UK Financial Service Providers Appear More Resilient to Turbulent Market Conditions Than Their US Counterparts, FIS Research Shows
August 15, 2023
- FIS Financial Services Expectations vs Reality research asked US and UK consumers about their personal financial decisions as well as asking about business executives’ investment and innovation plans.
- 78% of financial services company executives in the UK say high interest rates are impacting their ability to innovate and invest, but the issue is nearly universal in the US with 91% of executives there stating the same.
- Consumers in both the UK (76%) and US (77%) are aligned in saying high interest rates are affecting their financial decisions.
LONDON, August 15, 2023 – As financial services providers and consumers face continued pressures from economic and market instability, FIS® (NYSE: FIS), a global leader in financial services technology, has fielded new research to explore how executives and consumers are responding to the environment, and how they’re making their financial or investing decisions.
FIS’ Financial Services Expectations vs Reality research asked consumers in the UK and US about how they are making personal financial decisions, and their expectations of financial service providers. It also asked financial services company executives reciprocal questions about how, in reality, they are investing and innovating. The research found that financial services company executives in the UK are showing more resilience to market turbulence than their US counterparts.
These findings come as the UK has experienced sharper rates of inflation that are still significantly higher than those in the US. Whereas the US saw its peak at 9.1% in June 2022, the UK saw its peak at 11.1% four months later in September 2022. Meanwhile, the UK is still experiencing a higher rate of inflation at 7.9% as of June 2023, compared to the recent drop to 3% in the US.
How executives and consumers in the UK are reacting to economic headwinds compared to those in the US:
- 78% of financial services company executives in the UK say high interest rates are impacting their company’s ability to innovate or invest according to the FIS study.
- In contrast, nearly all US-based executives in financial services surveyed (91%) said they were experiencing an impact from high interest rates.
- Consumers in both the UK and the US showed a similar level of concern over high interest rates, with 76% and 77% respectively saying they have or will have an impact on their financial decisions.
“Across all negative market conditions respondents were presented with, UK financial services executives said they were less severely impacted than their counterparts in the US. This could be in part because the UK financial services sector is nimbler and more resilient to shocks, particularly given the current government’s efforts to stabilize conditions,” said Himal Makwana, Head of Platforms, Strategy, Operations & Venture at FIS. “With consumers showing significant concern about the state of the economy, especially higher inflation and interest rates, businesses are exploring how they can build trust with existing and potential new clients. Many of the executives we surveyed plan to do so with future-looking technology, such as embeddable financial services using APIs, blockchain and generative AI, to deliver advanced customer experiences.”
Businesses in the UK are increasing investment at higher rates than in the US according to the research, but both are taking a broad-brush approach. On the other hand, consumers are clear on what they want to see from their financial services providers.
UK-based financial services executives are increasing investment despite economic challenges, but are taking a broad approach to future tech, while consumers seek user-friendly solutions:
- Financial services company executives are increasing investment across the board, including in fraud/risk mitigation solutions (60%), generative AI (58%), metaverse (58%), embedded finance (57%), digital wallets (56%), and AI and machine learning technologies for process automation (55%).
- Large financial services companies (£10B+) in the UK are driving the bulk of investment across the sector; with 75% of executives from these firms focusing innovation efforts on the ease and speed of opening accounts, ahead of other priorities.
- Consumers, however, say their top two most sought-after features are an all-in-one platform for managing their financial services from all providers (44%) and the ability to quickly set up or apply for more complex financial services transactions, like loans and investments (24%).
“We are seeing a divide in how financial services companies are investing in new technology and what types of solutions consumers want most from their providers, according to this study,” added Makwana. “At the root of this gap between executive investment and innovation and consumer expectations seems to be the need for businesses to innovate through economic uncertainty. For example, many UK businesses are investing in automation and self-service, which can reduce costs while enhancing the customer experience. On the other side of the coin, consumers worrying about their finances are seeking personalized experiences and targeted services to make it easier to manage their money.”
About the Financial Services Expectations vs Reality research
FIS conducted a survey of 4,000 consumers and 800 business executives in the financial services industry in the US and UK in May 2023. Click here for more findings from the Financial Services Expectations vs Reality research.
FIS is a leading provider of technology solutions for financial institutions and businesses of all sizes and across any industry globally. We enable the movement of commerce by unlocking the financial technology that powers the world’s economy. Our employees are dedicated to advancing the way the world pays, banks and invests through our trusted innovation, system performance and flexible architecture. We help our clients use technology in innovative ways to solve business-critical challenges and deliver superior experiences for their customers. Headquartered in Jacksonville, Florida, FIS is a member of the Fortune 500® and the Standard & Poor’s 500® Index.
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