AI and automation contribute to optimism
despite macroeconomics impacting bottom line
CLEVELAND, Sept. 26,
2024 /PRNewswire/ -- KeyBank (NYSE: KEY)
announced the release of its semi-annual Middle Market Sentiment
Report, which surveyed more than 700 business owners and executives
of companies with $10 million to
$1 billion in annual revenue, to
gather their insights on the current economic and company outlook,
challenges currently affecting their businesses, and their growth
plans for the year ahead.
What's At Stake
Middle market businesses represent a large portion of private
sector GDP and make up a critical yet often overlooked segment of
our national economy. Despite setbacks, the results revealed middle
market companies demonstrated remarkable resilience and growth amid
this year's persistent market uncertainty. While concerns remain,
the shift in confidence has led to a positive company and economic
outlook.
Top Middle Market Insights
- Optimism jumps to its highest level in years: Middle
market companies continue to demonstrate remarkable resilience and
growth with 78% of business owners reporting an excellent/very good
outlook for their company in the next 12 months, up 5% from 2023.
Moreover, 50% have an excellent/very good U.S. economic outlook for
the next 12 months, which can be attributed to improved efficiency
in business operations (64%) – up 12% from last year – and
improvements in technology (60%).
- Macroeconomics still make an impact: The top three
factors expected to negatively impact business in the next 12
months include inflation (34%), higher labor costs (30%), and
higher interest rates (29%). Likewise, 72% expect high interest
rates to negatively impact their bottom line within the next six
months.
- Business owners see M&A as growth accelerator:
Middle market companies have their sights set on growth with 90% of
businesses anticipating M&A involvement on the buy-side and 51%
anticipating involvement on the sell-side in the next two
years.
- Access to capital remains tight: Middle market companies
are increasingly concerned about access to capital, as inflation,
interest rates, and high borrowing costs persist. Given the
conditions, 87% are planning to tap alternative sources within the
next three years – including private equity firms (46%), private
debt lenders (43%), and commercial lenders (41%).
- Sights are set on AI and automation for scale:
Technology and automation have played a critical role in both
improved outlook and expansion strategies across the middle market
sector. The increasing trend to adopt AI across the market
continues with 54% planning to implement some form of AI over the
next six months – up from 10% from Q4 2023 – to grow their
capabilities and improve processes across data analysis, customer
and supply chain optimization, content marketing,
fraud prevention, and cybersecurity
infrastructure.
- Fraud continues to be a watch point across the
sector: 32% of middle market businesses have experienced
cybersecurity or financial fraud issues in the past 12
months. The emergence of cybercrimes has pushed the middle market
to move quickly to protect their businesses against the top three
cyber or fraud occurrences: phishing/email spoofing
(48%); data corruption (44%); and identify theft (37%).
From Key Commercial Bank
- "The middle market has a long history of remaining resilient
through economic cycles and KeyBank is committed to supporting
these businesses. We recognize that their success is not only a
testament to their ingenuity and perseverance but also a
significant driver of broader economic stability and growth in our
communities," said Ken Gavrity,
President of Key Commercial Bank.
- "The growing dependence on digital infrastructure is a
double-edged sword, creating operating efficiencies and better
client experiences, but it also comes with increased potential for
cybersecurity and fraud if not managed correctly,"
said Gavrity. "Our team works with many middle market companies to
ensure that they are taking steps to deliberately manage the risks
and to leverage the education and tools that are available."
- "A relationship strategy means we get to know your business,
your strategy, your team, and how you make decisions. It's about
more than offering capital, it's being a strategic advisor that
helps you navigate growth, the economic cycles, and the
complexities of running a business. We've been doing this for
decades and built our whole business around that concept," Gavrity
continued.
Methodology
KeyBank surveyed 706 owners and
executives of businesses with $10
million to $1 billion in
annual revenue between May to June of 2024. KeyBank has conducted
the Middle Market Sentiment research study since 2010.
About KeyCorp
KeyCorp's roots trace back nearly
200 years to Albany, New York.
Headquartered in Cleveland, Ohio,
Key is one of the nation's largest bank-based financial services
companies, with assets of approximately $187
billion at June 30,
2024. Key provides deposit, lending, cash management, and
investment services to individuals and businesses in 15 states
under the name KeyBank National Association through a network of
approximately 1,000 branches and approximately 1,200 ATMs. Key also
provides a broad range of sophisticated corporate and investment
banking products, such as merger and acquisition advice, public and
private debt and equity, syndications and derivatives to middle
market companies in selected industries throughout the United States under the KeyBanc Capital
Markets trade name. For more information,
visit https://www.key.com/. KeyBank Member FDIC.
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SOURCE KeyBank
