TheCityUK and PwC have launched a bold new strategic vision for UK-based financial and related professional services. The report looks beyond Brexit to 2025 at the role that the industry can play in making possible the country’s long-term success outside the EU.
The UK is the world’s leading international financial centre, but a backdrop of rapid global change brings significant challenges which need to be addressed if it is to retain its competitive advantage and remain a leading part of the economy.
The report, 'A vision for a transformed, world-leading industry' provides an ambitious and practical roadmap to secure the industry's future. The implementation of the vision will ensure a transformed and renewed industry that continues to be world-class, highly innovative and digitised and better able to meet the changing needs of customers.
While responsibility for the industry’s transformation is its own, it will only be able to reach its full potential with an effective and strategic partnership with government and regulators.
Delivery of this bold vision will see the industry:
- Embrace innovation and new technologies to provide better and more tailored products and services and be a leader in cyber security, using data in a secure and sophisticated way.
- Enhance the prominence of hubs in regional and national centres, developing specialist roles and ensuring a strong supply of local talent with relevant skills.
- Retain its full ecosystem of financial and related professional services and keep the UK at the global forefront of financial innovation by continuing to be a world-leading FinTech centre.
The report includes an economic analysis that measures the likely impact of implementing the recommendations. This would lead to an increase in export competitiveness, innovation and efficiency, leading to an additional £16bn, or 9%, of industry GVA in 2025, compared to the current scenario. Seventy percent (70%) of this additional output will come from cities outside of London. The fastest growing regions for the industry by 2025 would be the North East (30%), Northern Ireland (25%), the West Midlands (23%), Yorkshire and the Humber (23%) and the East Midlands (19%).
Mark Hoban, TheCityUK Board Director and report Chair, said,
Our industry has thrived by embracing change and tackling challenges – qualities that have established its place as the leading international financial centre. But we can’t stand still and this bold vision makes us the first industry to set out a compelling vision for our future success beyond Brexit.
The industry is ready to build on its strengths and transform itself. To do so it needs to develop new markets, rebuild its relationship with customers, and harness innovation and new technologies. We want the industry to remain the place where the best and the brightest work. This vision is ambitious and delivering this transformation cannot be done by the industry alone. A strategic partnership with government and regulators is essential to its success and ensure the UK remains the world’s leading financial centre meeting the needs of its domestic and international customers.
Andrew Kail, PwC Head of Financial Services, said,
This industry is vital to the future of the UK economy, but it now finds itself at a critical juncture. Brexit has created high levels of uncertainty and the UK's leading position is being tested and challenged as other international centres develop rapidly. Technology is set to transform the ways of doing business and the customer experience beyond recognition.
Under this strategy, London will remain a premier location, but the other jewels in the crown by 2025 will be our regional financial centres. Banking, insurance and asset management centres outside of London will continue to develop, hosting more headquarters of major companies. Other regional hubs will focus on enhancing specialist roles which serve both UK and global markets. Our estimates show the implementation of this strategy could add £43bn to the overall UK economy.
The Vision provides a blueprint for transforming the future of the industry to allow the UK to retain the world-leading financial and related professional services business it has today, underpinned by the best talent and technology. Ultimately this will benefit customers and society as the industry provides the products and services they want and trust.
“The mantra of ‘treating customers fairly’ shouldn't be seen as a regulatory imposition. It should be a commercial priority,” added Kail.
Key attributes of TheCityUK and PwC’s 2025 vision:
- A strategic partnership between government, the industry and regulators is essential. A joint body should be established, led by government, to build a coherent strategy that ensures positive customer outcomes
- A trusted industry that focuses relentlessly on doing what is right for customers. The industry should earn the trust of customers and society through its actions and impact, demonstrably balancing customer needs and welfare, with shareholder returns.
- Customer-centric products and services that help address key societal needs. This means day-to-day financial services that are secure, user-friendly, fast and cheap and new products and services that minimise financial exclusion, support an ageing population and protect vulnerable customers. The industry must also evolve to provide customers with services that protect their digital identities and data.
- Enhanced trade and investment with developed, emerging and niche markets. Even stronger partnerships and alliances can be created with developed markets, and the UK’s distinctive capabilities should be used to grow relationships and extend influence with international firms, financial centres and government in emerging and niche markets.
- A leading FinTech and innovation centre. The UK’s FinTech sector can drive the industry’s evolution, enabling transformation through technology, enhancing the effectiveness and efficiency in the delivery of products and services.
- Access to deep pools of the best, diverse domestic and global talent. The UK should grow and develop the digital and entrepreneurial skills required by the industry to support innovations in areas like artificial intelligence (AI), blockchain and the Internet of Things. Stronger partnerships should be created between industry and educational institutions, talent should be increasingly developed through apprenticeships and visa systems should be simple, low-cost and flexible.
- Internationally focused, strong and agile regulation. UK regulators and policymakers must continue to lead the development of an open and compatible global financial system. Regulation must be strong, proportionate and internationally attractive.
- A simplified, stable and internationally competitive tax regime. As with legal certainty, the tax regime must be stable, and become renowned for being so. The UK should undertake a programme of tax simplification and rates should remain competitive. The regime should supports the industry’s need for access to talent.
- World leading digital and physical infrastructure. There will be more effective use of public-private-partnerships (PPP) to provide world-class infrastructure throughout the country, universal and reliable super-fast broadband and frequent and fast connections between domestic and international financial centres.
- Internationally trusted legal system and rule of law. This would include maintaining a strong, clear and consistent system of law, an independent judiciary and world-leading mechanisms for international commercial dispute resolution.