A new study by Davies among more than 500 senior decision-makers within UK financial services businesses has found:
- 89% of financial services firms rate their performance as ‘good’ over the last 12 months.
- 89% are confident their business will perform well over the next 12 months.
- However, economic turbulence is the most common challenge financial services firms are facing – 44% cited this as a challenge.
- 67% said interest rate hikes have had a significant impact on their offering, while 66% said the same about the cost-of-living crisis.
The vast majority of financial services firms in the UK say they have performed well over the past year and are confident about the year ahead, but economic turbulence remains a notable challenge, according to new research by Davies.
The specialist financial services consultancy division of Davies, Consulting at Davies, commissioned an independent survey of 501 senior decision-makers within UK-based financial services companies. It found that 89% of businesses rated their performance over the last 12 months as ‘good’ (50%) or ‘very good’ (39%).
Looking ahead, the same number (89%) said they are confident about how their business will perform over the coming 12 months.
However, Consulting at Davies’ research revealed that economic turbulence remains a notable concern. When asked about the biggest challenges their business is facing at present (they could select up to three), 44% selected economic turbulence, making it the most common challenge ahead of regulatory compliance (43%) and cybersecurity threats (38%).
With more economic turbulence expected as the UK general election approaches on 4 July, this challenge is likely to become more pronounced over the coming months.
Elsewhere, two thirds (67%) of UK financial services firms said interest rate hikes have had a “significant impact” on their offering since the start of 2022, while 66% said the same about the cost-of-living crisis.
Pino Vallejo, CEO of Consulting at Davies, said: “Given the challenging economic climate that has defined the past three years, it is positive to see that the UK’s financial services sector is full of confidence. Fuelled by strong performances over the past year, the research clearly highlights that most businesses are striving for more growth in the next 12 months. But there is also evidence of some caution, not least in navigating further economic challenges, with the general election likely to prompt more turbulence over the summer months that businesses will have to navigate carefully.”
Ashley Sheen, Consulting at Davies’ Chief Strategy Officer, added: “The past three years has seen us move from a persistent, near-zero rate environment to one with the prospect of meaningful interest rates prevailing for at least the medium term. This has forced financial services businesses to adapt. While it is reassuring to see many optimistic about the year ahead, further innovation will be required to remain competitive. Customers continue to demand solutions that reflect the prevailing economic climate and embrace emerging technology. This is certainly not a time for complacency.”
