Embracing reinvention

The Channel Islands findings reveal what’s on the minds of local business leaders, the risks and opportunities they face and their strategies for addressing them. We’ve also compared the Channel Islands findings with those from CEOs in other international finance centres, including Ireland, Luxembourg, Switzerland, Cyprus and Hong Kong as well as against the global peer group. 

What comes through strongly from our survey is the need for bold strategic thinking as geopolitical shifts, solving the climate and nature crisis, and emerging technologies like generative artificial intelligence (GenAI) dramatically change how the local and global economy works.

In this challenging and rapidly changing context, the attractions of Guernsey and Jersey as dynamic, responsible, respected and stable international finance centres are arguably greater than ever. The Channel Islands are ideally placed to facilitate flows of finance to where it's most needed, especially against a backdrop of capital flight to financial safe havens. As we explore in this report, the big question is how to further strengthen our competitiveness and harness this potential.

I would like to thank all the CEOs who took part in the survey for sharing their valuable insights. If you would like to discuss any of the issues raised in this report, please get in touch.

Exhibit 1: Biggest challenges to realising growth ambitions of Channel Islands CEOs

Channel Islands business leaders are more optimistic about global economic growth

Channel Islands business leaders are more optimistic about the outlook for global economic growth in the year ahead than all of their international peers.

Channel Islands business leaders are also more confident about their own revenue growth prospects than both their international peers and CEOs globally.

Most expect the Channel Islands economy as a whole to improve over the coming year, though they tend to be less bullish about the local economy than many of their international peers are about their local economies.

Exhibit 2: Comparing confidence in global and local growth

Local economic growth could be more of a challenge 

As our previous Island Index research highlights, sustaining historic levels of economic growth across the Channel Islands could be challenging as a result of constraints on available talent, housing and development land.

However, Channel Islands CEOs’ confidence in global growth underlines the opportunities for local businesses to expand internationally, compensating for any perceived slower growth at home.

Channel Islands wealth managers are a case in point. Research carried out for PwC’s Channel Islands Wealth Management Insights 2024 reveals that their international clients have higher average levels of investable wealth than local counterparts. Securing more international business could therefore offer a bigger boost to assets under management and associated economic value. 

One in eight Channel Islands CEOs believe their businesses won’t be viable in ten years’ time

In an era of heightened disruption and change, the critical question for organisations is whether their current business models and operational capabilities will remain viable and, if not, how to accelerate the necessary reinvention.

Only around one in eight Channel Islands CEOs believe their businesses won’t be viable in ten years’ time, compared to a global average of more than 40%. Is this an indication of confidence or complacency? Only time will tell.

What is clear is that the Channel Islands’ overall reinvention actions, which reflects if companies are transforming the way they create, deliver and capture value, trails behind their global counterparts. Specifically, the proportion of Channel Island firms which undertake reinvention actions to a very large extent is the lowest amongst its peers and lower than the global average.

How might this business model reinvention apply to organisations here in the Channel Islands? If we look at a fund administration business as an example, the forces driving reinvention in an increasingly fast-moving and competitive global landscape could include the need to implement new digital platforms, develop fresh client offerings or expand into different markets.

Exhibit 3: Confidence in business viability

Harnessing AI

So, if local businesses are at risk of falling behind, how can they close the gap on their peers and accelerate the business model reinvention needed to compete?

Both technology and the skills needed to make the most of its potential are a key part of the answer. GenAI is proving to be a particular focus for reinvention, with nearly 60% of Channel Islands CEOs believing that it will boost returns. But the way forward requires consideration. Right now, most AI use cases are targeted at productivity improvements. But as important as these are, the even bigger potential lies in transforming offerings and tapping into new markets. 

A clear case in point within Financial Services is reaching out to the beneficiaries of the ‘great wealth transfer’ as baby-boomers pass on their wealth to younger generations. With these market openings comes a generational shift in expectations as Financial Services organisations compete for digital native customers who’ve become accustomed to high levels of tech-enabled engagement, experience and personalisation.

As the survey findings further underline, the keys to capitalising on AI don’t just include investment, but also trust.

In line with their peers, CEOs are integrating AI at a cautious pace, recognising that safe and successful deployment of AI is a complex process that requires planning and coordination across the organisation.

The other big impact of tech transformation is as a spur for consolidation as companies look to bolster economies of scale. A third of Channel Islands CEOs plan to make at least one acquisition in the next three years. If historic trends continue, consolidation could help to strengthen both productivity and profitability. 

More than half of Channel Islands CEOs plan to take on new staff

A clear sign of the confidence of Channel Islands CEOs is that more than half plan to take on new staff in 2025. Few are planning job cuts, in stark contrast to the picture globally.

The central question is how to recruit and retain key talent when Channel Islands CEOs see shortage of skills as the biggest barrier to realising their growth ambitions.

It’s equally telling that employee productivity and engagement rank number two on the Channel Islands CEOs’ list of growth challenges. These barriers could not only dent performance and return in the short-term, but also make it harder to secure the workforce buy-in needed to drive transformation and change. 

Build, borrow, buy and ‘bot’

With the supply of available skills limited, workforce strategies need to be pragmatic.

Pressing priorities include the need to step up workforce upskilling – identifying the roles and tasks that could become obsolete through tech and AI, and training staff in the skills that are needed in a digital economy.

It’s also important for policymakers, businesses and educators to come together to develop the training, career opportunities, affordable housing and quality of life that would encourage young people to build lives and careers here.

As PwC’s Women in Work Index highlights, further priorities include encouraging people who have stepped out of the labour market to move back into work and providing them with the skills and incentives needed to secure employment. These currently ‘non-employed’ people include a significant proportion of women over aged 25 and men aged over 50. Bringing them into work could make a crucial difference as importing talent can be difficult, costly and time-consuming.

In turn, technology can play its part by taking care of routine work and hence freeing up time to spend on critical, value-generating tasks. Another opportunity could be to outsource some functions and roles to different jurisdictions to expand the talent pool available to local businesses.