Although optimism continued to deteriorate across the financial services sector, the investment sector saw it rise from +13% in June 2017 to +28% in September 2017 – a noticeable rise from September 2016 when it was -72%.
Meanwhile, ahead of Mifid II in January next year, it appears financial services firms expect to increase technology spending at the fastest pace since March 2015. Regulatory compliance and new products will be the primary drivers behind capital expenditure over the coming year as total operating costs in the sector continue to rise.
However, the survey, completed during the last fortnight in August, shows asset and wealth managers believe intense competition in the sector could limit levels of business in the next year.
To combat these concerns, financial services firms intend to significantly increase marketing expenditure. They plan to also invest in their people, land and buildings, and vehicles, plant and machinery.
The main reasons for authorising this investment were to increase efficiency/speed, statutory legislation & regulation and to provide new services.
Commenting, Elizabeth Stone, UK asset and wealth management leader at PwC, said: “Despite ongoing uncertainty, the investment industry continues to increase its reach across the financial services sector and the optimism shown in this survey reflects the industry’s ongoing growth and rise in assets under management.
“Many asset and wealth managers find themselves in a final push to prepare for the implementation of Mifid II in January and the scale of this new regulation means continued investment in technology is required to analyse and organise vast amounts of complex data.
“It’s interesting to see the industry concerned about a lack of adequate return on their investments and I would call on firms to view the time, energy and money they have invested in compliance and technology as a strategic opportunity. This isn’t just about getting over the line in time for Mifid II or GDPR. Firms need to think outside the box and use the new systems, skills and data they have built during compliance to understand more about the market and their customers.
“Competition undoubtedly remains intense and is increasingly coming from a number of angles – life insurers and emerging start-ups continue to push into the traditional asset and wealth management space. This pressure is leading firms to invest heavily in their brand, as they focus on cross-selling to existing customers.”
