Financial Services Sector Remains Optimistic Despite Economic Concerns

The most recent research conducted by KPMG UK presents a positive outlook for the financial services sector as we enter 2024. According to a survey of senior executives in the industry, an overwhelming 87% are confident about business growth in the first quarter of the year, with 83% expressing optimism about profitability for the same period.

The study also noted that, while over half of the leaders are positive about the UK economy, they have identified inflationary pressures and interest rates as the most significant challenges for their businesses in the upcoming quarter. Additionally, geopolitical risks were ranked lower than economic concerns, indicating that leaders are more focused on navigating financial challenges in the near future.

Karim Haji, global and UK head of financial services at KPMG, commented on the findings, emphasizing the need for the sector to address the impact of geopolitical uncertainty on inflation and interest rate pressures. He also highlighted the potential impact of upcoming elections in the UK and the USA on sector confidence beyond the first quarter of 2024.

Opinions among industry executives regarding the UK’s future as a global financial centre are divided. While the majority are confident in the UK’s ability to maintain its position, there are differing perspectives based on specific areas within the sector. For instance, banking executives showed more confidence in the UK’s position, while insurance and asset/wealth management executives were less convinced.

The research also revealed the sector’s priorities for 2024, with the recruitment and retention of talent, skills enhancement, mental health, and diversity and inclusion initiatives ranking high on the list. Despite the confidence expressed in the progress of diversity and inclusion policies within the industry, Karim Haji highlighted the need for external assurance and accountability to ensure that the sector’s diversity and inclusion strategies are truly effective.

In conclusion, KPMG’s research indicates a sense of cautious optimism within the financial services sector, as leaders prepare to navigate economic challenges and focus on workforce investment priorities in the coming year. This proactive approach, combined with a keen awareness of the need to address geopolitical and economic uncertainties, demonstrates a commitment to sustained growth and resilience within the industry.