Citi Commercial Bank 2024 Global Industry Insights Report

STAFFING FEARS FADE INTO THE BACKGROUND The 2023 GIIR showed that concerns around wage growth were running rampant and the jobmarket was still settling after the upheaval brought by the pandemic. Last year more than half (51%) of those surveyed said staffing was their biggest challenge, and while staffing remains a challenge for some respondents, this year that figure dropped to a little over a third (35%). This drop in staffing concerns is encouraging, especially given continued wage growth and the evolving requirements of jobs in the B&PS industry. For job seekers, a softer jobmarket and lower employment churnmean it’s fundamentally a buyers’ market, especially in the U.S. AI INTEGRATION NEARS ITSMIDWAY POINT It’s encouraging that somany respondents are using AI solutions. Some 42% of the industry leaders surveyed said they already use AI within their operations. Those who haven’t adopted AI say it’s due to a lack of knowledge and awareness or because the field has not quite reachedmaturity. The expectation is that more businesses will generate efficiencies by integrating AI into their operations to build new offerings and transform the industry. EASING INFLATION TAKES THE PRESSURE OFF The significant wage pressure experienced in recent years is now easing. That may explain the high rate of respondents with plans to expand into new international regions (only a third of repondents —many of which are already global —said they had no such plans). Still, the forecast shows service inflation cooling more slowly than that of manufacturing. In late October 2024, Citi forecast that global inflation will be ~3.4% by the end of 2024 and ~2.6% by the end of 2025. 1 Almost three-quarters of respondents said they were concerned about inflation, which is average for all industries on this issue. BUSINESS & PROFESSIONAL SERVICES B&PS define their industry’s main asset as people and how they relate to the challenges of hiring and retaining staff with the right skills. Businesses are looking to evolving technologies for new approaches and, with that top of mind, the survey found that just under half of respondents in B&PS are already using AI. While there is no fix-all, the advent and rapid adoption of AI may disrupt current processes for hiring and retaining staff. The most impactful of this year’s macroeconomic shifts has been the easing of the global inflation that, for years, has put pressure on the ability to staff up and keep costs down. B&PS is around the middle of the pack when compared to other industries on how they view these pain points, but it’s anticipated that these issues will remain in focus over the coming year. A people-dependent industry breathes a sigh of relief as inflation and labor pressures start to ease “AI technology will continue to be a transformational force within our industry – there are two primary use cases: interna l efficiencies and new offerings. It is easy to feel conviction that impacts will remain significant.” John Burke “We have an AI task force and are actively researching which tools to use.” U.S.-based company with between $10million and $24million in annual sales turnover CASH FLOWSTILL A PRIORITY DESPITE EASING OUTLOOK Despite an improving macroeconomic outlook, respondents remain concerned about cash and costs. In no industry were repondents less satisfied with progress towards their financial goals over the past year. Some 67% of those surveyed said they were concerned about managing cash flow as a top financial priority; 62% said that managing costs was their biggest challenge; and ‘improving working capital’ the most common answer when asked what they’d like out of their current commercial banking arrangements. One banking need highlighted in responses was a desire for help entering newmarkets. John Burke Global Head of Business & Professional Services (B&PS), Citi Commercial Bank 1 Citi WealthMarket Outlook 2025