
56%
59%
42%
40%
25%
28%
31%
23%
22%
7%
3% 3%
8%
0% 0% 0%
A
s
s
e
t
a
n
d
w
e
a
l
t
h
m
a
n
a
g
e
m
e
n
t
M
&
A
a
c
t
i
v
i
t
y
O
t
h
e
r
C
r
o
s
s
-
s
e
l
l
i
n
g
s
e
r
v
i
c
e
s
E
m
e
r
g
i
n
g
t
e
c
h
n
o
l
o
g
i
e
s
2
T
r
a
d
i
n
g
s
e
c
u
r
i
t
i
e
s
N
/
A
Revenues showed modest signs of improvement over
last year. Sixty percent of respondents reported an increase
in revenues over the last year, up slightly from 56 percent the
previous year.
Key
0
20
40
60
80
100
? Better now ? Same now
? Worse now
60%
56%
30%
14%
30%
10%
2012 (Q2) 2011 (Q2)
When asked to describe their revenue expectations a year
from now, three-quarters (75 percent) of executives predict that
revenues will increase, while 21 percent believe revenues will
stay flat. This mirrors the expectations of the prior year, when
70 percent and 23 percent, respectively, answered similarly.
Key
0
20
40
60
80
100
? Increase in revenues ? About the same
? Decrease in revenues
75% 70%
23%
7%
21%
4%
2012 (Q2) 2011 (Q2)
1
loans, savings, mortgages, etc.
2
i.e., mobile payments, etc.
Revenues
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
8 | Banking Industry Outlook Survey
While 31 percent of survey respondents noted they added
personnel over the last year, 44 percent report a decrease in
headcount. Executives have slightly higher expectations for the
year ahead, with 39 percent predicting an increase in hiring as
opposed to 32 percent who expect a drop in headcount.
Key
0
20
40
60
80
100
? Increase ? About the same
? Decrease ? Unsure
23%
31% 39%
26%
32%
44%
2% 3%
Current Headcount
(changes from last year)
Expected Headcount
over next year
Notably, more than one-third (36 percent) of survey respondents
do not expect their U.S. headcount to ever return to
prerecession levels.
Headcount: Return to prerecession levels
Key
0
10
20
30
40
13%
2%
19%
11%
19%
36%
? Already at, or greater than, pre-recession level
? 2013
? 2015 or later
? 2012
? 2014
? Never
Headcount
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
Banking Industry Outlook Survey | 9
The U.S. economic recovery continues to be just beyond
reach, according to the financial executives who participated
in this year’s survey. Seventy percent have pushed back their
expectations for a complete U.S. economic recovery until
2014 or later.
0
10
20
30
40
3%
27%
36%
34%
2012 (Q2)
Key
? 2012 ? 2013
? 2014 ? 2015 or later
Looking forward, financial services executives continue to view
external factors as a much greater concern than internal factors.
A vast majority (82%) admit to being more concerned about the
economy, competition, and the impact of regulatory changes
over their ability to compete or whether they have the right
strategic direction internally (18%).
Hope for Recovery Remains
on the Horizon
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
10 | Banking Industry Outlook Survey
Initiatives garnering attention
When asked about the top initiatives on the mind of
management, 19 percent of survey respondents cite the
need to significantly improve operational processes and
related technology.
Top initiatives on the mind of management
Key
19%
18%
15%
13%
12%
8%
7%
6%
2%
? Significant improvement of operation processes and related technology
? Navigating significant changes in the regulatory environment
? Significant cost reduction initiatives
? Significant investment in organic growth
4
? Merger/acquisition
? Improve enterprise risk management programs/processes
? Strategic divestiture of current assets
? Significant changes in business model
? Significant changes to financial processes and related technology
3
(upwardly mobile young professionals who earn good income,
about to buy first home, etc.)
4
(new product development, pricing strategies, geographic expansion)
Pursuing Growth and
Opportunity
Eighty-one percent of the financial services executives
surveyed acknowledge they have reexamined, or are in the
process of reexamining, their operating model as part of
their growth strategy. Respondents view specific customer
segments such as the mass affluent (37 percent) and
young rising professionals (23 percent) offering the greatest
growth opportunities for their institutions.
Customer segments offering the greatest growth
opportunity for your bank
37%
23%
19%
15%
5%
1%
Key
? Mass affluent (top 10% of income earners)
? Young rising professionals
3
? Consumers nearing retirement age (50–65)
? Underbanked (consumers without access to incremental credit)
? Unbanked (consumers with no transaction account)
? Retirees
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
Banking Industry Outlook Survey | 11
Assessing the competition
As market dynamics continue to change, banking executives
consider national banks (32 percent), and new market entrants
(28 percent) such as PayPal, and retail outlets like Wal-Mart,
as the biggest competitive threat to their banks.
Biggest competitive threat
Key
0
10
20
30
40
32%
? National bank ? New market entrants
5
? Credit union ? Regional bank
? Community bank
28%
16% 16%
8%
5
(PayPal, retail outlets such as Wal-Mart, etc.)
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
12 | Banking Industry Outlook Survey
Among the financial services executives surveyed, 83 percent
believe their institution has significant cash on its balance
sheet, of which 25 percent acknowledge that investment is
significantly underway.
Investment time frame
Key
0
10
20
30
40
25%
? Investment is significantly under way ? Second half of 2012
? First half of 2013 ? Second half of 2013
? 2014 and beyond
14%
19%
21% 21%
Compared to a year ago, 71 percent of executives note
that their company’s cash position on its balance sheet has
increased, with the majority saying it’s a moderate increase.
Cash position
Key
0
10
20
30
40
50
60
70
80
71%
25%
4%
? Increased
? Remained the same
? Declined
Capital Spending and Investing
Capital spending
About half (49 percent) of survey respondents predict their
institution’s capital spending will increase, while 34 percent
expect it to stay the same. Much of this spending is expected
in the areas of information technology, regulation/control
environment, new products and services, and acquisitions.
Increased areas of capital spending over the next year
Key
0
10
20
30
40
50
60
58%
? Information technology ? Regulation/control environment
? New products or services ? Acquisition of a business
? Business model transformation ? Advertising and marketing
? Geographic expansion ? Employee compensation and training
? Green/sustainability initiatives ? Research and development
? Expanding facilities
40%
37%
32%
20%
15%
14%
13%
8%
7%
5%
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
Banking Industry Outlook Survey | 13
When it comes to IT investment, 58 percent of the executives
surveyed believe platform simplification will be the most
important focus for their bank over the next year.
IT focus
Key
0
10
20
30
40
50
60 58%
? Platform simplification ? Mobile payments
(IT infrastructure, applications)
? Leveraging data more effectively ? Creating integrated view of
for regulatory requirements customer accounts
? Social media ? Catching up on deferred
maintenance
39%
38%
37%
31%
22%
Lending
More than half of survey respondents expect their bank to
increase lending over the next year. Fifty-six percent anticipate
higher commercial lending, and 58 percent think consumer
lending will rise.
Key
0
20
40
60
80
100
? Will significantly increase lending ? Will slightly increase lending
? Will moderately increase lending ? No increase in lending
24%
20%
33%
23%
26%
16%
Commercial Consumer
47%
11%
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
14 | Banking Industry Outlook Survey
More than two-thirds (69 percent) of survey respondents
identify regulatory and legislative pressures as the top
growth barrier for their institutions. Other hurdles include
risk management issues (38 percent), pricing pressures
(24 percent), and lack of customer demand (16 percent).
These results are in line with 2011 survey responses.
Barriers to growth
Key
0
10
20
30
40
50
60
70
69%
38%
24%
16%
11% 11%
9%
8%
4% 4%
2%
1%
8%
6%
1%
? Regulatory and legislative pressures
? Risk management issues
? Pricing pressures
? Lack of customer demand
? Lack of qualified workforce
? Access to and managing capital
? Increased taxation
? Energy prices
? Staying on top of emerging technologies
? Inflation
? U.S. dollar strength
? Labor costs
? Exchange rate fluctuations
? Foreign competition
? Other
Moreover, almost all of the executives surveyed (95 percent)
believe the capital requirements called for in various regulatory
reform initiatives, including the Dodd-Frank Act and Basel III,
will hinder growth moving forward.
Impacts on growth
Key
0
10
20
30
40
38%
? Significantly hinder growth, ? Moderately hinder growth
? Slightly hinder growth ? Improve growth
? No impact
34%
23%
3%
2%
The Many Impacts of
Regulatory Reform
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
Banking Industry Outlook Survey | 15
When asked to identify regulation that is having the
most negative impact on bank revenue, 30 percent of
executives cited residential troubled mortgages, followed by
the Durbin Amendment (14 percent) and new capital
requirements (14 percent).
Most negative impacts on bank revenue
Key
0
10
20
30
40
30%
? Troubled mortgages – residential ? Durbin Amendment
? New capital requirements
6
? Not applicable, our revenue has
increased or remained the same
? Other Dodd-Frank Act compliance ? Troubled mortgages – commercial
requirements
7
? Volcker Rule
14% 14%
13% 13%
9%
7%
Of the types of government regulations listed below, more
than half (59 percent) of respondents believe that capital
and liquidity requirements from various regulatory reform
initiatives, such as the Dodd-Frank Act and Basel III, are having
the most impact on their business.
Most impactful on business
Key
0
10
20
30
40
50
60
59%
? Capital and liquidity requirements? Consumer protection
? Federal supervisory changes
8
? Durbin Amendment
? Volcker Rule ? Limitation on federal preemption
authority for national banks and thrifts
? OTC derivates-related issues
9
? Systemic risk regulation (i.e., living wills)
? FATCA
42%
35%
32%
18%
12%
9%
6%
5%
6
resulting from regulatory reform initiatives (such as Basel III and the
Dodd-Frank Act)
7
(consumer protection, OTC derivatives-related issues, etc.)
8
powers and duties of OTS being transferred to OCC, FDIC, Fed, and CFPB
9
(Swaps Push-Out Rule, clearing, trading and reporting rules on Section 1256)
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
16 | Banking Industry Outlook Survey
Risk and Regulatory
Challenges
Evolving regulation and changing marketplace dynamics
have heightened the need for companies to implement a
strong internal risk framework. When asked to identify any
existing challenges preventing the adoption of a formal
risk policy, 40 percent of survey respondents believe
that process integration and operational efficiency pose
significant obstacles.
Challenges preventing the adoption of a formal risk policy
Key
0
10
20
30
40
50
40%
? Process integration/efficiency of operations? Culture and behavior
? Clearly defined roles and responsibilities ? Shared resources across the
organization
? Governance framework ? Don’t know
30%
22%
22%
26%
12%
(Multiple responses allowed).
Despite obvious challenges, 62 percent of the financial services
executives surveyed believe their institution is at least
somewhat prepared to seize opportunities as a result of public
policy and regulatory reform. Meanwhile, 30 percent report
being very prepared.
Ability to seize opportunities from regulatory change
Key
0
10
20
30
40
50
60
70
62%
? Somewhat prepared ? Very prepared
? Not prepared ? Don’t know
30%
2%
6%
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
Banking Industry Outlook Survey | 17
Tax regulation
According to the executives surveyed, evolving tax regulation
is expected to impact their business strategy, with 30 percent
believing it will result in less capital investment.
Key
0
10
20
30
40
50
30%
? Less capital investment ? Changing business structure/impact to hiring
? Increased overseas expansion ? Increased M&A activity
? Increased domestic expansion ? Don't know
25%
16%
15%
9%
29%
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
18 | Banking Industry Outlook Survey
The evolving regulatory environment has also impacted
potential M&A activity. While many had been predicting a
wave of consolidation in the banking industry, 40 percent of
respondents believe it may have been tempered by anticipation
of regulatory actions and related issues.
Key
0
10
20
30
40
50
40%
? Anticipated regulatory actions/issues ? Targets' balance sheet issues
? Sellers' demands too high ? Buyers' offers are not reasonable
27%
19%
13%
At the same time, 60 percent of respondents also believe
regulation will be a key driver of M&A, followed by new
geographic markets (28 percent) and new technology
(24 percent). These results closely mirror the responses
seen in last year’s survey.
M&A drivers
Key
0
10
20
30
40
50
60
70
60%
? Regulatory changes/reform ? Access to new geographic markets
? Access to new technology and products ? Product synergies
? Access to new resources ? Debt
? Labor cost pressures ? Pension and healthcare cost pressures
28%
24%
21%
19%
16%
11%
10%
Looking forward, 55 percent of banking executives think it is
likely their institution will be involved in a merger or acquisition
either as a buyer or seller over the next two years.
Likelihood of M&A activity
Key
0
10
20
30
40
50
42%
? Involved in M&A as buyer ? Involved in M&A as seller
? No plans for M&A activity ? Unsure/don’t know
13%
39%
32%
A Closer Look at M&A Activity
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
Banking Industry Outlook Survey | 19
When asked to describe the organizational maturity regarding
usage of data analytics, more than one-third (34 percent)
of executives rate the data analytics literacy of their bank’s
management and workforce as average, while 28 percent rate
their data analytics literacy as high.
Data analytics maturity of company
Key
0
10
20
30
40
50
34%
? Average when it comes to utilizing analytics ? High data analytics literacy
? Rapidly moving toward high analytical literacy ? Average to low analytical literacy
? No formal data analytics capabilities ? Don't know
28%
19%
13%
2%
4%
Financial services executives plan to use digital, social,
and mobile technologies in a variety of ways over the next
12 months. In fact, nearly half (49 percent) have plans to use
social media for external brand promotion, and 43 percent
expect to deploy customer-facing mobile applications over the
next year.
Digital marketing strategies planned for year ahead
Key
0
10
20
30
40
50 49%
? Digital marketing strategies planned for year ahead
? Social media for external brand promotion
? Social media for customer insight
? Social media for recruiting
? Social media for two-way customer engagement
? Mobile-specific customer-facing Web sites
? Enterprise mobile applications
? Mobile-commerce technologies
10
? Location-based marketing using mobile technology
? Mobile-specific enterprise websites (i.e., mobile intranets)
? Social media for enterprise collaboration/knowledge sharing
? Social media for customer crowdsourcing
? Creation and distribution of digital media marketing messages using video
11
? Creation and distribution of digital media internal messages using video
? Social media for enterprise crowdsourcing
? Social media for enterprise risk management
? Don't know
43%
40%
36%
33%
32%
29%
28%
24%
17% 17%
16%
13%
22%
21%
15%
12%
Data Analytics and Digital
Marketing Channels
10
including NFC-enabled payments and mobile wallets
11
(including company-specific external video channels)
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
20 | Banking Industry Outlook Survey
Banking executives maintain a cautious optimism for the near-term business
outlook, expecting modest improvements in revenue, the economy, and hiring
in 2013, but remain guarded longer term, not seeing a complete economic
recovery until 2014 or beyond. Mounting regulatory and legislative pressures
continue to create significant challenges and serve as sizable barriers to growth
within the sector. As a result, many banking executives are focusing their efforts
on strategies to increase operational efficiencies and reduce costs. To support
such initiatives, executives plan on investing more in IT to simplify platforms,
manage changing regulatory requirements, utilize data more effectively, and
enhance customer relationships.
Conclusion
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
Banking Industry Outlook Survey | 21
While financial executives are cautiously optimistic about the future, the continued
challenging environment requires that banks and other financial institutions adjust to,
and actively manage, the changes impacting performance.
For decades, KPMG’s global Financial Services practice has been recognized for its
presence in and commitment to the industry. Through our international network of
member firms, we have the global reach and experience to serve clients anywhere in
the world. Comprised of Banking and Finance, Insurance, Investment Management,
and Real Estate, our Financial Services practice includes professionals with the
knowledge, experience, and skills to help our clients address their most pressing
challenges, sort through today’s complex business problems, and achieve their goals.
KPMG: A Leader in Serving the
Financial Services Industry
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
Key Contacts:
Brian Stephens
National Sector Leader,
Banking & Finance
T: 202-533-3534
E: [email protected]
Judd Caplain
National Account Leader,
Banking & Finance
T: 212-872-6802
E: [email protected]
Bill Cline
National Account Leader,
Capital Markets
T: 704-335-5300
E: [email protected]
John Depman
National Segment Leader,
Banking & Finance
T: 267-256-1631
E: [email protected]
Mark Price
National Tax Leader,
Banking & Finance
T: 202-533-4364
E: [email protected]
David Reavy
National Audit Leader,
Banking & Finance
T: 212-909-5496
E: [email protected]
Peter Torrente
National Client Leader,
Banking & Finance
T: 212-872-5815
E: [email protected]
kpmg.com
KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative
(“KPMG International”). KPMG International’s member firms have 145,000 professionals, including more than 8,000 partners,
in 152 countries.
© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A.
The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 26401NSS
doc_843286539.pdf
The events of the past year in banking have allowed even the casual industry observer to grasp the interconnectivity of this vital industry and the overall economy in which it operates. We have learned all too well that a healthy banking industry is critical to economic vibrancy, providing the essential credit, capital, and liquidity that support growth and profit.
Banking Industry
Outlook Survey:
Executives Seek Efficiency
Gains Amid Challenges
kpmg.com
KPMG LLP, the audit, tax, and advisory firm, surveyed C-suite and
other top-level executives in the banking and broader financial
services industry during the second quarter of 2012.
Participants were asked about business conditions in their sector,
the most significant revenue growth opportunities, and any barriers
to growth that may exist. They were also asked a variety of questions
about the economy, including factors they perceive might impede
or support their sector’s recovery as well as the impact of regulatory
reform on their businesses and potential areas of investment.
These responses were compared to the findings of a similar survey
conducted among executives in the second quarter of 2011.
KPMG’s
Industry Outlook Survey
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
Contents
Foreword ....................................................................................................... 2
Key Findings from KPMG’s Industry Outlook Survey .................................... 4
Slow and Steady Sector Progress ................................................................. 6
Business Conditions ...................................................................................... 6
Revenues ....................................................................................................... 7
Headcount ..................................................................................................... 8
Hope for Recovery Remains on the Horizon ................................................ 9
Pursuing Growth and Opportunity .............................................................. 10
Capital Spending and Investing ................................................................... 12
The Many Impacts of Regulatory Reform ................................................... 14
Risk and Regulatory Challenges .................................................................. 16
A Closer Look at M&A Activity .................................................................... 18
Data Analytics and Digital Marketing Channels ........................................... 19
Conclusion ................................................................................................... 20
KPMG: A Leader in Serving the Financial Services Industry ....................... 21
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
2 | Banking Industry Outlook Survey
Foreword
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
Banking Industry Outlook Survey | 3
The events of the past year in banking have allowed even the casual industry observer
to grasp the interconnectivity of this vital industry and the overall economy in which
it operates. We have learned all too well that a healthy banking industry is critical to
economic vibrancy, providing the essential credit, capital, and liquidity that support
growth and profit.
In order to gauge the momentum of the industry and better understand the
challenges it faces, KPMG LLP (KPMG) has again reached out to senior executives
across a broad swath of the industry. As a result, this report includes both a snapshot
of current conditions and impressions of what may lie over the horizon for an
industry that continues to wrestle with choppy growth and persistent political and
regulatory uncertainties.
Amid all of those uncertainties, however, is the growing realization that what’s worked
in the past may not work in the future, leading many executives to closely examine
how their business is organized, how it creates products and services, how it reaches
out to its customers in a sustainable manner—indeed, how it grows its top line and
builds revenue. While it may not be broken, senior executives at organizations large
and small are making sure they understand their organization’s business model,
as the industry navigates a landscape littered with ambiguous and sometimes
perilous contours.
On behalf of KPMG, I would like to thank those who participated in this survey. I hope
the findings are useful to you in addressing market challenges and opportunities.
I also welcome the chance to discuss this study and its implications for your business
in the year ahead.
Brian Stephens
National Sector Leader, Banking & Finance
KPMG LLP
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
4 | Banking Industry Outlook Survey
Key Findings from KPMG’s
Industry Outlook Survey
Against the backdrop of a complex and uncertain regulatory environment—
as well as a still-sluggish overall economy—a majority of the banking executives
in the Unites States who participated in KPMG’s 2012 Banking Industry
Outlook Survey say that growth, a reexamination of the business model, and
operational-process improvements are at the top of their agenda this year.
Given those conditions and priorities, the executives say they will continue
to focus on reducing costs, will be somewhat less likely to be involved
in a merger or acquisition (M&A) than they were a year ago, and will
concentrate on leveraging information technology (IT) to enhance
their business.
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
Banking Industry Outlook Survey | 5
Some of the key findings from the 2012 banking industry
survey include:
• Ninety percent said they are either examining or
reexamining their business model as part of their growth strategy.
• Regulatory reform continues to challenge the sector in
a variety of ways. More than two-thirds (69 percent) of
the executives surveyed view regulatory and legislative
pressures as the greatest barrier to growth over the next
year. While most respondents say they are generally
optimistic about their bank’s revenue and growth prospects,
the unstable economy has created an ambivalent
industry in terms of increasing headcount for the future.
About 40 percent of respondents say their organization has
reduced headcount this year, while about a third reported an
increase in headcount. More than a third (37 percent) don’t
expect their bank to boost headcount to prerecession levels.
• Continuing a trend from the previous year, spending primarily
will be focused on IT, including initiatives in such areas as
platform simplification, mobile payments, leveraging data
for regulatory compliance, and creation of a more integrated
view of customers.
• Compared to 2011, there was a significant decline
(14 percentage points) in the number of respondents
who said their bank would be involved on the buy side
(either likely or very likely). This year, 42 percent said they
would be likely buyers, versus 56 percent in 2011.
• More than half (69 percent) of the banking executives
surveyed expect some improvement in economic
conditions over the next year. However, they have pushed
back their expectations for a full U.S. economic recovery
until 2014 or later.
KPMG’s survey reflects the responses of 100 banking/
financial sector executives from large, U.S.-based companies
with $100 million or more in annual revenue. The majority of
respondents (54 percent) worked for institutions with annual
revenues exceeding $10 billion, while 23 percent represented
institutions with annual revenues between $1 billion to
$10 billion, and 23 percent worked for institutions with revenues
in the $100 million to $1 billion range. Eighty-two percent
of these institutions are publicly held and 18 percent are
privately held.
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
6 | Banking Industry Outlook Survey
Faced with regulatory reform challenges and a lackluster
economy, banking executives are focused on reexamining
business models and initiatives that increase operational
efficiency and reduce costs, according to the banking
executives in this year’s survey. Regulatory reform continues
to pose significant challenges for the sector and remains
a significant barrier to growth. Executives will rely on
traditional services and asset-wealth management as primary
drivers for revenue growth over the next year and consider
the mass affluent (top 10 percent of income earners) and
young professionals as key customer segments for growth
opportunities. While survey respondents expect modest
gains in revenues and the economy over the next 12 months,
their longer-term outlook is less certain, with the majority
believing a full U.S. economic recovery is still years away.
More than two-thirds of the executives surveyed believe the
economy will improve over the next year, which represents
a brighter outlook than in 2011, when 55 percent thought so.
Similarly, the number of executives who believe the economy
will stay the same over the next year dropped to 28 percent
from 36 percent a year ago.
Key
0
20
40
60
80
100
? Better next year ? About the same
? Worse next year
69%
55%
36%
9%
28%
3%
2012 (Q2) 2011 (Q2)
Slow and Steady Sector
Progress Business Conditions
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
Banking Industry Outlook Survey | 7
Driving revenue
According to 56 percent of the financial executives surveyed,
traditional services are still considered the primary driver
of revenue growth, down slightly from 59 percent in 2011.
However, a significant number of respondents also view
cross-selling of services (42 percent) and asset and wealth
management (40 percent) as key revenue drivers over the
next three years. This marks a shift from last year’s survey
responses, which identified M&A activity and trading activity
as having the most potential to drive revenue.
Biggest Drivers of Company’s Revenue Growth:
Next 1–3 years
?2012 (Q2) ?2011 (Q2)
0
10
20
30
40
50
60
T
r
a
d
i
t
i
o
n
a
l
s
e
r
v
i
c
e
s
1
56%
59%
42%
40%
25%
28%
31%
23%
22%
7%
3% 3%
8%
0% 0% 0%
A
s
s
e
t
a
n
d
w
e
a
l
t
h
m
a
n
a
g
e
m
e
n
t
M
&
A
a
c
t
i
v
i
t
y
O
t
h
e
r
C
r
o
s
s
-
s
e
l
l
i
n
g
s
e
r
v
i
c
e
s
E
m
e
r
g
i
n
g
t
e
c
h
n
o
l
o
g
i
e
s
2
T
r
a
d
i
n
g
s
e
c
u
r
i
t
i
e
s
N
/
A
Revenues showed modest signs of improvement over
last year. Sixty percent of respondents reported an increase
in revenues over the last year, up slightly from 56 percent the
previous year.
Key
0
20
40
60
80
100
? Better now ? Same now
? Worse now
60%
56%
30%
14%
30%
10%
2012 (Q2) 2011 (Q2)
When asked to describe their revenue expectations a year
from now, three-quarters (75 percent) of executives predict that
revenues will increase, while 21 percent believe revenues will
stay flat. This mirrors the expectations of the prior year, when
70 percent and 23 percent, respectively, answered similarly.
Key
0
20
40
60
80
100
? Increase in revenues ? About the same
? Decrease in revenues
75% 70%
23%
7%
21%
4%
2012 (Q2) 2011 (Q2)
1
loans, savings, mortgages, etc.
2
i.e., mobile payments, etc.
Revenues
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
8 | Banking Industry Outlook Survey
While 31 percent of survey respondents noted they added
personnel over the last year, 44 percent report a decrease in
headcount. Executives have slightly higher expectations for the
year ahead, with 39 percent predicting an increase in hiring as
opposed to 32 percent who expect a drop in headcount.
Key
0
20
40
60
80
100
? Increase ? About the same
? Decrease ? Unsure
23%
31% 39%
26%
32%
44%
2% 3%
Current Headcount
(changes from last year)
Expected Headcount
over next year
Notably, more than one-third (36 percent) of survey respondents
do not expect their U.S. headcount to ever return to
prerecession levels.
Headcount: Return to prerecession levels
Key
0
10
20
30
40
13%
2%
19%
11%
19%
36%
? Already at, or greater than, pre-recession level
? 2013
? 2015 or later
? 2012
? 2014
? Never
Headcount
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
Banking Industry Outlook Survey | 9
The U.S. economic recovery continues to be just beyond
reach, according to the financial executives who participated
in this year’s survey. Seventy percent have pushed back their
expectations for a complete U.S. economic recovery until
2014 or later.
0
10
20
30
40
3%
27%
36%
34%
2012 (Q2)
Key
? 2012 ? 2013
? 2014 ? 2015 or later
Looking forward, financial services executives continue to view
external factors as a much greater concern than internal factors.
A vast majority (82%) admit to being more concerned about the
economy, competition, and the impact of regulatory changes
over their ability to compete or whether they have the right
strategic direction internally (18%).
Hope for Recovery Remains
on the Horizon
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
10 | Banking Industry Outlook Survey
Initiatives garnering attention
When asked about the top initiatives on the mind of
management, 19 percent of survey respondents cite the
need to significantly improve operational processes and
related technology.
Top initiatives on the mind of management
Key
19%
18%
15%
13%
12%
8%
7%
6%
2%
? Significant improvement of operation processes and related technology
? Navigating significant changes in the regulatory environment
? Significant cost reduction initiatives
? Significant investment in organic growth
4
? Merger/acquisition
? Improve enterprise risk management programs/processes
? Strategic divestiture of current assets
? Significant changes in business model
? Significant changes to financial processes and related technology
3
(upwardly mobile young professionals who earn good income,
about to buy first home, etc.)
4
(new product development, pricing strategies, geographic expansion)
Pursuing Growth and
Opportunity
Eighty-one percent of the financial services executives
surveyed acknowledge they have reexamined, or are in the
process of reexamining, their operating model as part of
their growth strategy. Respondents view specific customer
segments such as the mass affluent (37 percent) and
young rising professionals (23 percent) offering the greatest
growth opportunities for their institutions.
Customer segments offering the greatest growth
opportunity for your bank
37%
23%
19%
15%
5%
1%
Key
? Mass affluent (top 10% of income earners)
? Young rising professionals
3
? Consumers nearing retirement age (50–65)
? Underbanked (consumers without access to incremental credit)
? Unbanked (consumers with no transaction account)
? Retirees
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
Banking Industry Outlook Survey | 11
Assessing the competition
As market dynamics continue to change, banking executives
consider national banks (32 percent), and new market entrants
(28 percent) such as PayPal, and retail outlets like Wal-Mart,
as the biggest competitive threat to their banks.
Biggest competitive threat
Key
0
10
20
30
40
32%
? National bank ? New market entrants
5
? Credit union ? Regional bank
? Community bank
28%
16% 16%
8%
5
(PayPal, retail outlets such as Wal-Mart, etc.)
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
12 | Banking Industry Outlook Survey
Among the financial services executives surveyed, 83 percent
believe their institution has significant cash on its balance
sheet, of which 25 percent acknowledge that investment is
significantly underway.
Investment time frame
Key
0
10
20
30
40
25%
? Investment is significantly under way ? Second half of 2012
? First half of 2013 ? Second half of 2013
? 2014 and beyond
14%
19%
21% 21%
Compared to a year ago, 71 percent of executives note
that their company’s cash position on its balance sheet has
increased, with the majority saying it’s a moderate increase.
Cash position
Key
0
10
20
30
40
50
60
70
80
71%
25%
4%
? Increased
? Remained the same
? Declined
Capital Spending and Investing
Capital spending
About half (49 percent) of survey respondents predict their
institution’s capital spending will increase, while 34 percent
expect it to stay the same. Much of this spending is expected
in the areas of information technology, regulation/control
environment, new products and services, and acquisitions.
Increased areas of capital spending over the next year
Key
0
10
20
30
40
50
60
58%
? Information technology ? Regulation/control environment
? New products or services ? Acquisition of a business
? Business model transformation ? Advertising and marketing
? Geographic expansion ? Employee compensation and training
? Green/sustainability initiatives ? Research and development
? Expanding facilities
40%
37%
32%
20%
15%
14%
13%
8%
7%
5%
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
Banking Industry Outlook Survey | 13
When it comes to IT investment, 58 percent of the executives
surveyed believe platform simplification will be the most
important focus for their bank over the next year.
IT focus
Key
0
10
20
30
40
50
60 58%
? Platform simplification ? Mobile payments
(IT infrastructure, applications)
? Leveraging data more effectively ? Creating integrated view of
for regulatory requirements customer accounts
? Social media ? Catching up on deferred
maintenance
39%
38%
37%
31%
22%
Lending
More than half of survey respondents expect their bank to
increase lending over the next year. Fifty-six percent anticipate
higher commercial lending, and 58 percent think consumer
lending will rise.
Key
0
20
40
60
80
100
? Will significantly increase lending ? Will slightly increase lending
? Will moderately increase lending ? No increase in lending
24%
20%
33%
23%
26%
16%
Commercial Consumer
47%
11%
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
14 | Banking Industry Outlook Survey
More than two-thirds (69 percent) of survey respondents
identify regulatory and legislative pressures as the top
growth barrier for their institutions. Other hurdles include
risk management issues (38 percent), pricing pressures
(24 percent), and lack of customer demand (16 percent).
These results are in line with 2011 survey responses.
Barriers to growth
Key
0
10
20
30
40
50
60
70
69%
38%
24%
16%
11% 11%
9%
8%
4% 4%
2%
1%
8%
6%
1%
? Regulatory and legislative pressures
? Risk management issues
? Pricing pressures
? Lack of customer demand
? Lack of qualified workforce
? Access to and managing capital
? Increased taxation
? Energy prices
? Staying on top of emerging technologies
? Inflation
? U.S. dollar strength
? Labor costs
? Exchange rate fluctuations
? Foreign competition
? Other
Moreover, almost all of the executives surveyed (95 percent)
believe the capital requirements called for in various regulatory
reform initiatives, including the Dodd-Frank Act and Basel III,
will hinder growth moving forward.
Impacts on growth
Key
0
10
20
30
40
38%
? Significantly hinder growth, ? Moderately hinder growth
? Slightly hinder growth ? Improve growth
? No impact
34%
23%
3%
2%
The Many Impacts of
Regulatory Reform
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
Banking Industry Outlook Survey | 15
When asked to identify regulation that is having the
most negative impact on bank revenue, 30 percent of
executives cited residential troubled mortgages, followed by
the Durbin Amendment (14 percent) and new capital
requirements (14 percent).
Most negative impacts on bank revenue
Key
0
10
20
30
40
30%
? Troubled mortgages – residential ? Durbin Amendment
? New capital requirements
6
? Not applicable, our revenue has
increased or remained the same
? Other Dodd-Frank Act compliance ? Troubled mortgages – commercial
requirements
7
? Volcker Rule
14% 14%
13% 13%
9%
7%
Of the types of government regulations listed below, more
than half (59 percent) of respondents believe that capital
and liquidity requirements from various regulatory reform
initiatives, such as the Dodd-Frank Act and Basel III, are having
the most impact on their business.
Most impactful on business
Key
0
10
20
30
40
50
60
59%
? Capital and liquidity requirements? Consumer protection
? Federal supervisory changes
8
? Durbin Amendment
? Volcker Rule ? Limitation on federal preemption
authority for national banks and thrifts
? OTC derivates-related issues
9
? Systemic risk regulation (i.e., living wills)
? FATCA
42%
35%
32%
18%
12%
9%
6%
5%
6
resulting from regulatory reform initiatives (such as Basel III and the
Dodd-Frank Act)
7
(consumer protection, OTC derivatives-related issues, etc.)
8
powers and duties of OTS being transferred to OCC, FDIC, Fed, and CFPB
9
(Swaps Push-Out Rule, clearing, trading and reporting rules on Section 1256)
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
16 | Banking Industry Outlook Survey
Risk and Regulatory
Challenges
Evolving regulation and changing marketplace dynamics
have heightened the need for companies to implement a
strong internal risk framework. When asked to identify any
existing challenges preventing the adoption of a formal
risk policy, 40 percent of survey respondents believe
that process integration and operational efficiency pose
significant obstacles.
Challenges preventing the adoption of a formal risk policy
Key
0
10
20
30
40
50
40%
? Process integration/efficiency of operations? Culture and behavior
? Clearly defined roles and responsibilities ? Shared resources across the
organization
? Governance framework ? Don’t know
30%
22%
22%
26%
12%
(Multiple responses allowed).
Despite obvious challenges, 62 percent of the financial services
executives surveyed believe their institution is at least
somewhat prepared to seize opportunities as a result of public
policy and regulatory reform. Meanwhile, 30 percent report
being very prepared.
Ability to seize opportunities from regulatory change
Key
0
10
20
30
40
50
60
70
62%
? Somewhat prepared ? Very prepared
? Not prepared ? Don’t know
30%
2%
6%
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
Banking Industry Outlook Survey | 17
Tax regulation
According to the executives surveyed, evolving tax regulation
is expected to impact their business strategy, with 30 percent
believing it will result in less capital investment.
Key
0
10
20
30
40
50
30%
? Less capital investment ? Changing business structure/impact to hiring
? Increased overseas expansion ? Increased M&A activity
? Increased domestic expansion ? Don't know
25%
16%
15%
9%
29%
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
18 | Banking Industry Outlook Survey
The evolving regulatory environment has also impacted
potential M&A activity. While many had been predicting a
wave of consolidation in the banking industry, 40 percent of
respondents believe it may have been tempered by anticipation
of regulatory actions and related issues.
Key
0
10
20
30
40
50
40%
? Anticipated regulatory actions/issues ? Targets' balance sheet issues
? Sellers' demands too high ? Buyers' offers are not reasonable
27%
19%
13%
At the same time, 60 percent of respondents also believe
regulation will be a key driver of M&A, followed by new
geographic markets (28 percent) and new technology
(24 percent). These results closely mirror the responses
seen in last year’s survey.
M&A drivers
Key
0
10
20
30
40
50
60
70
60%
? Regulatory changes/reform ? Access to new geographic markets
? Access to new technology and products ? Product synergies
? Access to new resources ? Debt
? Labor cost pressures ? Pension and healthcare cost pressures
28%
24%
21%
19%
16%
11%
10%
Looking forward, 55 percent of banking executives think it is
likely their institution will be involved in a merger or acquisition
either as a buyer or seller over the next two years.
Likelihood of M&A activity
Key
0
10
20
30
40
50
42%
? Involved in M&A as buyer ? Involved in M&A as seller
? No plans for M&A activity ? Unsure/don’t know
13%
39%
32%
A Closer Look at M&A Activity
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
Banking Industry Outlook Survey | 19
When asked to describe the organizational maturity regarding
usage of data analytics, more than one-third (34 percent)
of executives rate the data analytics literacy of their bank’s
management and workforce as average, while 28 percent rate
their data analytics literacy as high.
Data analytics maturity of company
Key
0
10
20
30
40
50
34%
? Average when it comes to utilizing analytics ? High data analytics literacy
? Rapidly moving toward high analytical literacy ? Average to low analytical literacy
? No formal data analytics capabilities ? Don't know
28%
19%
13%
2%
4%
Financial services executives plan to use digital, social,
and mobile technologies in a variety of ways over the next
12 months. In fact, nearly half (49 percent) have plans to use
social media for external brand promotion, and 43 percent
expect to deploy customer-facing mobile applications over the
next year.
Digital marketing strategies planned for year ahead
Key
0
10
20
30
40
50 49%
? Digital marketing strategies planned for year ahead
? Social media for external brand promotion
? Social media for customer insight
? Social media for recruiting
? Social media for two-way customer engagement
? Mobile-specific customer-facing Web sites
? Enterprise mobile applications
? Mobile-commerce technologies
10
? Location-based marketing using mobile technology
? Mobile-specific enterprise websites (i.e., mobile intranets)
? Social media for enterprise collaboration/knowledge sharing
? Social media for customer crowdsourcing
? Creation and distribution of digital media marketing messages using video
11
? Creation and distribution of digital media internal messages using video
? Social media for enterprise crowdsourcing
? Social media for enterprise risk management
? Don't know
43%
40%
36%
33%
32%
29%
28%
24%
17% 17%
16%
13%
22%
21%
15%
12%
Data Analytics and Digital
Marketing Channels
10
including NFC-enabled payments and mobile wallets
11
(including company-specific external video channels)
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
20 | Banking Industry Outlook Survey
Banking executives maintain a cautious optimism for the near-term business
outlook, expecting modest improvements in revenue, the economy, and hiring
in 2013, but remain guarded longer term, not seeing a complete economic
recovery until 2014 or beyond. Mounting regulatory and legislative pressures
continue to create significant challenges and serve as sizable barriers to growth
within the sector. As a result, many banking executives are focusing their efforts
on strategies to increase operational efficiencies and reduce costs. To support
such initiatives, executives plan on investing more in IT to simplify platforms,
manage changing regulatory requirements, utilize data more effectively, and
enhance customer relationships.
Conclusion
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
Banking Industry Outlook Survey | 21
While financial executives are cautiously optimistic about the future, the continued
challenging environment requires that banks and other financial institutions adjust to,
and actively manage, the changes impacting performance.
For decades, KPMG’s global Financial Services practice has been recognized for its
presence in and commitment to the industry. Through our international network of
member firms, we have the global reach and experience to serve clients anywhere in
the world. Comprised of Banking and Finance, Insurance, Investment Management,
and Real Estate, our Financial Services practice includes professionals with the
knowledge, experience, and skills to help our clients address their most pressing
challenges, sort through today’s complex business problems, and achieve their goals.
KPMG: A Leader in Serving the
Financial Services Industry
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
©
2
0
1
2
K
P
M
G
L
L
P
,
a
D
e
l
a
w
a
r
e
l
i
m
i
t
e
d
l
i
a
b
i
l
i
t
y
p
a
r
t
n
e
r
s
h
i
p
a
n
d
t
h
e
U
.
S
.
m
e
m
b
e
r
f
i
r
m
o
f
t
h
e
K
P
M
G
n
e
t
w
o
r
k
o
f
i
n
d
e
p
e
n
d
e
n
t
m
e
m
b
e
r
f
i
r
m
s
a
f
f
i
l
i
a
t
e
d
w
i
t
h
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
C
o
o
p
e
r
a
t
i
v
e
(
“
K
P
M
G
I
n
t
e
r
n
a
t
i
o
n
a
l
”
)
,
a
S
w
i
s
s
e
n
t
i
t
y
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.
2
6
4
0
1
N
S
S
Key Contacts:
Brian Stephens
National Sector Leader,
Banking & Finance
T: 202-533-3534
E: [email protected]
Judd Caplain
National Account Leader,
Banking & Finance
T: 212-872-6802
E: [email protected]
Bill Cline
National Account Leader,
Capital Markets
T: 704-335-5300
E: [email protected]
John Depman
National Segment Leader,
Banking & Finance
T: 267-256-1631
E: [email protected]
Mark Price
National Tax Leader,
Banking & Finance
T: 202-533-4364
E: [email protected]
David Reavy
National Audit Leader,
Banking & Finance
T: 212-909-5496
E: [email protected]
Peter Torrente
National Client Leader,
Banking & Finance
T: 212-872-5815
E: [email protected]
kpmg.com
KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative
(“KPMG International”). KPMG International’s member firms have 145,000 professionals, including more than 8,000 partners,
in 152 countries.
© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A.
The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 26401NSS
doc_843286539.pdf