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Although optimism remains at its lowest point since 2008, the decline is slowing.
Three key interdependent themes are emerging from this quarter’s survey results around people, investment and opportunity.
The digital workforce is beginning to have an impact on the way organisations are retaining and training their people.
Businesses are continuing to investing in technology to prioritise speed and efficiency as well as improved products and services.
Employment numbers are up overall and set to stabilise, signalling an end to the headcount cuts we saw in the last quarter. There’s a growing need for different skill sets, but people are still a focus for businesses.
Speed and efficiency are big priorities across financial services. As a result we’re seeing IT spend increase to its highest levels in 12 months.
The strategies for growth in all sectors mean we’re seeing a redistribution of marketing spend. Businesses are investing in developing new products and services and creating technology-enhanced customer experience.
Businesses will be building leaner workforces with more specific skill sets and supporting them with AI and automation.
IT spend will continue to increase as organisations put solutions in place to streamline processes, reduce costs, and stay compliant with evolving regulations.
The growth strategies for all sectors will focus on building and deepening existing customer relationships and broadening offers.
Optimism remains at its lowest point since 2008, but the overall decline in sentiment is slowing.
Brexit delays also mean business change plans have been further put on hold.
A competitive market, is having an impact on levels of demand - with reported concerns over demand at their highest levels since 2012.
However, the people story looks more positive.
Employment levels have improved significantly on the previous quarter’s results. M&A activity in the sector has helped to increase headcounts in the more established firms.
The biggest spend will be on IT. Increasing speed and efficiency, and complying with regulations, will be prioritised over technology such as AI.
Businesses are diverting their marketing spend into new product development and are focussing on consolidating their existing customer base through cross-selling.
Employment numbers are expected to rise in the next quarter, with established firms acquiring fintechs for their people as much as their platforms.
Banking is in danger of lagging behind as other sectors like insurance get on the front foot with technology.
Growth strategies will focus on the domestic market and increasing volume sales to existing customers.
The sector is relatively positive compared to financial services overall.
Confidence in the broking sector is up due to opportunities offered by improved customer service and M&A activity.
The business story for general insurance and broking is slightly less positive. Business volumes fell against expected growth and the next three months will see a further drop.
But the gloomier mood in life insurance seems mismatched against a rise in profitability and levels of business volume, in line with expectations.
In broking, hiring levels fell in response to a need for cost savings. In general insurance and life insurance, headcounts are also flat and expected to fall, although there is an upturn in training investment.
Speed and efficiency is a priority across the sector. There is also a focus on improving CRM capabilities and delivering better services.
Broking is using its close customer relationships to create opportunities to grow market share and use technology to enhance the customer experience. Life insurance is broadening out from protection and cross-sell products covering more life stages. General insurance is pulling back on marketing spend in favour of brand consolidation.
Firms will create efficiencies through outsourcing and automation and focussing on smaller teams of more specialised people.
Investment will be focussed on improving CRM capabilities and technology-enabled product innovation.
Life insurance will look to international markets for growth opportunities and broking will increase M&A activity over the next six months.
Investment managers now require different skill sets to complement the new, technology-driven model.
Traditionally, AWM has been late to adopt technology compared to the rest of financial services. But we’re now seeing firms starting to invest in new tech such as AI, to enhance the customer experience and to increase efficiencies and speed.
Established distribution channels are supporting businesses to grow by focussing on CRM. By re-packaging and digitising existing services, firms can cross-sell hybrid offers to existing and new customers.
A more technology-driven model means we’ll see training increase as firms start to re-skill their people.
Investment will be targeted towards technology to enhance the customer experience and create new business opportunities.