The prospect of a referendum Yes vote in September continues to cause anxiety among financial service firms, a retail banking expert says.
Steve Davies, UK head of retail banking for business service giant PwC, was speaking on the eve of today’s launch of a CBI/PwC report on the sector’s health.
Mr Davies, who is based in PwC’s Edinburgh office, said: “With economic recovery in Scotland and the UK gathering pace, the financial services industry seems to be increasingly more optimistic about growing volumes and revenues.
“But if organisations are to fully capitalise on growth opportunities as they arise, it’s essential that they can clearly demonstrate their ability to keep up with the accelerating pace of change in the marketplace, particularly in the technology arena.
“But this will come with challenges, particularly around cyber security. Companies must develop a clear understanding of the cyber threats they face and the measures they need to take to be confident in their ability to manage risk.
“They also need to be resilient in the face of increasing competition not only from new entrants but from non-financial services firms – a move that could result in increasing pricing pressure.
“Our research shows that a significant number of consumers believe challenger banks are a good alternative, with less than half loyal to their traditional bank.
He added: “In the event of a Yes vote on September 18, all of these issues would remain relevant.
“But until more certainty is established around the impacts on regulation, currency and the financial products’ marketplace, as well as the costs of response to changes, it will be difficult for companies to establish how their growth plans will be affected.”
CBI/PwC’s report says UK financial service firms saw another rise in business volumes in the three months to June, while optimism continued to pick up in the sector.
Mr Davies said: “Looking ahead to the next quarter, financial services firms expect business volumes to grow at a solid pace, profitability to rebound and numbers employed to increase slightly.”
A Scottish Government spokesman said: “We very much welcome the report, which, following recent publications from the Fraser of Allander Institute and Ernst and Young, paint a positive picture of business growth in Scotland.
“The Scottish Government is focused on maximising every opportunity to increase sustainable economic growth and prosperity, but only with the full powers available to us under independence will we be able to take the decisions required to grow our economy and increase Scotland’s competitiveness.”
CBI formally backed the Better Together campaign earlier this year, leading to organisations including Scottish Enterprise, VisitScotland and Highlands and Islands Enterprise, quitting their membership.