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U.S. Bank CEOs Bullish on Growth, Appetite for M&A on the Rise, Report

July 23, 2018, 07:21 AM
Filed Under: Banking News

Ninety percent of U.S. bank chief executives (CEOs) are very confident about the growth prospects for their companies over the next three years, with mergers and acquisitions (M&A) and third-party strategic alliances helping fuel this growth, according to KPMG’s 2018 CEO Outlook survey. CEOs are also optimistic that their digital transformation investments will pay off in the near future.

The appetite for mergers and acquisitions stood out as a top growth strategy (28 percent), ahead of strategic alliances and joint ventures (23 percent each) The main objectives behind their M&A strategy is to reduce costs through synergies and economies of scale (47 percent) and on-boarding new digital technologies/ innovation (47 percent).

“This year’s survey indicates that the banking CEOs are doing many of the things that will help them better compete,” said David Reavy, national leader for KPMG’s Banking & Capital Markets sector. “They are addressing the areas that are key to growing their business, such as their commitment to digital transformation, a renewed focus on improving their customers’ experience, and finding new ways to cut costs.”

“While the banking CEO’s appear confident for their future, they are still facing hurdles such as how to serve the millennial generation and attract the right talent that will allow them to take advantage of what artificial intelligence and data & analytics can do for them,” said Reavy.

The survey outlines the results from U.S.-based banking CEOs. Key findings include:

  • 100 percent of U.S. bank CEOs are confident about the growth prospects of their companies over the next three years.
  • Thirty-three percent of the banking CEOs say they will likely undertake an acquisition that will have “significant” impact on the overall organization over the next three years. 
  • The majority of the CEOs believe they will see significant return on investment from their digital transformation program, with 31 percent saying it will be within 12 months, 44 percent saying 1-3 years and 21 percent saying it will take 3-5 years.

Growth through innovation and investment

The top actions that the CEOs say they will take over the next three years to pursue their growth objectives include: setting up accelerators and incubator programs for startups (56 percent), collaborating with innovative startups including fintech, insurtech and healthtech firms (49 percent), and corporate venturing at 41 percent.

Challenges around the millennial customer experience

Nearly three-quarters (72 percent) of the CEOs believe they are meeting or exceeding customers’ expectation for a personalized experience, but express concerns over meeting the needs of millennials.

In fact, 44 percent of the CEOs say they expect a challenge in finding senior leaders who can better relate to millennials. The CEOs also are reconfiguring their workforce to focus on new technology skills, with emerging technology specialists and scenario and risk modeling specialists being a priority.


A vast majority of the bank CEOs (97 percent) said they are “overall” prepared to identify new cyber threats. Sixty-two percent said they are “very well” prepared to contain a cyber attack on their strategic operations. However, only 18 percent said they are “very well” prepared in relation to their overall level of preparedness for a cyber attack, while 59 percent said they are “well” prepared.

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