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Tech threats and opportunities for Bermuda

Future challenges: Arthur Wightman, PwC Bermuda leader, has said CEOs in Bermuda will need to advance strategies to embrace technologies that challenge their organisational DNA (Photograph supplied)

Disruptive technologies, such as blockchain, present both threats and opportunities for financial services businesses in Bermuda.

And the island must stay strong to keep its relevance in global capital markets.

That is the belief of Arthur Wightman, PwC Bermuda leader, who made his comments as PwC released its 20th CEO Survey at the World Economic Forum in Davos, Switzerland.

Globalisation continues to have a marked impact on financial services and “the competitive landscape is fiercer than ever”, stated Mr Wightman.

“This means that Bermuda must fight harder to secure its relevance in the global capital markets for years to come. Given the significant positive impact that international business has on the local economy and the dependency Bermuda has on it, leaders in the private and public sector must galvanise behind this objective.

“Technology businesses are also beginning to disrupt financial services. Over time it is expected that blockchain will transform distribution channels and the role that machines versus people play in this sector. CEOs in Bermuda will need to advance strategies to embrace technologies that challenge their organisational DNA.

“Technologies pose both threats as well as opportunities to Bermuda.”

The survey showed CEOs around the world are generally more confident about growth prospects for this year than they were a year ago. Some 38 per cent felt very confident about their company’s growth prospects, that compares with 35 per cent in 2016. Similarly, there was a slightly higher percentage of CEOs who said they believed global economic growth will improve, up from 27 per cent to 29 per cent.

Bob Moritz, global chairman for PwC, said: “Despite a tumultuous 2016, CEO confidence is moving back up — albeit slowly and still a long way from the levels we saw back in 2007.

“But there are signs of optimism right across the globe, including in the UK and US, where despite predictions of a Trump slump and a Brexit exit, CEOs confidence in their company’s growth are up from 2016.

“And that mood is reflected elsewhere, with more CEOs across the world targeting the US and UK for investment than a year ago.”

CEOs’ confidence in their own one-year revenue growth is on the rise in nearly every major country across the world. In India it was measured at 71 per cent, while in Brazil confidence levels have more than doubled to 57 per cent. Also near the top of the table were Australia and Britain at 43 and 41 per cent respectively.

Business leaders believe technology “is now inseparable from business’ reputation, skills and recruitment, competition and growth”.

The survey found that almost a quarter of CEOs believe technology will completely reshape competition in their industry over the next five years.

In a statement, PwC said: “In an increasingly digital-driven world, technology has created a new dynamic between business and customers bringing huge benefits for both.

“However, on the flip side 69 per cent of CEOs say it is harder to gain and keep people’s trust in this environment and 87 per cent believe risks from use of social media could have a negative impact on the level of trust in their industry.”

Mr Moritz said: “CEOs expect it to become harder to sustain trust in the digital era. But competitive advantage will go to those with the greatest capacity to turn technology into their strength when coupled with the ability to connect with their stakeholders in an ongoing relationship grounded in trust.”

The annual survey also shows that concerns about skills and jobs have more than doubled in 20 years.

“CEOs are concerned that key skill shortages will impair their company’s growth potential, relevance and sustainability. And it’s soft skills that they value the most,” said Mr Moritz.

“Innovation and relationship skills can’t be coded. So to drive the change CEOs need — thinking carefully and actioning accordingly — a balance between technology and irreplaceable skills in their people is key.

“Managing expectations with stakeholders will help enable the needed trust to survive and thrive. Bottom line — prioritising the human element in a more virtual world will be a prerequisite for future success.”

The survey was conducted between September and December 2016, and 1,379 CEOs from 79 countries responded.