AmazonScience/document-haystack

1We operate in a highly competitive environment in terms of the products and services we offer and the geographic markets in 2which we conduct business.3We are subject to intense competition both from other financial institutions and from non-bank entities, including financial technology 4companies (often referred to as “FinTech”). In many cases, non-bank entities can engage in many activities similar to ours or offer 5products and services desirable to our customers without being subject to the same types of regulation, supervision and restrictions that 6are applicable to banks, which could place us at a competitive disadvantage. Emerging financial technologies, including with respect 7to payment services and systems, lending, digital wallets, non-fungible tokens and digital currencies and cryptocurrencies, may affect 8our customers’ needs and expectations for products and services. We may fail to attract or retain customers if we are unable to develop 9and market products and services that meet evolving customer needs or demands or if we are unable to deliver them effectively and 10securely to our customers. We may also fail to attract or retain customers if we are unwilling to provide products or services that we 11deem to be speculative or risky. The competition we face is described in Item 1 of this Report under “Competition.”12Consolidation in our industry, including among smaller banks combining to form more competitive larger ones and between banks and 13non-bank entities, could result in PNC facing more intense competition, particularly in impacted regions or with respect to particular 14products. As we expand into new markets, we may face competitors with more experience and established relationships in these 15markets, which could adversely affect our ability to compete.16A failure to adequately address the competitive pressures we face could make it harder for us to attract and retain customers across our 17businesses. On the other hand, meeting these competitive pressures could require us to incur significant additional expense or to accept 18risk beyond what we would otherwise view as desirable under the circumstances. In addition, in our interest rate sensitive businesses, 19competitive pressures to increase rates on deposits or decrease rates on loans could reduce our net interest margin, negatively 20impacting our net interest income.21We depend on skilled labor, and employee attrition, competition for talented employees and labor shortages may have a material 22adverse effect on our business and operations.23Our performance is dependent on attracting and retaining talented and diverse employees. We face significant competition for these 24employees across many of our businesses and support areas. This presents greater risk as we expand into new markets, develop new 25product lines, or enhance staffing in certain areas, particularly technology. This competition leads to increased expenses in affected 26business areas. Differences in demands, expectations and priorities of the workforce (such as remote work expectations) may require 27us to modify our recruiting and retention strategies to attract and retain employees. Limitations on the way regulated financial 28institutions can compensate their officers and employees, including those contained in pending rule proposals implementing 29requirements of Dodd-Frank, may make it more difficult for regulated financial institutions, including PNC, to compete with other 30companies for talent.31Risks Related to Other Operational Issues32We depend on the effectiveness and integrity of employees, and the systems and controls for which they are responsible, to manage 33operational risks.34We are a large company that offers a wide variety of products and services to a broad and diverse group of customers. We rely on our 35employees to design, manage and operate our systems and controls to assure that we properly enter into, record and manage processes, 36transactions and other relationships with customers, suppliers and other parties with whom we do business. In some cases, we rely on 37employees of third parties to perform these tasks. We also depend on employees and the systems and controls for which they are 38responsible to assure that we identify and mitigate the risks that are inherent in our relationships and activities. These concerns are 39increased when we change processes or procedures, introduce new products or services, acquire or invest in a business or implement 40new technologies, as we may fail to adequately identify or manage operational risks resulting from such changes. These concerns may 41be further exacerbated by employee turnover and labor shortages.42As a large financial services firm, we are faced with ongoing attempts by individuals or organizations to defraud us or our customers 43for financial gain. We depend on systems, processes and personnel, either at PNC or from third parties, to identify and prevent 44potentially fraudulent transactions, but those systems may not be adequate and fraudulent actors regularly change tactics to improve 45their chance of success. Even if PNC is not financially responsible for reimbursing a customer for its fraud losses, such losses may 46damage PNC’s reputation or ability to attract and retain customers. 47As a result of our necessary reliance on employees, whether ours or those of third parties, to perform these tasks and manage resulting 48risks, we are thus subject to human vulnerabilities. These range from innocent human error to misconduct or malfeasance, potentially 49leading to operational breakdowns or other failures. Our controls may not be adequate to prevent problems resulting from human 50 51The PNC Financial Services Group, Inc. –  2023 Form 10-K  29