Banking on success across the North

The financial services sector may be more associated with London’s towering office blocks than the Yorkshire Dales but a new report reveals the region is playing its part in a success story stretching far beyond the Square Mile.

The research by influential industry group TheCityUK reveals that Leeds alone has more than 30,000 people employed in financial and related professional services and that the sector contributes 7.3 per cent of regional GVA.

It highlights the growing relationships between financial services firms and the region’s universities as a key driver of future growth, along with promoting more apprenticeships to “tap into currently underused talent pools.”

The in-depth report, called ‘Enabling Growth Across the UK’, also underlines the challenges the sector faces in Yorkshire, including the need for stronger transport links across the Northern Powerhouse to drive future growth.

Its authors say: “This would not only improve productivity but also enable companies to form stronger links with other financial hubs across the UK.”

The report calls on national, regional and local leaders to develop regional strategies and calls on the government to prioritise the “scaling up” of the UK FinTech sector.

Chris Hearld

Chris Hearld chairs TheCityUK in the Leeds city region. He is also KPMG’s Leeds office senior partner and its regional chairman in the North.

Commenting on the study he said: “Financial and related professional services are absolutely vital to our area, with companies employing a huge number of people across a diverse industry offering, including a thriving FinTech community.

“One of our key challenges is to ensure that Leeds City Region can offer apprentices and graduates more than their first job, but also genuine prospects for progression and the promise of a career.”

The region has a strong presence in banking, processing and servicing functions and is an important centre for related professional services.

Leeds City Region is one of the UK’s largest banking hubs. It is home to 30 national and international banks, and has the headquarters of three of the five largest building societies.

It is also a major centre for mortgage, corporate and retail finance, insurance and stockbroking along with strong equity, venture and risk finance offerings. Insurance also plays a major part in the regional picture.

TheCityUK report highlights that many multinational companies are located in Yorkshire, including HSBC, with its global IT shared services based in the region, and Santander Group, with its internal contact and service centres based in the area.

First Direct, Handelsbanken, Lloyds Banking Group and RBS all operate significant banking operations in the region, alongside Aviva.

Leeds is also a significant hub for related professional services and all of the ‘Big Four’ firms have significant operations in the city.

But it is not all about Leeds. Sheffield has almost 19,000 people employed in the sector, Bradford more than 8,000. Halifax is home to 7,500 workers and almost 7,000 are employed in York.

Anjalika Bardalai, chief economist at TheCityUK, says: “The region is in a relatively good place and has performed well.” And she underlines the strength of its talent pool as a major plus point moving forward.

Bardalai adds that the profile of the industry is changing, pointing to growth of Fintech and predicts that the disruption the sector has seen in recent times will continue.

She says: “New business models make the landscape more competitive and that means that the existing players have to embrace that change or they are going to start to suffer.”

And she adds: “Regions that have relatively high degree of economic specialisation tend to grow faster. That is an area where Yorkshire could develop and improve; there is work to be done there.”

Paul Anderson, partner at Squire Patton Boggs in Leeds, has specialised in financial services matters for more than 20 years and says: “These are exciting times.

“Fintech is now really on the national agenda along with the acknowledgement that the North has much to offer. Cities like Leeds are starting to gain a reputation and are putting the North on the radar.”

He also points to the growing collaboration between the sector and the region’s universities and points to the fact it is cheaper to start and build a business in the North compared to London and the South East.

However, he agrees with TheCityUK report’s authors that the big challenge is improving transport links across the Northern Powerhouse area.

Anderson also urges more collaboration across the whole of the Powerhouse to promote the region as a major financial services hub.

That approach is backed by Henri Murison, director of the Northern Powerhouse Partnership. He talks of a FinTech cluster stretching across the Pennines from Leeds to Manchester and speaking earlier this year declared: “We believe we are starting to get some real traction.”

He says FinTech’s growth will come from existing financial services businesses in the region, pointing to its strength. “Looking at what is achievable in terms of growth, it is about existing businesses bringing new offers to the market. Disruption in retail will also bring other opportunities forward.

“I believe we are on the cusp of something that could be very big and have significant potential for growth.”

Jessica Katsouris, partner at KPMG, agrees there is a lot of growth in the sector, with rising numbers of wealth managers in the region investing in the ‘tech space’.

Traditional banks and building societies are also working hard to give consumers “face to face” experiences in the digital world as they look to strengthen customer loyalty.

And with the disruptors continuing their role she believes the emergence of a new wave of challenger banks is also set to build across the North.

Katsouris says: “We are seeing quite a big inflow of applications for banking licenses from organisations; some of which have started life predominantly as lenders.”

Nick Quin

Nick Quin, public affairs Manager at the Yorkshire Building Society, says: “There is a strong history and tradition of building societies in Yorkshire, with the first established in 1785 and three of the UK’s five largest still located in the region.

“This legacy, combined with the presence of world-class universities and a strong professional services sector has resulted in a core of skills and expertise which makes it an attractive region for the sector.”