Financial Services predictions for 2023

Ewen Fleming

Ewen Fleming

London Office Head, and Head of Consulting & Financial Services

Typically, this is a time of year when we look forward and try to predict what the new year may have in store.

There is a proverb attributed to Buddha that starts “The past is already gone, the future is not here yet…” and that epitomises just why predictions are so difficult. The current volatility in the global and domestic market makes it especially fraught to predict the future, however, we will stick our necks out anyway.

In line with many sectors, Financial Services have been searching for their new normal post-COVID. Not only did the pandemic impact consumer behaviour and the ways that business is undertaken, but the economy is stuttering, inflation has escalated and with it the central bank’s base rate. This is in the context of the UK attempting to reduce their high level of borrowing due to the measures the Government put in place during the pandemic, including an extensive furlough scheme and underwriting business bounce back loans. 

The severity of the situation has been exacerbated by global economic and geopolitical challenges – Russia’s war with Ukraine, oil and food security, supply chain disruption extenuated by prolonged lockdowns in China, Brexit and political volatility.

Against this backdrop, household costs have soared in 2022 and consumers are coming under increased financial pressure, creating a cost-of-living crisis. Identification and support of vulnerable consumers is set to be the overarching focus of 2023 and with effect from 1 August this will be set in UK regulation. Ineffective compliance by Financial Services firms serving retail customers, to the new Consumer Duty, whether by poorly designed or priced products and services, or through communicating to or servicing them inadequately, will lead to an erosion of consumer trust, adverse media headlines and a further spate of regulatory fines and remediation programmes.

Below, we detail what we envisage might lie ahead at a sub sector level.

Retail banking  

  • A significant drop in property transactions due to the increased cost of borrowing will lead to reduced demand for house moves. 
  • Lenders will pivot to customer retention and seek to re-connect directly with their customers changing the broker vs. direct application mix.  

Corporate/investment banking 

  • A tough economy will see business lending decrease (other than green lending which will grow) and bad debt increase. 
  • Investment banking arms will shrink in the face of mergers and acquisitions deal flow reducing, despite a growth in restructuring activity. 


  • Household pressures will lead consumers to be more price conscious (some may even cancel policies to reduce monthly outgoings) and challenge insurers (as will Consumer Duty regulation) to align their pricing for new and existing customers. 
  • Online best buy and direct to consumer websites may prove inadequate for distribution and encourage insurers to proactively interact with their customers and seamlessly integrate a ‘human touch’ within their digital interface.  

Wealth management 

  • Consumers will demand greater transparency, fee: value justification and the ability to pic’n’mix direct, advised, and discretionary managed investments. 
  • The volatility in bonds and gilts during Liz Truss’s time as PM will force asset managers to reconsider their investment selection and portfolio construct to match with their clients’ risk appetite and desire to repair the value of their pension pots. 

Get in touch

If you would like to discuss any of our predictions above, please don't hesitate to get in touch with myself, a member of our Financial Services team, or your usual Johnston Carmichael adviser. 

You can read further insights from our Financial Services team, here

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