By Darren Ketteringham, Leader of Industry for Financial Services, PwC UK and Miles Celic, Chief Executive Officer, TheCityUK
As the Government prepares to launch its financial services growth and competitiveness strategy, firms face both new opportunities and shifting market forces. With rapid changes in technology, customer needs, and macroeconomic and geopolitical trends, firms have to rethink their strategies for an unpredictable future.
In 2017, TheCityUK and PwC published A vision for a transformed, world-leading industry (‘Vision 2025’ report), which set a roadmap for a highly digitised, innovative and customer-centric financial and related professional services industry by 2025. Eight years on, much of what we anticipated and recommended has come to pass - from the enduring strength of London as a global financial centre, to higher demand for digital, cyber and data skills.
Now, as we face another decade of profound change, we reflect on the progress made and the further reforms needed for the industry to thrive amid the transformative changes ahead. PwC’s Framework for Growth and UK Financial Services further explores the ways in which the Government should put financial services at the centre of its industrial strategy.
A recalibrated regulatory framework
The Government has pledged to recalibrate the approach to risk and ensure the regulatory framework is positioned to help deliver growth. Its approach in many ways echoes the strategic partnership between government, industry and regulators which our Vision 2025 report called for.
We’d like to see urgent implementation of the reform agenda, and further clarity on how potential tensions will be managed between innovation, growth, consumer protection and financial stability.
Technology and innovation
The Vision 2025 report anticipated much of the progress of recent years, such as the transformative impact of cloud computing and GenAI. As the industry continues to embrace new technologies, the UK’s regulatory and policy framework must keep pace with innovations such as AI, digital assets and tokenisation, with a focus on developing international standards and alignment. A pro-innovation regulatory framework, with greater clarity in areas such as how GenAI models fit into existing regulatory frameworks, will support the industry’s ability to capitalise on emerging technologies.
Sustainable finance and net zero transition
Sustainable finance and the transition to net zero have been another major driver of change, and we anticipate an even greater shift will be required to meet the Government’s target of net zero by 2050. The industry will play a key role in delivering economic transformation and innovation in climate technologies and low-carbon solutions.
Regional development
Financial services are an engine of economic growth and opportunities throughout the UK, and the Vision 2025 report anticipated the growing importance of regional and national financial centres. With supportive policy across areas such as skills, infrastructure and planning reform, financial services have the potential to drive economic growth throughout the UK even further.
Talent and skills
The report highlighted the importance of upskilling to meet future needs and retaining access to - and keeping hold of – the best domestic and global talent. Addressing these challenges remains vital today and will require industry, government and other stakeholders to collaborate on interventions which build the talent pipeline.
Customer centricity
As firms navigate these changes, their ability to meet customers’ evolving needs and preferences will be key. The Vision 2025 report highlighted relatively low levels of public trust in financial services, which have since improved, in part due to industry and regulatory initiatives which have raised the bar on customer centricity. Looking ahead, firms will need to enhance their use of data, analytics and technology to meet the evolving demands of customers and regulators.
Reflecting on these themes underscores the significant progress made by the industry to become more digitised, innovative and customer-centric. And with a stronger partnership between industry, government and regulators, our incredible financial services industry is well placed to drive sustainable and inclusive economic growth, amid the transformative changes ahead. To deliver this, focus should be on:
- Industry, regulators and Government working towards rapid delivery of announced reforms and considering further steps to encourage investment in UK assets.
- Steps to ensure the regulatory framework keeps pace with, and is supportive of, innovation.
- Measures to enhance the role of devolved and local government to support the further development of regional financial centres.
- Government and industry initiatives focused on addressing the skills gap and retaining access to the best global and domestic talent.
