January 19, 2015 - An upturn in business volumes and increase in compliance demands is encouraging UK financial firms to raise IT budgets in a bid to reach new customers and shake off competition from new market entrants, according to the latest quarterly survey from the Confederation of British Industry (CBI) and PwC.
Overall business volumes for the three months to December rose at the fastest pace since the mid-1990s, says the report, with demand from both UK households and corporates underpinning solid growth across most industry sectors. Firms expect similarly healthy growth to continue next quarter, underpinned by an upturn in income from fees, commissions and premiums and a decent return from net interest, investment and trading income.
Overall marketing spend and investment intentions for the year ahead were positive across the board. IT investment is predicted to increase to the greatest extent, with all sub-sectors planning to step up their tech spend.
The need to increase speed/efficiency is the most widely cited motivation for higher investment, with a desire to provide new services and reach new customers becoming increasingly important.
Kevin Burrowes, UK financial services leader at PwC, says: "Financial services firms continue to be optimistic, but we will see them investing more to stay ahead of new entrants, deal with technology challenges, meet increasing regulatory and structural reform costs and deliver better results for customers.
And while employment has fallen, training expenditure has increased, as banks face desired skill shortages such as compliance experts. "We expect this trend to continue," says Burrowes.
The forecast is supported by statistics released today from the latest analysis of the contractor market by Venn Group, the contract recruitment specialists, which reports a sustained growth in the hiring of compliance experts although the demand for operational staff has continued to fall.
The majority of hiring activity has been focused on professionals who are skilled in understanding complex regulation and the potential impact this can have on firms' bottom lines, says Jodie Finn, Associate Director of Venn Group, with some contractors commanding day rates "in excess of £1000".
