CBI/PwC Financial Services Survey

Q4 2020 Results


Moving forward

2020 required huge efforts just to keep operations running. But all the time, the shifts in customer expectations and impact of technological disruption continued to gather pace. As we move into 2021, the need to rethink business models and accelerate transformation is more urgent than ever.

The world has changed and financial services organisations have to change with it. The organisations out in front have already decided where and how their business is going to compete in the future and are pushing ahead with the operational reconfiguration needed to deliver. Others risk being left behind.

Isabelle Jenkins Leader of Financial Services, PwC UK

Rising optimism and a return to growth

The pick-up in financial services (FS) sentiment continued in Q4 2020. Business volumes also returned to growth for the first time in over two years. However, the survey was carried out before the move back into national lockdown and the tightening of restrictions. This is likely to temper the positive outlook in the findings.

As advisers, investors and sources of finance, FS organisations have a vital role to play in leading the UK economic recovery.

Overall Financial Services


The results illustrate the strength and resilience of the insurance industry. As rates harden and the claims environment remains relatively benign, general insurers are the most confident of the FS sectors about returns over the next three months. Amidst uncertainty over the economy and investment returns, life insurance is one of the least optimistic sectors.

General Insurance Q4 2020

*Results in the above graphic relate to General Insurance


Investment and corporate bankers are more confident about their prospects than those on the retail side. Sentiment within investment and corporate banks has been buoyed by the strong demand for M&A, restructuring and market-making services. 

By contrast, retail banks anticipate a significant dip in both volumes and returns. A potential increase in non-performing loans (NPLs) over the next three months could impede lending capacity and ability to support the recovery. We won’t know the full extent of debt impairment for some time. Much depends on how quickly the economy can recover and whether government subsidies for businesses and jobs can be sustained.

From both a balance sheet and social responsibility perspective, key priorities include identifying early warning signs of impairment and stepping in before difficulties become irreversible. Some lending may not be feasible. But banks can still provide advice and access to alternative funding as part of a collaborative platform model.

Banking Q4 2020

Investment Management

Private equity firms anticipate a larger rise in volumes and returns than the investment management sector as a whole. Many investors are looking to private equity and other alternative funds to boost yields. Acquisition opportunities for private equity are also increasing.

Investment managers have the funds at their disposal to accelerate economic turnaround. This includes the wall of dry powder within private markets funds. With bank funding constrained, the openings include a stronger role for alternative lenders in supporting small businesses and other engines of recovery. With government funding constrained, infrastructure funds can step in to help bridge some of the investment gap.

For private markets managers, the challenges include weighing up investment opportunities against the increased public scrutiny that would come from a more prominent role in socially-critical areas, such as small business finance and infrastructure development.

Investment Management Q4 2020

Priorities ahead

  • Work out how to protect your balance sheet, while sustaining funding and support for recovery. Crucially, this support can help to strengthen public trust and bolster your social licence to operate.

Strategic rethink and reconfiguration more important than ever

What the results say

  • Changes in regulation (80%) and acceleration in digital technologies (77%) stand out as the biggest disruptors for FS organisations. Related shifts in customer behaviour and preferences are just behind (72%) with COVID-19 remaining a significant disruptor (73%).
  • The majority of firms are responding to disruption by employing new technologies within their business (85%), or offering new products/services to customers (70%). 

Disruption has moved up a gear over the past year. And with it the need to accelerate change.

The survey raises questions over whether FS organisations are moving fast enough to keep pace. In particular, operational resilience is the number one priority. To achieve this responding to changes in customer expectations and the move to more digital and platform delivery models need to be at the top of the agenda. 

The businesses out in front know how their business model will need to change to stay relevant in this fast-changing landscape. They are also ahead of the curve in investing in digital and implementing the technologies, skills, ways of working and cyber safeguards needed to deliver. This is reflected in both progress on upskilling and the transition to cloud. 

Priorities ahead

  • Determine your vision for the future and move quickly to ensure the talent and technology to deliver is in place. If you don’t, you could quickly find yourself side-lined as faster moving competitors pull ahead.
  • Break down the silos that impede transformation. The businesses out in front have the customer in their sights and are integrating systems and functions to deliver.

Recognising the importance of upskilling

What the results say

  • FS organisations see technological proficiency, or ability to adapt to new technologies as the skill they most need more of over the next five years (98%), followed by customer interaction (74%).
  • Upskilling existing staff (81%) is ahead of recruitment (68%) in ensuring that they can meet future skills needs.

Acceleration in digital transformation is as much about people, culture and organisational design as systems and technology. The organisations out in front are developing the skills and fostering the buy-in within their workforce to make the most of new tools and technology. In doing so they are creating an optimised and operationally resilient workforce equipped to deal with future challenges and opportunities.

A lot of upskilling is rightly focused on digital skills and enabling employees to harness data analytics in their decision making. As automation gathers pace, the distinctively human capabilities that can’t be replicated by machines such as creativity and empathy are also set to become more important. Other rising skills demands include ESG, both in specialist areas such as green finance and through engagement with governments and communities.

Priorities ahead

  • Upskilling isn’t enough on its own. It’s also important to ensure employees have opportunities to apply new skills and contribute to innovation.
  • Upskilling is not a one-off. Investment in people and skills should be ongoing in line with the rapid evolutions in technology and customer demand. It’s also important to take onboard employees’ ideas for improvement in areas such as process design and identify people who can support the growth of your business.

Embracing ESG to make a real difference

What the results say

  • More than 80% of FS organisations report that environmental, social and governance (ESG) issues form part of their business objectives, values or mission statement.
  • Alignment with customer priorities is the most important driver for taking action on ESG, followed by investor expectations and regulation.

ESG is crucial in keeping pace with customer and investor demands, while capitalising on fast growth markets such as green bonds and ESG-orientated investing. Many FS organisations recognise the need to make their business more diverse and sustainable internally but the impact on product development is less well developed.

With increasing pressure to deliver real change from customers, investors and society, it's now more important than ever to bring ESG considerations to the fore. By firmly embedding ESG strategy into frontline products, as well as back office operations, FS organisations have a real opportunity to act as the bridge between investors and other industry sectors, drive sustainable finance into the mainstream and lead the way in driving positive change more widely.

Investment Management

Our analysis suggests that ESG is the most important development in asset management since the creation of exchange traded passive funds two decades ago. 

A growing number of institutional investors are planning to move away from non-ESG products altogether. 

The challenge of keeping pace is highlighted by the 40% of investment managers surveyed who cite constraints on internal resources as a barrier to delivering their ESG agenda.


The ‘greening’ of the global economy demands finance and expertise. As such, it could provide a hugely valuable growth opportunity for the City. 

Key ESG challenges include supporting customers whose jobs and businesses have been affected by the downturn. 

Strategies are coming together - only 4% of banks report that lack of clarity over objectives is holding up the delivery of their objectives. But 68% report that constraints on resources is a barrier.


Insurers’ role in protection and pensions goes to the heart of ESG. A strategy which puts ESG at the forefront and recognises the insurance industry’s wider role in society, should have benefits in the short to medium term. 

Priorities ahead

  • Recognise ESG as a commercial as well as societal imperative. Determine how products and strategies will need to change. 
  • Ensure product design and implementation support customer trust.


What the results say

  • When asked about the importance of equivalence, only 14% of FS organisations said “very important” and 54% “somewhat important”. 
  • Most FS organisations acknowledge that they have more work to do in moving people into roles within the EU. Only 41% report being fully operational in this respect.

While most FS organisations that operate internationally have put in place the necessary contingency plans to continue to support their clients, in many cases, these are currently tactical rather than strategic. In some areas obtaining equivalence would enable a more efficient and cost effective way of doing business.  

Operating from different domiciles creates additional demands in areas such as separate reporting and dealing with distinct compliance requirements. As the survey findings highlight, there is still some work to do in areas such as staff location and migrating of contracts.

Beyond operational challenges, it’s clear that business has been lost to other European centres. This underlines the importance of exploring new markets and investing in innovation in the months and years ahead.

Priorities ahead

  • Determine who needs to work where within a long-term staffing model for the post-Brexit world. Key considerations include tax, regulation and client demands, as well as lifestyle preferences within your team.
  • Step up the pace of innovation in developing new markets and revenue streams.

The future of real estate

What the results say

  • Investment is set to be cut back on land and buildings (-53%).
  • Over 40% of FS organisations believe that more than 90% of their staff can work remotely.
  • 88% are looking to reappraise office space. More than half (57%) now plan to reduce office space, while 64% are redefining or reconfiguring existing office space. 


Change is here to stay

Rather than a temporary shift, the changes we’ve seen in how and where people work as a result of COVID-19 now look like they’re here to stay.

A different purpose

The upward trend towards redefining or reconfiguring office space points to a changing role for the office in line with new ways of working. Rather than a place for day to day working, there’s a move towards it being more of a collaboration space and a place for instilling the values and culture of a business. The office also has an important role to play in key functions such as onboarding new staff and bringing people together to foster innovation, share ideas and learn from each other.

New opportunities

A review of office space does not necessarily mean empty space. Instead, a change in footprint for some of the larger companies opens up potential for others to fill the space. This could leave room for smaller companies that might not have been able to afford premium real estate to take up portions of the space previously occupied by just one large company.

Priorities ahead

  • As a real estate investor it’s important to evaluate the products you are putting into the market. The days of ‘develop, lease and wait for the returns’ are over. It’s now important to get closer to customers, understand their demands and develop flexibility, greater operational agility and improved service capabilities.
  • Experience within retail highlights the value of a joint venture type partnership between owners and tenants. It’s important to provide an office environment that will help tenants to boost performance and returns.


{{contentList.dataService.numberHits}} {{contentList.dataService.numberHits == 1 ? 'result' : 'results'}}

Contact us

Isabelle Jenkins

Isabelle Jenkins

Leader of Industry for Financial Services, PwC United Kingdom

Tel: +44 (0)7711 773030

Follow us