The UK is the region with the highest concern about the impact of excessive regulation, according to a report.
Law firm DLA Piper has published its Financial futures: Disruption in global financial services report looking at the key drivers for optimism and the challenges facing the sector.
The firm commissioned a global survey of around 800 major decision-makers in financial services organisations.
Respondents were asked whether they agreed regulation was stifling innovation, with UK respondents agreeing the most (89 per cent), followed by North America (87 per cent).
Half of respondents stated that the greatest impact on their business over the past two years has been managing risks related to cybersecurity and financial crime, with 57 per cent expecting this issue to affect them in the immediate future.
Tony Katz, UK partner and global co-chair of the financial services sector, said: “Proportionate regulation can be a competitive advantage in attracting business and investment.
“We see that in the UK it can aid growth by cementing the reputation of our financial markets as a safe and rewarding place to invest. Trusted capital markets attracting the leading financial professionals is key to its reputation and investment decisions.”
The survey also revealed that the financial services sector, generally, had an optimistic outlook for the next one to two years.
Around 80 per cent of organisations globally were optimistic, including one in 10 who were very optimistic.
The biggest reason for optimism was digitalisation and advances in technology (79 per cent) followed by the impact of AI (62 per cent) and new products and services (55 per cent).
On sustainability, more than 80 per cent of financial services organisations believed it was “the new normal” for ESG concerns to be a core driver of the industry.
However, firms were also overwhelmed by ESG demands, with more than half of respondents describing the ESG agenda as one of their biggest challenges over the next two years (an increase of 24 per cent in comparison to the past two years).
In terms of actions being taken, 62 per cent of firms were integrating ESG factors into risk management, while 57 per cent were developing ESG products and services.
Jean-Pierre Douglas-Henry, UK partner and managing director of sustainability and resilience, said: “We are witnessing what could be the greatest reallocation of capital in history. As policymakers across the globe seek to fund international sustainability objectives and to address the financial risks posed by climate change and nature loss, we can expect an even greater focus on the one sector that the whole real economy depends on: financial services.”
Artificial Intelligence
Respondents across the global sector believed that digitalisation and AI (86 per cent) would have a transformative effect on financial services over the next two years.
In addition to this, more than half of the sector was concerned about the risks to their business presented by AI with 14 per cent saying it was the most critical issue faced by their organisation.
