PwC and CBI study highlights positive performance from financial services

31 March 2014

A new survey of the financial services sector by the business group CBI and accountancy firm PricewaterhouseCoopers (PwC) has indicated that confidence in the industry is growing on the back of a positive three months.

Business volumes grew for the second consecutive quarter across all industry sub-sectors except for insurance. Despite the fact growth was not as strong as expected, the poll has been greeted by businesses operating within the finance sector.

Within the banking sector particularly, optimism rose further, as profits increased for a third straight quarter and expectations for robust growth in volumes and profitability next quarter were undiminished.

Many banks are planning to increase investment in land and buildings more rapidly than at any time since 2007 over the year ahead, while investment in IT is also expected to grow at a vigorous pace.

Within asset management, Paula Smith, PwC’s UK leader in the area, said investment managers have had a positive period, but noted that they must be aware of potential future danger.

"It's good to see that investment managers are reacting to this through investment intentions in order to increase efficiency and to reach new customers," she added.

As business confidence returns, more and more financial services companies are preparing to invest in the next 12 months, with IT predicted to see a significant increase in funding.

Matthew Fell, CBI Director for Competitive Markets, said: "Businesses plan to spend heavily on IT and are scrambling to find new professional staff to meet growth demands."

The main factors driving investment are are the need to boost efficiency and speed, cited by 71 per cent of financial services firms, the replacement of outdated legacy systems (61 per cent) and the provision of new services.

Kevin Burrowes, PwC financial services leader, said: "Banks need to adopt bold new strategies as they face challenges around regaining trust, legacy issues, regulation and technology. Digital must be at the heart of their business as new entrants such as challenger banks, peer-to-peer lending and crowdfunding all have one thing in common: digital platforms which make the most out of big data and really focus on customer needs."

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