ESG driving systemic change in financial services industry, KPMG report reveals

The financial services sector has no choice but to embrace the environment, social and governance (ESG), according to KPMG report, which describes ESG as the “great behavioral driver of system change.”

Thirty-two industry commentators, CEOs, CFOs and board members from around the world gave their perspective on the future of financial services for KPMG Voices on 2030: financial services reinvented Report.

The global financial services industry is changing at a faster pace than ever – and systemic change is expected over the next decade, industry executives and experts have concluded.

The panel agrees that ESG is arguably one of the key issues driving change in financial services, concluding that the world is lagging behind net zero, but by 2030 financial services capital will play a crucial role in delivering positive results and help fuel the transition to sustainability.

Judd Caplainglobal head of financial services at KPMG, said the voices in the report speak with one voice on “the imperative to leave the world in a better place than we found it”.

“They expect the environmental, social and governance phenomenon of recent years to evolve and expand, ensuring that financial services companies are driving positive change. This can include climate change mitigation, but also social justice, equality and equity.

profound change

KPMG Voices predict five areas where they expect the most profound change.

  • ESG: the great behavioral driver of system change
  • Power change: customers taking control of their data shift power in the financial system
  • A changed landscape: business models proliferate and adapt
  • The data economy: data is changing the economics of financial services
  • Talent Opportunity: talent is also becoming open, with ecosystem-based experience being a competitive differentiator

The report also expects greater diversity and inclusion as leaders seek a broader talent pool with broader skillsets, including emotional intelligence; and collaboration rather than competition, with more partnerships leveraging the skills and competencies of multiple actors.

David Rice, Global COO, Commercial Banking at HSBC and contributor to the report, comments: “Partnership is powerful. Look at how banks, tech companies, and non-financial institutions have collaborated over the past decade to create network effects and virtuous circles that ultimately benefit customers.

“We were able to reduce prices and eliminate friction for all participants in the system. Indeed, in 2030, customers, whether individuals or businesses, no longer see banking as an activity in its own right. It has become invisible, integrated into the underlying interaction. It could be B2B payment, supply chain optimization, or simple things like buying your groceries online. It has become the dominant distribution model for all banks.

“The reality is that we operate in a world where you cannot work independently. Banks need to find partners to create symbiotic relationships that create value and create network effects for both customers and suppliers. In the digital economy, the bank’s role can even be that of a curator of platform interactions. It can be a consumer or a producer.

Stephen V. Lee