UK Financial Services Industry Research Articles

A Notsie narrative perspective on turnover in the UK financial services industry

ABSTRACT Drawing on a cultural perspective from the Global South, Notsie narrative, a West African literary folklore, we explore the high churn rate in the UK financial services industry. Viewing the storied accounts of former financial complaint handlers through a Notsie narrative lens, we examine why they frequently quit their well-paid jobs. Our study elucidates how the relentless pursuit of efficiency culminates in managerial tyranny – a set of impulsive and oppressive organizing practices that combine to precipitate high turnover. The wisdom of our Notsie narrative perspective centres on the importance of relationality – the skilled ways of interrelating that create connections between people, and what it means for the Notsie kingdom being doomed to collapse without its people; a wisdom seemingly overlooked and undervalued in western ways of knowing, located in individualism, rationality, and instrumentalism.

The impact of machine learning on UK financial services.

Machine learning is an increasingly key influence on the financial services industry. In this paper, we review the roles and impact of machine learning (ML) and artificial intelligence (AI) on the UK financial services industry. We survey the current AI/ML landscape in the UK. ML has had a considerable impact in the areas of fraud and compliance, credit scoring, financial distress prediction, robo-advising and algorithmic trading. We examine these applications using UK examples. We also review the importance of regulation and governance in ML applications to financial services. Finally, we assess the performance of ML during the Covid-19 pandemic and conclude with directions for future research.

Dialectic Tensions in the Financial Markets: A Longitudinal Study of pre- and Post-Crisis Regulatory Technology

This article presents the findings from a longitudinal research study on regulatory technology in the UK financial services industry. The financial crisis with serious corporate and mutual fund scandals raised the profile of compliance as governmental bodies, institutional and private investors introduced a ‘ tsunami’ of financial regulations. Adopting a multi-level analysis, this study examines how regulatory technology was used by financial firms to meet their compliance obligations, pre- and post-crisis. Empirical data collected over 12 years examine the deployment of an investment management system in eight financial firms. Interviews with public regulatory bodies, financial institutions and technology providers reveal a culture of compliance with increased transparency, surveillance and accountability. Findings show that dialectic tensions arise as the pursuit of transparency, surveillance and accountability in compliance mandates is simultaneously rationalized, facilitated and obscured by regulatory technology. Responding to these challenges, regulatory bodies continue to impose revised compliance mandates on financial firms to force them to adapt their financial technologies in an ever-changing multi-jurisdictional regulatory landscape.

Improving Global Financial Services Regulation

As the most globally active financial services provider, the UK has the potential to be a key player in helping to develop a more efficient international regulatory framework after it leaves the EU. All entities that have efficient and attractive financial services offerings will benefit from having better global financial services regulation. The UK financial services industry is a major component of its economy. In 2016, UK financial services contributed 6.7% of the total UK GVA1, provided 3.1% of all jobs in the UK and generated a trade surplus of £68bn2 in the finance and insurance sectors.

What's the future for biometrics in global payments?

Global payments methods have expanded significantly in recent years, with contactless platforms from tech firms like Apple Pay, Android Pay and Samsung Pay leading the way. But along with these advances in financial services technology, there have been headlines about the mass closure of local bank branches. For example, in the UK over 1,000 high street branches are estimated to have closed in the two years to December 20161. Banking executives are justifiably focusing on both the decreasing numbers of customers using their branches, and the increasing numbers of individuals banking online. Yet despite the increased take-up of technology, the UK's financial services industry remains behind the curve in adopting biometric identification2. This article reviews the changes underway and reports on a new survey into how user acceptance – the critical element in the adoption of biometric ID verification – can be maximised.

Financial Services, the EU, and Brexit: An Uncertain Future for the City?

The financial services industry is of central importance to the UK economy. It represents some 7% of GDP. It also generates major exports for the UK - in the region of one-third of UK financial services are exported to the EU. News reports in the immediate aftermath of the referendum result included the sharp drop in banking stocks; the overtures being made to attract UK financial business away from the City to other EU centres; and plans by leading financial institutions to move some operations away from the City. Vivid illustrations all of the importance of the Brexit vote for the City and the UK financial services industry.

Is it time for firms to reconsider their approach to settling enforcement action?

The ongoing reform of the regulatory regime for the UK financial services industry is wide ranging and substantial. Whilst much of the attention has been grabbed by the introduction of the headline-inducing criminal offence of “reckless management” of a failed financial institution, much of the real impact of the changes will be felt as a result of other provisions. Two such provisions relate to the new power given to the Financial Conduct Authority (FCA) to publish information about enforcement action at a far earlier stage, and the reversed burden of proof for “Senior Managers” under the new regime. It is in the detail of such provisions, however, where the full ramifications, and unintended consequences, of change may have been underestimated. One such consequence may be the impact which these two provisions may have on the attitude and approach of firms to settlement of significant enforcement actions taken against them by the FCA (and by the Prudential Regulatory Authority).

Can Product Elimination Support Post-Downsizing Success Aspirations?

Organisations implement downsizing to overcome difficult and uncertain trading conditions, reduce complexity and gain strategic fit. Academic theory tends to focus on the human resource implications of downsizing. Whilst such articles may acknowledge the role of product elimination, there is limited understanding of either how it can be accomplished or of the customer retention benefits that may be derived. Service deletion theory promotes the use of partial or full elimination strategies as a means to gain positive outcomes. This study utilised interviews and questionnaires to examine product elimination success in the UK financial services industry. It identified that customer retention could be achieved post elimination if the desire to accomplish this was built into the removal process. The implication is that strategically aligning the objectives and implementation of a downsizing activity is more likely to result in positive elimination outcomes that can support the company's longer-term commercial objectives.

An empirical investigation of the relative effect of trust and switching costs on service loyalty in the UK retail banking industry

The crisis in the UK financial services industry has led to retail banking customers treating transactions with growing scepticism. Retail banks are having to work very hard to regain customer trust. Despite recent research in marketing that acknowledges the importance of service loyalty to service firms, studies that have examined the relative effects of trust and the different types of switching costs on attitudinal and behavioural loyalty are scant. Therefore this article aims to build a model to examine the strength of the relationships between these constructs. Using survey data collected from a convenience sample of 290 retail banking customers in the United Kingdom, the article reveals that the main drivers of attitudinal loyalty are trust and relational switching costs. In contrast, the main drivers of behavioural loyalty are trust, relational switching costs and attitudinal loyalty. Interestingly, financial and procedural switching costs exert no significant effect on either attitudinal or behavioural loyalty. Trust and relational switching costs exert a stronger effect on attitudinal than behavioural loyalty.

The individualization of corporate governance

PurposeUnder the Financial Services and Markets Act 2000, the Financial Services Authority (FSA) is the single regulator of firms in the UK financial services industry. The Act grants extensive powers to the FSA such that it can impose by rules and regulations additional corporate governance requirements on firms in the financial services industry. The legislative and regulatory requirements also extend to individuals under the FSA approved persons' regime. The purpose of the paper is to examine this individualization of corporate governance.Design/methodology/approachThe paper first explores the rise to significance of internal control and risk management in corporate governance and regulation, and links this to Beck's risk society and individualization theses. The extent of the individualization of corporate governance by the approved persons' regime is explored by examining three sources of evidence: the FSA's documents setting out the approved persons' regime; the initial perceptions about the implementation of the approved persons' regime from interviews with high‐level individuals in the financial services industry; and the outcomes of illustrative FSA enforcement actions against individuals.FindingsThe findings are that the FSA has developed a comprehensive and formidable apparatus for the individualization of corporate governance in the UK's financial services industry. It is argued that a discourse based on the interpretive evaluations of internal control and risk management may be replacing a discourse based on the quantitative techniques of management accounting, which may be characterised as the demise of the “calculating self” and the rise of the “auditable self”.Practical implicationsThe FSA's approved persons' regime could be developed as a model for other areas of the private and public sectors, where for regulatory purposes it may be desirable to identify approved or official roles.Originality/valueThe ability of regulators to “make” corporate governance by rules and regulations is relatively unexplored. Also, the focus of corporate governance is on firms rather than individuals. The paper considers the extension of corporate governance from the firm to the individual that may be achieved by regulation.

Assessing the value of online affiliate marketing in the UK financial services industry

This research attempts to understand affiliate marketing success and application within three financial services markets. The results of both quantitative and qualitative research reveal a distinct pattern of success and failure in the markets researched. These results were used in order to create a list of attributes by which the 'suitability' of a market for affiliate marketing can be evaluated. We conclude that the process of affiliate marketing needs to be implemented in a much more contingent manner, catered to the market attributes and variances exhibited.

The stages of financial services product elimination

This paper examines product elimination in the UK's financial services industry. The literature review establishes that physical goods elimination theory has only limited application to the financial services sector. Specifically, it fails to take account of constraints that prevent the removal of a product to a state of nonexistence. To overcome this, the sector uses two forms of removal — full and partial elimination. A three-stage methodology is used to find out how products are eliminated in retail banks, building societies and insurance organisations. A model is developed which explains that companies within the sector proceed through four stages during the elimination process — identification, decision, implementation and post elimination evaluation. At the end of this process, a product will have been either partially or fully eliminated. The preference of the industry is to use partial elimination. It can be concluded that the customer relationship is a key determinate factor in the choice of elimination process.

The National Audit Office Report on the Financial Services Authority

Ten years on from the creation of the Financial Services Authority as one of theworld's first “unified” financial services regulators seems an appropriate time to take stock with the first external review of its performance. After a decade of growth and development, how effective is it as a regulator of the UK's financial services industry? In April this year, the National Audit Office published a value-for-money report on five key areas of the FSA's work.

Sales force automation systems: An analysis of factors underpinning the sophistication of deployed systems in the UK financial services industry

This study investigates organizational and strategic context variables that are linked to the sophistication of sales force automation systems in UK financial services firms. We find that increasing sophistication in SFA deployment, evaluated as a count of the number of types of results of sales campaigns that are measured, is driven directly by the information orientation of the host firm. We also find that the “sophistication” of deployed systems is, in fact, limited — the information held on the systems cannot underpin the strategic goals of the sales/marketing managers. We theorise that adoption of SFA systems is driven by managerial imperatives and that these have resulted in sales force resistance — shown by the paucity of information held on adopted SFA systems.

Interest rate fluctuations and the UK financial services industry

The article explores the relationship between short-term interest rates and the equity returns of the UK financial services industry. Based on the arbitrage pricing theory, the present study seeks to answer the sensitivity and pricing questions. The former is tested with a linear two-index model attempting to identify any interest rate risk exposure of these stock returns. The latter, however, is examined using a nonlinear multivariate analysis based on the Seemingly Unrelated Regression Equations (SURE) model by imposing cross- and within-equation constraints on the estimated parameters. The econometric analysis unveils a significant negative interest rate effect and the existence of a risk premium incorporated in the expected returns of portfolios consisting of these stocks.

A model of the antecedents of multiple channel usage

The number of companies using multiple channels in the distribution of each of their products is increasing steadily. Despite this popularity, the drivers of these channel strategies remain virtually unknown. This work attempts to deal with this problem by developing a model regarding the circumstances under which companies adopt multiple channel strategies. Data collected from companies in the UK financial services industry provide significant empirical support to the model. The results indicate that product sophistication, market target sophistication, channel conflict, market maturity, scope economies, and competitive strength, are important considerations in the multi-channel move.

Clearing the way for gender balance in the management of the UK financial services industry: enablers and barriers

Clearing the way for gender balance in the management of the UK financial services industry: enablers and barriers

Product innovation and consumer choice in the UK financial services industry

PurposeWithin the UK, low levels of saving has been a continuing policy concern for both government and financial regulators. Why individuals save less than might be expected has been increasingly associated with an inability of ma… financial services consumers to comprehend product quality and to underta… of firms in this debated through examining the product choices presented to consumers by financial services providers.Design/methodology/approachWe examine two aspects of poor consumer decision making, yet to be fully explored in the wider regulatory literature. Initially, we review how financial services providers consider product innovations and the marketing strategies they pursue in constructing their offerings to consumers. Secondly, we ass… a popular financial product, the interest bearing deposit account, to examine what savings product choices are actually presented to consumers. These areas are explored through semi‐structured interviews undertaken with semi financial services managers and through a review of the entire product offerings to the interest bearing deposit market.FindingsWe report that savings markets are characterised by high product turnover and short duration. Consumers in the UK, alike many developed nations, and often unfamiliar with, and lack confidence when, buying savings products. Example consumers often have difficulties when making product comparis… Faced by so much proliferation of undifferentiated products, consumers find difficult to make a straightforward comparison between products.Research limitations/implicationsIt is concluded that further public education, a greater understanding of ho… firms present product choices to consumers and how consumers perceive s… choices are areas demanding further research and consideration.Originality/valueConsideration of how firms make decisions with regard to product innovation and savings problem more generally is an area demanding further investigation from a range of disciplinary approaches. Finally, given the perceived high importance of financial services to individuals and the nation… economy at large, some scrutiny should be placed on the issue of the high profitability of the financial services industry and how this is reflected into product innovations and, therefore, differentiated quality choices presented various categories of consumers.

Intensified efforts to fight money laundering and terrorist financing – more changes for the UK financial services industry?

Intensified efforts to fight money laundering and terrorist financing – more changes for the UK financial services industry?

Intensified efforts to fight money laundering and terrorist financing – more changes for the UK financial services industry?

Intensified efforts to fight money laundering and terrorist financing – more changes for the UK financial services industry?