While it is quite common to talk about the trends expected to come up in one sector or the other, such forecasts are sometimes speculative, with no data to back them up. In contrast, KPMG’s Banking CEO Outlook has talked every year to the leaders of more than a hundred companies, asking them what they consider important in the period to come. We spoke to Zaruhi Furunjyan, the Director and Head of Consulting at KPMG Armenia and Georgia, to see what is of interest in the latest report, and how our region compares to the global trends.
Interview : Nazareth Seferian Photo : KPMG Armenia
KPMG has been publishing Banking CEO Outlook on an annual basis for the last several years. These reports provide quite important insights from the leading financial institutions on what is happening with the sector globally. What is the key takeaway from the 2024 outlook, what is the major change that you observed based on the views collected from 120 banking and capital markets CEOs?
— Yes, you are absolutely right. At KPMG, we are committed to staying well-informed about the market trends through collecting and analyzing first-hand data. This gives us the opportunity to understand client strategies and vision from within and be better prepared to support them as consultants and auditors. Each year, we see evolving trends in the financial sector—new opportunities, challenges, ways of thinking, and changing customer expectations. Following global market trends, the financial sector is also shifting towards innovations and ESG, with increased investments in these areas. I would not call this a rapid change from previous years’ trends, but rather a continuing focus on these priorities. One important point to highlight is that with the growing investments in AI and technologies, CEOs understand the importance of investing heavily in cybersecurity and are paying more attention to cybersecurity risks. According to the report, 81% believe cybercrime will impact their organization’s growth in the medium-to-long term.
Based on the KPMG 2024 Banking CEO Outlook, Gen AI is gaining prominence as a top investment priority for 81 percent of banking CEOs. Since you work with most of the financial institutions in the Caucasus region, what is your view on GenAI in our markets? Is this seen as a priority here as well?
— This is an interesting question. Based on our work with most of the financial sector companies in the Caucasus region, I would say that probably this trend is not yet the same in most of the countries. From what we have observed, although the companies in the region consider innovation as a priority and understand its importance and potential benefits, from an investment perspective we seem to be behind global trends. Financial institutions invest in digitalization and most of them consider this as a strategic priority. However, when it comes to GenAI specifically, it may still be too early to call it a major focus. I believe global trends will gain prominence locally in the mid-term, but it seems to still be early for that.
Having a good Employee Value Proposition (EVP) to attract and retain talent is one of the top operational priorities for growth over the next three years. In your opinion, what constitutes a good EVP for Gen Z talent that has been joining the workforce in recent years and where is improvement needed?
— It is indeed a priority, and a significant challenge to integrate Gen Z into the culture in which previous generations traditionally worked. The Gen Z mindset is different: they are bolder in expressing their opinion, prioritize their mental and physical wellbeing, are ready to stand firm in their viewpoints, and tend to have more flexibility both at work and in life. Furthermore, Gen Z is highly motivated by purpose and social impact. They want to work for organizations that align with their values, particularly regarding social, environmental, and ethical issues.
As a result, companies have started changing their internal culture to retain and develop this talent. The key changes seem to be moving towards flexibility in working arrangements, offering additional health-related benefits, providing more opportunities for personal development and of course being able to adapt in terms of technologies and innovation to ensure that working methods are more appealing for Gen Z talent. I believe organizations also need to focus on authenticity, clear career progression, transparent DEI (diversity, equity and inclusion) initiatives, and compensation that reflects the full range of needs for this generation. Based on the responses received from the CEOs, 93% expect to increase their company’s headcount, and the majority of new hires are expected to be Gen Z representatives. Therefore, companies need to continue to adapt in order to make the workplace both interesting and rewarding for the new generation.
During the pandemic, many companies were forced to accept policies on working from home and, later, hybrid working. The report states that 86% of CEOs expect staff to work from the office and 92% are likely to reward employees who make an effort to come to the office. Is there a contradiction between this and the good EVP we discussed earlier?
— I think during the pandemic, at some point, what was considered normal changed and the work processes were adapted accordingly. However, let’s acknowledge that from the perspective of communication, work efficiency, and managing staff discipline, several issues have arisen. I think that in the Caucasus region, it was easier to bring staff back to the office by offering a limited choice for hybrid arrangements. This may be due to the size of the companies or the communication culture in our countries, which differs from that of western, developed countries. The CEOs’ expectations do not necessarily mean the goal is to bring staff fully back to the office, but rather to create appealing workplace environments, provide access to programs for personal and professional development, and instill flexibility depending on employee needs and market-specific considerations. So, in my view, there is not much contradiction between a good EVP and these expectations. Rather, it’s about finding a consensus between employee expectations and increased work efficiency.
Join us on Telegram