Innovation and collaboration are driving the North’s financial services industry, let’s keep up the pace
By Jessica Katsouris, partner and financial services expert at KPMG in Manchester.
The North of England’s financial services industry is growing, making waves in a UK sector that is traditionally associated with London. This Northern upswing is supported by a relatively positive regional economic outlook and, perhaps most importantly, a vibrant community of innovators eager to break the mould.
The opportunity for Northern firms to make their mark on the financial services landscape goes hand in hand with the relentless pace of technology and its impact on consumer demands. In the North, as in the rest of the UK, people want their financial world, and the experiences that underpin it, to be fast, convenient and personalised.
This new landscape means that financial services, which was once the reserve of a much smaller, well-established group of businesses, is now more accessible than it’s ever been. The Fintech and Open Banking revolutions, made possible by increasing digitisation and ever-expanding volumes of data, are here to stay, and it’s fantastic to see such a rich and diverse range of businesses in the North of England line up to take advantage.
Today, banks that have traditionally been considered challengers find themselves falling outside the boundaries of that definition. Recently we’ve seen an upsurge in businesses in the North of England that initially set out their stalls as online only lenders, applying for banking licences which is allowing them to tap into the savings market.
Soon, an even greater and more diversified collection of organisations are going to enter the sector, making the need for financial services firms to differentiate themselves from the competition even more important. Established and new players alike are partnering with smaller, innovative third parties to achieve this and deliver the technology driven digital services the modern consumer has come to expect.
Wealth management in focus
One area where Northern firms are making a big mark in this regard is wealth management. It’s a branch of financial services that technology is changing rapidly. Robo-advisors are increasing in popularity, with financial service players and the tech firms that support them in the North closely involved in the upswing.
Robo-advisors are delivered through digital only platforms and allow people to invest little and often in everything from equity markets to commodities, usually tailoring a portfolio of investments to a customer’s individual risk appetite. Similarly, personal saving is becoming more app based, letting people control their personal financial ecosystem through a single portal.
It is clear that wealth management, supported by newcomers and innovators, is a market that’s beginning to cater to the consumer demand for convenience, personalisation and simplicity – a microcosm of the entire financial services sector’s direction of travel.
Digital by default
While banks continue to recognise the important role branches play in our communities, and are committed to their preservation, the race towards digitisation is naturally leading many to reduce the number they operate. The challenge this poses is replicating the delivery of face-to-face customer experiences digitally, which, again, is a market where innovative fintech firms in the North of England have an opportunity to gain traction.
We’ve started to see a lot of banks and building societies in the region ramp up their activity in this respect, to ensure the customer journey is at the centre of their propositions. Partnering with third parties to explore alternatives to telephone, and clunkier digital platforms, like webchat, that will ultimately be replaced by customer service systems that require less and less human supervision.
Behind the curve?
For some areas of financial services, pursuing innovation is harder to accomplish. The insurance sector, for instance, is a pillar of our local financial services community, but to see through significant change it needs to overcome a unique set of obstacles.
While the sector is using technology, such as telematics, to provide more accurate policies for drivers, insurance is a data intensive industry and still relies heavily on legacy systems to leverage this data and deliver new services and benefits for customers. A recent KPMG survey revealed that nearly three-quarters of insurers expect to seek acquisition opportunities and two-thirds expect to seek partnership opportunities over the next 3 years to enhance insurtech capabilities. Insurers should explore the rich community of fintech providers the region has to offer in this regard.
The financial services industry is going through a period of significant change. The good news is that digitisation and the opportunities it affords look set to benefit consumers and businesses across our region. For businesses, this will mean embracing inevitable change and tap into the innovative spirit that has been one of the pillars of the Northern economy for generations.