The financial sector is the backbone of the British economy, critical support for all business operations. Banks, insurance, and financial services companies enable vital financial activities, payment or saving solutions, credit or capital availability, risk mitigation, and financial information accuracy.
They are involved in a diverse range of operations all along with the flows of money and capital in the economic cycle. Delivering high value-added financial products and services that provide large returns on investments, British financial companies also naturally face very stiff competition from both national and foreign actors of the financial sector.
Financial companies specialize, diversify and acquire others to reach higher returns, reduce their costs, better hedge their risks, and find safer investments.
Regulatory Environment
There are two key regulators in the UK. The Prudential Regulation Authority (“PRA”) is responsible for the financial safety and soundness of banks, while the Financial Conduct Authority (“FCA”) is responsible for how banks treat their clients and behave in financial markets.
Prudential issues such as capital and liquidity fall squarely within the PRA’s remit, whereas conduct issues such as mis selling and market abuse are matters for the FCA.
Both the PRA and FCA are interested in bank governance and systems and controls. This is because the ways in which banks organize their affairs and control their activities are relevant both to the financial health of a bank and the way it treats its clients and conducts itself in markets.
Besides these two regulators, it is worth noting that the Bank of England supervises financial market infrastructure such as clearing houses (e.g. LCH) and payment systems (e.g. VISA). There is also a separate Payment Systems Regulator, which focuses on competition issues.
Banking & Finance – Sectoral Break-up
Market Insights
- Trends Affecting Market
- Modernizing dated core systems will be imperative: 2020 was a year that put the financial infrastructure to the test and challenged existing architecture planning assumptions. The need for modern, agile, scalable, secure, resilient technology infrastructures became abundantly clear and the new imperative in 2021.
- Banking goes beyond cash with digital engagement: In 2021, as a direct response to consumers’ growing reliance on mobile payment and banking solutions, the financial services industry will likely continue to invest in modern data and analytics tools, artificial intelligence capabilities, and digital platforms.
- Insurance becomes personal: Data and analytics, powered by AI, will enable personalized, contextualized interactions across the entire insurance life cycle, from sales and underwriting, to claims management and support.
- Institutional and wholesale trading moves off trading floors: As trading floors and exchanges worldwide emptied, the prior assumptions that all trading will happen from physical offices—over corporate networks and enterprise-operated data centre were suddenly rendered obsolete.
- Trends affecting Customers
- Work from Home: With the pandemic, as corporate offices became unavailable overnight, the entire financial services workforce from traders to bankers to support personnel relied on their at-home internet connections along with existing VPN and virtual desktop infrastructure solutions to do their work.
- Environment: Work environment is reimagined, one that combines immersive digital and mobile experiences with flexible hardware to support in-person and remote workers. New ways of hybrid working and connecting with customers has also lean heavily on helpful, integrated tools cantered on the cloud to level traditional boundaries in so far.
- Health and well-being: Energizing campaigns on physical and mental health at a level of intensity that very few have matched before. Banks are extending support beyond individual employees to the full ecosystem, including employees’ families and contractors in the workforce.
- Trends affecting Consumers
- With many companies closing their brick and mortar channels, consumers are going online to buy essentials. At the same time, concerns have been raised about whether physical cash could spread the coronavirus.
- Systemic challenges related to connectivity, financial inclusion, skills and trust (e.g. digital security, privacy and consumer protection) have been brought into sharp relief.
- Banks are on the front line, supporting their customers through the crisis, both in their role transmitting government stimulus measures, offering forbearance and emergency funding to clients and donating to relief efforts.
- The current pandemic crisis is a great financial shock for many. Recovering from this crisis will require relying on extended support and flexibility from banks to help customers get back on their feet.
Key Challenges faced by Banking & Financial Sector
Market Share of Top Banks in UK
Top 10 banks together command more than 70% of overall market share in the UK. The list includes Global Banks as well as Home grown Banks like HSBC, Barclays, Lloyds Banking Group. The US based banks J.P. Morgan Chase and Citigroup dominate with top two positions and a combined market share in excess of 28%.
UK FM Market
The UK is one of Europe’s most developed and comprehensive markets for facility management services with regard to size & sophistication. Due to the widespread use of facility management services, vendors are now increasingly focusing on using specialized services to gain a foothold in the market, which has also witnessed several changes due to the macro-economic and social changes in the country.
Over the last decade, several service vendors operating in the country have been focused on expanding their presence to leverage the growing demand for facility management, especially with the recent trend favouring the outsourcing of non-core operations. The country has been witnessing an increased number of opportunities to leverage facility management and corporate real estate in innovative ways, given the dynamics across the country.
Key trends suggest that the United Kingdom continues to attract investment opportunities from global specialist facility management companies to address challenges in the local, fragmented markets. Large strategic buyers were highly active, mopping up smaller rivals, and private equity investment was rising as financial sponsors continued to finance the deployment. Moreover, technology-enabled business models have resulted in rising valuations in the country.
FM Suppliers to Banking Sector in UK – Competitive Landscape
Among the top FM Suppliers to the Banking & Finance Industry, Mitie with Interserve business also part of its portfolio is the largest FM provider with standalone as well as integrated services to Banking Clients. Other leading providers include large FM suppliers like Sodexo, ISS, CBRE, JLL, Engie, etc.
Apart from serving the Banking Industry, the overall FM market in UK is one of the largest markets in Europe in terms of maturity and sophistication. The market is highly competitive owing to the presence of several organized players and strong presence of top global companies, such as Mitie, ISS, Sodexo, CBRE, JLL among others. It is a large market with some estimates putting the annual revenues in the vicinity of 40-45 Billion USD. As per Baachu Database, however, the total contract value remains in the range of £100 Billion for Contracts with terms ranging from one to 10 Years on an average.
To have a detailed view of the UK FM Market with complete sector & services breakdown , please download our comprehensive report here https://baachurain.com/product/uk-facilities-management-market-2022-2025-report/ .
This report is unique for its treatment of the growth aspect being based on the real contracts and their value. The report complements similar report from Frost & Sullivan as that report gives a glimpse of future growth based on revenues while Baachu has used Total Contract Value as the basis.
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