E-scooters at a crossroads
E-scooters at a crossroads

The key trends shaping 2023 across Financial Services

Words by:
January 13, 2023

We may only be 13 days into 2023, but it’s already on track to be a very busy one in the financial services industry. Whether you’re an adviser, asset manager, bank, fintech, pensions provider or in fact provide any financial services proposition, you’re in for a challenging, but exciting year.  

Looking ahead, here are the key themes we see shaping 2023 – will they be obstacles or opportunities? 

  • Sustainability and stewardship 

The conversation around sustainability is only gaining more ground – with Scope 3 emissions disclosure on the horizon, SDR finally being implemented and Net Zero targets tightening. In particular, we expect stewardship to come to the fore, with wealth and asset managers being held to account regarding their previous commitments and asset owners seeking clarity around the concrete outcomes of stewardship activities. With better stewardship leading to improved investment outcomes and real-world sustainability achievements, this is a movement which can’t come quickly enough.  

  • Rise of the consumer 

Consumers across nearly every sector are becoming increasingly demanding and discerning. The old adages “the customer is always right” and “fortune favours the bold” are holding fast with new innovations tailored to meet consumer expectations gaining traction and market share. Our recent consumer research showed that over half of 18-34 year olds are often on the lookout for the newest and most advanced financial technology apps and if those apps don’t work for them, they’ll vote with their feet. It’s a jungle out there but firms who can successfully innovate and communicate their new offerings, will reap the rewards.  

  • The regulator grows teeth 

Of course, the financial services industry has always been a highly regulated sector, even more so with the additional duties and responsibilities heaped on the FCA through the Financial Services and Markets Bill. However, recently the regulator has grown teeth and firms who aren’t complying won’t just face a slap on the wrist but instead steep fines and penalties. 

The Consumer Duty is a case in point. Consumer protection has consistently been at the heart of regulation, but the requirements of the new Consumer Duty demonstrate that ticking a box is no longer enough. All firms which distribute or manufacture products or services to retail customers now need to demonstrate good value, consistent and clear communications and appropriate support to their customers – essentially Treating Customers Fairly, on steroids. 

  • Data, data, data 

With the Government heralding Open Banking as a success earlier this week and businesses and industry groups piling in to make recommendations on what comes next, all eyes are on the EU review of PSD2 regulations and what this could mean for data and tech enabled products in the UK. Will HM Treasury and the FCA follow suit with the reforms being proposed in Brussels? Or will the temptation to ease regulatory burdens win over additional data protections?  

In either scenario, more work is needed to iron out the remaining kinks in Open Banking – from tougher compliance rules to an improved consumer UX – before the blue sky thinking of Open Finance can begin.  

  • Ongoing volatility 

2022 was the sixth-most volatile year since the Great Depression and most economists are forecasting markets to “get worse before they get better”. That said, the continued desynchronisation between the US, Euro area and China presents a range of investment opportunities for those who are shrewd enough to find them. It will be a bumpy ride, but long-term investors are likely to be rewarded if they can sit tight and we know both the media and consumers will be hungry for a good news story for those who can successfully weather the storm. 

At WA, we’ll be watching these areas closely, making sure we are one step ahead of the next developments on the horizon and supporting firms who want to leverage these trends for their own market position. If that sounds of interest, we’d love to chat. 

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