Survey: Bankers Anticipate Growth on the Horizon

Nursing ranked number one in Gallup Poll’s annual Most Honest and Ethical Professions Poll. But the real feat is that this is the 22nd year in a row that the profession has topped the list. In contrast, recent Gallup data shows that only about one of every four Americans have either a “great deal” or “quite a lot” of confidence in banks, yet customers are not fleeing financial institutions. Despite any lingering wariness of the financial sector after last year’s failures, there are a lot fewer people who have a fear of banks than of needles. In fact, bank executives are quite confident these days when it comes to their business outlooks. Banking execs are displaying renewed optimism about their institutions — although with some reservations, particularly when it comes to smaller banks. A survey of 200 banking executives recently released by KPMG found that two-thirds expect their banks to grow. Three in five say they plan to hire more workers. More than one-third say they plan to acquire another bank before the end of the year.  The positive outlook transcends bank sizes, with about 60% of those surveyed hailing from banks with less than $50B in assets so that regional and smaller banks were well represented. Still, the optimism was strongest among larger banks (those with $50B or more in assets), perhaps a reflection of the challenges facing smaller banks when it comes to technology, an important facilitator for growth. By the NumbersHere’s how the feelings about growth prospects for the coming year break down:

Hiring OutlookWith growth comes increased demands for services, which can translate into the need for more workers. That dynamic is evident in the large number of respondents who say they expect headcounts at their banks to rise. Again, this sentiment is strongest among the largest banks but is also evident in smaller banks that anticipate solid growth. About one in five respondents said their banks could see their workforces grow by 6%-10%.KPMG says it expects most of the added workers will find positions in back-office jobs, primarily in risk and regulation functions. There may also be growth in jobs related to generative artificial intelligence (GenAI). Again, big banks may have an edge here. M&A ProspectsFor smaller banks, the continuing pressure to keep up with technology, particularly GenAI, may contribute to mergers as a way to gain size, tech expertise, and economies of scale. While 38% of those in the survey said they expect to acquire one or more banks, KPMG says that consolidation will likely be strongest among smaller banks. But consolidation is not the only action that is expected, with 41% saying they plan to buy just financial assets, which is not as dependent on regulatory approval. In any case, mergers and acquisitions appear to be the main way banks hope to improve their fortunes, with six of ten saying profitability won’t be driven by organic growth.The Race To Incorporate GenAIDigital advances continue to change the nature of banking, and GenAI promises to speed things up. Half of executives said GenAI will be able to do 1%-5% of their workers’ daily tasks; 37% said GenAI would be capable of handling 6%-20% of daily workloads. About two-thirds said GenAI is integral to their bank’s long-term goals.While bankers are generally optimistic about their growth prospects in the near term, the optimism is skewed toward the biggest banks. Smaller banks are also positive, but less so, as they contemplate the demands of an increasingly high-tech industry, particularly with the advent of GenAI.