03. August 2023

According to the study, the institutes expect to close the current year with an overall increase in sales of around 7.1 percent. In 2024, however, growth is expected to weaken, with an anticipated increase of only 5.3 percent. The reason for this is rising personnel and administrative costs, which are eating into profits. "Although only a 4.5 percent increase in personnel costs is assumed for the current year, in the medium term, however, a shortage of skilled workers and interest rate increases will lead to wage increases. That's when price and revenue models come back into focus and should be optimized sooner rather than later," says Schindera.

Personnel shortage will come to a head by 2030

The board and management members who participated in the study assume that the staff shortage, which is already leading to restricted store opening hours, will continue to worsen until 2030. The surveyed CxOs expect a real peak in the period from 2026 to 2028, after which staffing levels are expected to continue to thin out until the situation slowly eases from 2030. "Advancing automation has the potential to alleviate the personnel shortage – but skilled workers are urgently needed for this," says Horváth partner Frank Schindera, summarizing the dilemma. He wants to see a greater commitment in the area of employer branding, personnel development, and HR work.

Automation is a top priority for management

After all, managers have certainly recognized its potential. Digital transformation, including automation, clearly leads the ranking of management priorities for 2023. The surveyed top executives believe its greatest impact will be felt in the area of consulting. Eight out of ten respondents also foresee enormous (efficiency) benefits for controlling/finance. A similar picture emerges when asked about the potential of AI applications. In the view of the industry experts, these will primarily positively change internal administration (70 percent) and customer service (60 percent). "Optimizing cost structures as well as price and revenue models ideally creates financial freedom for the upcoming automation projects," says Horváth partner Frank Schindera.

In second place among the management priorities is another digital topic, namely cybersecurity. Twenty-nine percent of the participating institutions state that they have been the victim of at least one cyberattack in the past twelve months that has caused significant damage. Therefore, both prevention and cyber resilience remain "top priorities" as well. Human resources issues rank third, followed by sustainability.

Sustainability before the "next level"

"In terms of sustainability, the institutions have done and learned a lot compared to the previous year. So far, however, the focus has been primarily on their own carbon footprint and on meeting regulatory requirements. For the 'next level', i.e., measuring and reducing Scope 3 emissions, many institutions still lack strategic solutions to integrate these targets into their business objectives and management models," states Horváth's Frank Schindera. He believes that the high level of complexity and uncertainty with regard to future legal requirements as well as a lack of data and transparency with regard to borrowers and fund providers are reasons for this limited progress. "Institutions must nevertheless urgently address the issue and develop their own practicable solutions."

About the study

For the Horváth study "Banks and Financial Service Providers 2023," a representative sample of board members from credit institutions and other financial service providers was surveyed. The sample comprises over 80 respondents with whom personal in-depth interviews were conducted. These took place as part of the large-scale international Horváth study "CxO Priorities 2023", for which a total of more than 430 top managers from 19 countries and 13 industries were surveyed.