CoronavirusJun 19 2020

UK financial services needs to evolve

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UK financial services needs to evolve

In the week that saw non-essential retail stores open and press images of socially distant queues outside of Primark, commentators expressed cynicism about the initial rush of footfall.

David Fox, co-head of retail agency at Colliers International, said unless the post-lockdown rush to the stores was converted into pounds at the tills, the High Street would be irreparably damaged by Covid-19.

Given that people have been changing their spending patterns — and that the most likely consumers returning to stores tend to be the younger generation and therefore those with the least spending power — Mr Fox warned the initial adrenaline rush of shopper activity might be nothing more than a brief respite.

He said: “Consumption is the greatest driver of our economy — the last three months have brought into ever sharper focus the need to understand how we prefer to spend, and the differing dynamics of spending patterns in the wider demographic.”

A country on the brink of Brexit needs to think harder about what will drive our economy in the future. Germany has manufacturing; France has pharmaceuticals; South Korea has technology. 

If we rely on the consumer to spend in order to keep our economy buoyant, we are at risk of failing to take seriously our greatest export: the services sector. 

Financial services has been a staple of the UK economic engine for decades; unless there is a significant commitment by government to provide more apprenticeships, improve entry points for fintech startups and foster a regulatory regime that encourages and enhances entrepreneurship, the future for our economy looks troubled. 

Innovation and adaptability are keywords in financial services, as evidenced by the numbers of advisory businesses thinking how to meet their clients’ needs during the Covid-19 lockdown, and how this enforced change has shaped the way they might do business in the future. 

Diary of an Adviser in this week’s Financial Adviser issue, is a case in point, where adopting virtual meeting technology has freed advisers up to meet more clients. 

FTAdviser’s latest podcast, on how technology is helping to democratise investing, heard from experts who claim fintech development is key — along with education — to getting a younger, less affluent, generation, investing. 

Michael Kent, from digital money transfer firm Azimo, said: “The wealth tech sector has an opportunity to reduce the cost of giving good investment service to more people, and younger people are used to organising their finances on apps, so this could be a way forward.”

This innovation needs to be supported by the government and by the Financial Conduct Authority. The FCA’s Digital Sandbox has already provided some measurable support for such developments, but more needs to be done to get more people saving, rather than spending.