Banks should prioritise cost optimisation, data governance, and digital transformation to build a foundation for long-term growth

HONG KONG SAR – Media OutReach Newswire – 24 January 2025 – Hong Kong’s banking sector showed signs of recovery in 2024 after a prolonged period of challenges. This positive trend is expected to continue in 2025, with the pace of US rate cuts expected to be slower than many forecasts.

KPMG’s latest report, the Hong Kong Banking Outlook 2025, predicts substantial opportunities for banks that are willing to adapt and innovate, with technologies like Generative AI and virtual assets set to transform operating models. The report provides insights and predictions from KPMG experts regarding the outlook for Hong Kong and highlights key themes for banks to focus on this year, including embracing emerging technologies, staying abreast of ESG trends and keeping pace with regulatory developments.

Paul McSheaffrey, Senior Banking Partner, Hong Kong, KPMG China, says: “2024 marked an improvement for Hong Kong’s banking sector, with signs of recovery emerging after a prolonged period of challenges. Driven by policy shifts in the Chinese Mainland, these developments have laid the groundwork for cautious optimism entering 2025. Some green shoots of recovery have been seen, including an uptick in funds raised on the Hong Kong Stock Exchange and positive policy measures in the Chinese Mainland aimed at stimulating consumer demand. Thus, we are more optimistic about the prospects of the Hong Kong banking sector during the year.”

For retail and commercial banks, KPMG believes that the pace of interest rate reductions will be slower than many forecasts suggest, which will help banks preserve their margins. For investment banks, the positive policy measures in China are expected to enhance consumer sentiment, thereby fostering capital raising and M&A activity in China, ultimately benefiting Hong Kong.

Jianing Song, Head of Banking and Capital Markets, Hong Kong, KPMG China, says: “As we enter 2025, the environment faced by banks is becoming increasingly complex. However, we believe that this year will bring substantial opportunities for banks willing to adapt and innovate. Emerging technologies, such as Generative AI and virtual assets, have the potential to transform operating models. Through cost optimization, data governance, and digital transformation, banks can navigate their current challenges and build a foundation for long-term growth.”

Resilience remains a key regulatory focus

Resilience against cyber fraud and financial crime will remain a top priority in 2025 as losses experienced by banks and customers continue to make headlines. Meeting regulatory expectations will be crucial, with a strong focus on implementing existing regulations and new resilience requirements. AI adoption will be become a sector-wide topic in financial crime over the next two years, as authorised institutions and regulators gear up to tackle risks and meet regulatory expectations.

KPMG also expects Hong Kong regulators to launch initiatives to further encourage the use of distributed ledger technology (DLT) in the banking industry. This is driven by the need to build resilience against the operational risks associated with traditional settlement and payment infrastructure. It also addresses the need for banks to adapt their business models in the face of competition from new Fintech market entrants and ‘digital natives’.

Strategic cost optimisation

Geopolitical uncertainty, rising operational expenses and increasing regulatory requirements mean that manging costs will remain a focus in the banking sector. Instead of implementing broad cost-cutting measures, KPMG expects banks to adopt a more strategic approach centered on cost optimization. This involves identifying the root causes of inefficiency and implementing targeted corrective interventions. Automation can be an effective tool in this process, addressing latent inefficiency in core processes across front, middle, and back office. This can lead to increased productivity, reduced cost to serve, an enhanced customer experience and ultimately, a stronger top line.

Digital transformation trends

The pace of digital transformation in Hong Kong’s banking sector is expected to accelerate in 2025. More than one-third of financial institutions are already integrating Generative AI, supported by government initiatives such as the HKMA’s Generative AI Sandbox. Virtual assets have also been ranking high on the digital transformation agenda for banks, with initiatives like HKEX’s Virtual Asset Index Series and HKMA’s Project Ensemble Sandbox accelerating Hong Kong’s tokenisation market development. KPMG expects policy support to continue in this area throughout 2025.

In 2025, Hong Kong banks should prioritise digitising their operations by leveraging resources such as Fintech Connect; expanding their digital-savvy workforce through talent acquisition and upskilling; and future-proofing their digital asset and Generative AI readiness by establishing a robust data governance framework.

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About KPMG China

KPMG China has offices located in 31 cities with over 14,000 partners and staff, in Beijing, Changchun, Changsha, Chengdu, Chongqing, Dalian, Dongguan, Foshan, Fuzhou, Guangzhou, Haikou, Hangzhou, Hefei, Jinan, Nanjing, Nantong, Ningbo, Qingdao, Shanghai, Shenyang, Shenzhen, Suzhou, Taiyuan, Tianjin, Wuhan, Wuxi, Xiamen, Xi’an, Zhengzhou, Hong Kong SAR and Macau SAR. Working collaboratively across all these offices, KPMG China can deploy experienced professionals efficiently, wherever our client is located.

KPMG is a global organisation of independent professional services firms providing Audit, Tax and Advisory services. KPMG is the brand under which the member firms of KPMG International Limited (“KPMG International”) operate and provide professional services. “KPMG” is used to refer to individual member firms within the KPMG organisation or to one or more member firms collectively.

KPMG firms operate in 142 countries and territories with more than 275,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. Each KPMG member firm is responsible for its own obligations and liabilities. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.

In 1992, KPMG became the first international accounting network to be granted a joint venture license in the Chinese Mainland. KPMG was also the first among the Big Four in the Chinese Mainland to convert from a joint venture to a special general partnership, as of 1 August 2012.

Celebrating 80 years in Hong Kong
In 2025, KPMG marks “80 Years of Trust” in Hong Kong. Established in 1945, we were the first international accounting firm to set up operations in the city. Over the past eight decades, we’ve woven ourselves into the fabric of Hong Kong, working closely with the government, regulators, and the business community to help establish Hong Kong as one of the world’s leading business and financial centres. This close collaboration has enabled us to build lasting trust with our clients and the local community – a core value celebrated in our anniversary theme: “80 Years of Trust”.

• First-ever corporation to top Corporate Knights Global 100 twice
• 14^th consecutive year in Global 100 index, 7^th top 10 ranking
• Follows strong 2024 performance in other key ESG ratings

HONG KONG SAR – Media OutReach Newswire – 24 January 2025 – Schneider Electric, the leader in the digital transformation of energy management and automation, has been named the World’s Most Sustainable Corporation 2025 by Corporate Knights and is the only company to rank first in the Global 100 twice. Schneider Electric previously topped this annual list of the most sustainable publicly listed companies, generating annual revenues of over $1bn in 2021. This unique achievement underlines Schneider’s long-standing commitment and holistic approach to delivering the best environmental, social and governance (ESG) performance possible.

“For many years now, sustainability has been at the heart of what Schneider Electric does. For an IMPACT company it’s more than just a corporate goal, it’s the driving force that shapes our business decisions and inspires our employees,” said Olivier Blum, Schneider Electric’s Chief Executive Officer. “This second title as the World’s Most Sustainable Corporation from Corporate Knights, alongside other key ESG recognitions, is testimony to the valuable, long-term positive impact we have.”

This year, Schneider Electric’s number one position reflects the company’s leadership in sustainable development practices, such as the gender diversity of its executives and board directors, and its innovative solutions to facilitate energy efficiency, electrification and decarbonization. Schneider also obtained strong scores for efforts to decouple its energy consumption and carbon emissions from its business growth, and its strong investment in sustainable research and development. Corporate Knights also called out the link between executive pay incentives and Schneider Electric’s sustainability performance and ESG ratings.

“Schneider Electric’s position at the top of the Global 100 index is remarkable. No other company has accomplished this twice,” said Toby Heaps, Corporate Knights’ CEO. “This success stems from Schneider’s broad impact that goes beyond its own sustainability efforts. Schneider provides the technology to enhance energy efficiency, support decarbonization and help other companies in their sustainable transitions.”

Compiled by the Canadian media and research company, Corporate Knights, the annual Global 100 index is based on publicly disclosed, quantitative data related to resources, employees, suppliers, sustainable revenues, and investment. The Global 100 methodology uses fixed and variable key performance indicators to rank companies among their peers. Schneider Electric has been part of the Global 100 every year for the past 14 years and in the top 10 seven times — a record for its electrical equipment manufacturing peer group.

Being awarded this title in both 2021 and 2025 coincides with the beginning and end of the five-year period of the latest Schneider Sustainability Impact program. This program measures the company’s progress across a range of transformative ESG targets set for the end of 2025 and helps maintain an unwavering focus on achieving both its global and local ambitions.

Schneider’s sustainability leadership is further affirmed with these latest scores from prominent ESG rating providers:

Related resources:

• Schneider Electric latest sustainability performance reports
• Environment, Social, Governance (ESG) FAQ

Hashtag: #SchneiderElectric #Sustainability #ESG #Award

The issuer is solely responsible for the content of this announcement.

About Schneider Electric

Schneider’s purpose is to create Impact by empowering all to make the most of our energy and resources, bridging progress and sustainability for all. At Schneider, we call this Life Is On.

Our mission is to be the trusted partner in Sustainability and Efficiency.

We are a global industrial technology leader bringing world-leading expertise in electrification, automation and digitization to smart industries, resilient infrastructure, future-proof data centers, intelligent buildings, and intuitive homes. Anchored by our deep domain expertise, we provide integrated end-to-end lifecycle AI enabled Industrial IoT solutions with connected products, automation, software and services, delivering digital twins to enable profitable growth for our customers.

We are a people company with an ecosystem of 150,000 colleagues and more than a million partners operating in over 100 countries to ensure proximity to our customers and stakeholders. We embrace diversity and inclusion in everything we do, guided by our meaningful purpose of a sustainable future for all.

www.se.com/hk

Discover the newest perspectives shaping sustainability, electricity 4.0, and next-generation automation on Schneider Electric Insights.

As a panelist for a discussion session titled “Stemming Financial Fragmentation”, Mr Chan noted that while geopolitics may subject regional and global financial markets to greater volatility, Hong Kong boasts a robust financial system and strong buffer, maintains a free and open business environment, and steadfastly upholds the linked exchange rate system.

He added that Hong Kong is actively embracing financial innovation, including the development of digital assets, with appropriate regulations in place to promote the responsible and sustainable growth.

In another thematic discussion, organised by the Giving to Amplify Earth Action launched by the WEF, the Financial Secretary noted that Hong Kong, as an international financial centre, plays to its strengths as a “super-connector” and “super value-adder” in promoting investment in climate projects. Hong Kong provides financial support for green and transition projects through its comprehensive financial services. It also seeks to facilitate co-operation among the public, private and philanthropic sectors.

In support of the city’s efforts to develop trade relations with “Global South” countries, Mr Chan held bilateral discussions with the Minister of Investment of Saudi Arabia, Khalid Al-Falih, and the Minister of Finance of Egypt, Ahmed Kouchouk, and invited them to lead business delegations to Hong Kong to explore mutually beneficial co-operation opportunities.

Mr Chan also met with the President and the Chief Executive Officer of Franklin Templeton, Jenny Johnson, to discuss the business expansion plans of the international fund group in the region.

A day earlier (January 22), Mr Chan met representatives from Coinbase, a United States cryptocurrency exchange platform, to learn about the company’s latest business development and exchange views on global trends and regulatory policies concerning digital assets.

Mr Chan also met with senior management from insurance provider Swiss Re, where he outlined Hong Kong’s initiatives to strengthen its role as an international risk management centre, including the development of innovative products such as catastrophe bonds. He emphasised that Hong Kong would continue to encourage businesses worldwide engaged in infrastructure and investment projects to leverage the city for comprehensive risk management, adding that Hong Kong seeks to attract more domestic and international companies to establish captive insurance companies in the city.

Other bilateral meeting included those with the Minister of Finance of Qatar, Ali bin Ahmed Al-Kuwari, and the State Secretary for International Finance, Federal Department of Finance of Switzerland, Daniela Stoffel, respectively. Exchanges focused on the latest global economic and financial landscapes and ways to enhance co-operation between Hong Kong and both economies in trade, financial services and infrastructure.

In discussion with Professor Klaus Schwab, founder and executive chairman of the WEF, Mr Chan said Hong Kong is willing to strengthen co-operation with the WEF in different areas, including green transition, financial services development, urban management, and more. He added that Hong Kong valued its participation in the WEF Annual Meeting, which provides an opportunity to showcase the city’s unique advantages under the “one country, two systems” principle and better understand international trends, exchange views with various economic and sectoral representatives, and present Hong Kong’s perspectives.
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The issuer is solely responsible for the content of this announcement.