According to a recent report from Lloyds, UK financial groups must focus on AI and talent retention to maintain pace with a rapidly evolving market. In the 2023 Lloyds Bank Financial Institutions Sentiment Survey, the finance leader delivered insights from multiple senior executives, and wealth and asset managers from UK banks and insurance businesses. The survey included the latest trends, opportunities and risks in a market tackling the challenges of rising inflation and economic uncertainties.
The report indicated that the majority of respondents believe that growth in the finance industry will remain relatively unchanged compared to other years. Over 85% of respondents claim they intend to maintain or increase their investment plans in the coming years, with a stronger focus on technology and talent retention.
Lisa Francis, the MD of institutional coverage at Lloyds Group says the survey displays reassurance that the UK will remain competitive in the global financial scene. Half of respondents believe London will keep its position as a financial leader in the future years. The development of new opportunities over the last year is an indicator that the worst of the economic challenges may have passed.
According to the report, the number of respondents indicating a positive outlook for the economy has risen considerably compared to last year. Francis explains that she has worked in the industry for a long time and feels things are evolving continuously and new challenges are appearing, referring to the growth of AI as a key driver for innovation in finance. Francis believes it’s useful to recognise what clients are looking for and to see this clearly displayed.
While nearly 70% of people believe London’s position may have declined, respondents highlighted several actions that would help maintain or enhance the city as a global financial hub, including developing better relationships with Europe, creating more freedom and flexibility from regulations and using technology more efficiently.
Integrating AI solutions
Discussions around technological progression and AI have become dominant in the finance industry. According to the report, AI is considered a tool that could support the industry with improving productivity and providing the nation with an added competitive edge. Approximately 80% of respondents believe AI will drive considerable change for the UK economy, creating multiple outcomes, such as increased productivity, the elimination of certain skilled and unskilled positions and the creation of new opportunities.
Francis explains that technology acts as an enabler, allowing banks worldwide to improve productivity and encourage better outcomes for their clients. Francis highlights that many clients believe technology, especially AI will transform the industry within the next few years and believes this is the key to maintaining the relevance of the UK within the finance industry.
According to a 2023 report by McKinsey, generative AI could create up to $340 billion in value to the finance industry by strengthening services and enhancing productivity. Some of the benefits finance businesses can make of AI include assessing regulator reports, enhancing client servicing by automating document preparation and delivering technical reports.
The AI industry is also supporting large volumes of raw data and how we can utilise that information to deliver a better experience for customers, drive better insights and explore new trends. If businesses can protect their clients with confidence, they can really benefit from new technology. Nevertheless, the AI market is still in its infancy for many organisations unsure about applying new tech. According to the Lloyds report, while 56% of clients envisage AI as an opportunity for growth, 41% are still unsure about its application.
Attracting and Retaining Talent
In the report, companies said that attracting and retaining talent is a key strategic priority to maintain relevance in the industry, with over 50% of respondents emphasising it as one of their main concerns. People remain the most important asset in the UK’s financial services industry, dependent on people to secure and innovate their business. Recent global disruption has transformed how people work and impacted on the skills many companies require, but investment in training and development from financial organisations isn’t keeping pace with the rate of change in the industry.
Retaining and attracting new talent are key factors of the financial industry. The UK must keep attracting diverse talent, which has become more challenging since the introduction of new immigration rulings. While businesses are focused on recruiting new talent, over half of the survey respondents believe a number of skilled and unskilled positions could become redundant due to AI. Despite new technological developments, the finance industry and the labour market remain very connected by the requirement to access talent with a range of skills, particularly those with digital tech skills.
Francis emphasises from their discussions with clients focused on developing talent, that this remains critical for future growth and securing the resilience of all organisations.
