SWOT - UK Financial Services Industry

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SWOT

Strengths

Firms have a wealth of customer data that they could mine

Providers have a massive estate of customer assets

Crypto-currencies

DB to DC to CDC?

Weaknesses

A bonus culture drives greed and resentment

Executives are out of touch with the needs of their retail customers

Mis-selling and other scandals undermine customer trust

Products are too complex and use too much jargon

Some markets continue to operate on a commission basis

People are becoming more reliant on retail credit

Opportunities

Open Finance - Open Banking and the Pensions Dashboard

Autoenrolment could increase the number of people engaged in Financial Services

Consumers are moving online and mobile

Consumers are working longer / phasing retirement to make ends meet

Erosion of pension and savings pots leaves consumers playing catch-up

Erosion of state benefits and DB pensions means consumers must increasingly self-provide

Online financial planning website could plug the advice gap

Providers could be forced to offer advice, directly or via a partnership, in order to serve the mass market

Artificial Intelligence and Automation could make financial services more affordable

The mass market is underadvised

Fintech is booming

The trend is to replace administrative personnel with technical personnel

There exists a protection gap

Big data can improve decision making

Telematics and wearable technology could revolutionise underwriting

'Regtech' could help financial services providers streamline the costs of regulatory compliance

PSD II could open up the payments infrastructure

InsurTech / InsTech

Personalisation and gamification can increase customer engagement

The Personal Information Economy (PIE) could provide new ways for companies to access individuals' data securely and with all permissions in place.

The adviser platform market is consolidating

More advice is being delivered remotely

The market is consolidating

The bulk annuity market is booming, for now

Consumer duty is increase life insurance written by general IFAs/Wealth Managers

A shift towards workplace has a negative impact on individual business (esp life/IP etc.) but this could have long-term impacts if/when you leave

Threats

General Data Protection Regulation (GDPR)

Consumers are unengaged and do not take advice

Financial services incumbents are increasingly technology companies

Poor productivity is a major issue for the UK

Admired non-financial services brands are entering the market

Brexit could weaken the UK financial services sector

MIFID II could further constrain distribution

Consumers are disillusioned after financial scandals and economic malaise

Customers are living longer, but not necessarily in as good health

Global warming and pollution could negatively impact health and longevity

NEST could undermine competitiveness in the pensions sector

New entrants to the market are disrupting with technology

Peer-to-peer lending is growing rapidly

Pensions freedoms could expose the market to mis-selling and scams

The 2014 budget provided the biggest shakeup of retirement savings in a generation

The FCA could continue to intervene in the provision of financial services

The pensions charge cap could distort the market

The Simplified Products initiative could further commoditise the market

The size of the advice market is constrained

Challenger Banks

FCA has been tasked with setting a cap on pension exit fees

Brexit could result in significant legislative and regulatory change

Disintermediation & Robo-advice

Extra-industry firms may have access to better data for assessing risk

Regulation could stifle innovation

Protection Sales are declining and significant players are exiting the market

The secondary market in annuities could have several disrupting impacts

The Insurance Distribution Directive (IDD)

Cost of living crisis and high interest rates are supressing insurance sales especially related to mortgages