Nearly nine in 10 (87 per cent) financial services leaders are “confident” of business growth in the first quarter of the year, research from KPMG UK has revealed.
The research, which surveyed 160 UK adults who are director level in financial services companies, found this confidence was particularly prevalent among those working in banking, asset and wealth management.
It detailed that 89 per cent of those in these sectors are optimistic about business growth in Q1.
This was followed by insurance executives - 79 per cent of whom expect growth.
“It’s great to see financial services leaders go into the New Year feeling confident despite ongoing economic turbulence, which is set to continue to challenge the sector in the first quarter”, KPMG global and UK head of financial services, Karim Haji, commented.
The research additionally discovered that, while 61 per cent of respondents have a broad positive outlook for the UK economy going into 2024, more than half (56 per cent) believe inflationary pressures will still pose the biggest challenge for their business in the first quarter.
This was the most commonly cited challenge, followed by interest rates, which was mentioned by 46 per cent as the most pressing challenge, and cost pressures, mentioned by 37 per cent.
However, despite ongoing political uncertainty and ongoing conflicts around the world, geopolitical risks were ranked lower than economic concerns, being cited by just 21 per cent of those surveyed.
Haji added: “While on the surface, leaders seem less concerned about the specific impact of geopolitical uncertainty, there’s no denying that it is in part adding to inflationary and interest rate pressures.
“With interest rates set to stay high in a bid to tackle persistent inflation, combined with the added uncertainty of looming elections in the UK and USA, it will be interesting to see what impact this has on sector confidence beyond the first quarter.”
Employee retention
The research also provided insight into hiring and employee retention, finding that 79 per cent of executives are confident that they can hire the skills they need in Q1.
Recruiting and retaining talent, and boosting skills are among the biggest workforce investment priorities in 2024, followed by improving employee mental health and accelerating diversity and inclusion programmes.
Additionally, 38 per cent feel that ethnic diversity is the area of D&I the sector needs to focus on most in 2024, followed by gender and socio-economic diversity (33 per cent respectively).
“It’s interesting to see confidence in the sector on progress being made in D&I policies and it’s important to point out that this is a subjective view and perhaps a sign that leaders need better external assurance on how they compare against competitors”, Haji said.
“Understandably the sector is most focused on investing in workforce areas that have a more direct impact on near-term profitability and growth, but this can’t come at the expense of initiatives that support broader employee and societal needs.”
tom.dunstan@ft.com
What's your view?
Have your say in the comments section below or email us: ftadviser.newsdesk@ft.com
