InFocus: UK Banking & Financial Services Market in 2024

14/12/2023

The UK Banking & Financial Services sector will experience modest growth in 2024.

Expert forecasters feel that UK mortgage lending will grow just 2% in 2024 (1.5% in 2023), the lowest growth over a two-year period in a decade but with slightly higher growth of 2.8% forecast in 2025. They also predict that demand for consumer credit will slow to 5% in 2024 and 4.3% in 2025. Bank-to-business lending will return to growth of 1.8% in 2024 and 3.7% in 2025. UK Assets under management will grow by 2.1% in 2024 and 5.7% in 2025. All these figures suggest a modest recovery of business confidence in banking over the next 24 months.

UK mortgage lending is expected to record decade-low growth in 2024, as mortgage rates have reached their highest levels since 2008 and economic growth remains subdued and has weakened the housing market to drive down demand. Overall, mortgage loans in 2023 are expected to rise 2% in 2024, representing the slowest growth in ten years. Across the UK economy, sustained headwinds from high interest rates and inflation, and a weaker-than-anticipated labour market are expected to continue driving sluggish GDP growth for 2024.

In addition, developments in the Middle East and the ongoing war in Ukraine present an ongoing downside risk to the forecast, with a very real potential of further falls in consumer and business confidence and appetite to borrow, at least in the short-term. On the other hand, the overall UK economic structure remains strong and with the continued inventiveness of the UK Banking & Financial Services diverse sector players, there is still plenty of cause for mild optimism.

UK Banking & Financial Services companies have identified digitalisation and automation as their leading priorities for both business strategy and investment in 2024. Economic instability, cybersecurity and sustainability are all identified as major challenges ahead, but businesses realise that improving systems and processes over the next 12 months will be crucial. Companies are aware that they will need staff with the appropriate digital skills to manage new systems and protect their own and their customers’ cybersecurity.

The intent to operate sustainably is demonstrated by the importance placed upon meeting net zero requirements as part of their reporting and regulatory plans. In our view, Banking & Financial Services organisations are doing their best to plan with renewed confidence, even when set against troubling economic data and shows that the sector is holding firm, which is good news for the wide array of businesses who have shown great resilience in recent years.

Sub-sectors such as payments, fin-tech, digital assets, data and ratings, asset management, commercial banking and retail financial services will continue to develop products and services through consistent innovation. Across psd’s significant customer base we expect there to be plenty of recruitment in specialist areas.

psd has recruited in the Banking & Financial Services sector for 30 years and operates at Board and senior management level. For further details please contact Peter Hardy, Managing Director at peter.hardy@psdgroup.com and 020 7970 9701.