Confidence among financial services firms remains high, despite growing concerns around economic turbulence as the general election approaches, a new study by Davies has shown.
According to the findings, 89% of financial services firms are confident their business will perform well over the next 12 months and the same number rated their performance as ‘good’ or ‘very good’ over the last 12 months.
However, nearly half (44%) cited economic turbulence as their biggest challenge. More than two thirds (67%) said interest rate hikes have had a significant impact on their offering, while 66% said the same about the cost-of-living crisis.
Economic volatility was considered a greater challenge than both regulatory compliance (43%) and cybersecurity threats (38%).
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, chief strategy officer of consulting at Davies, 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. While it is reassuring to see many optimistic about the year ahead, further innovation will be required to remain competitive. This is certainly not a time for complacency.”
