Financial services upbeat as business thrives

The survey of 98 firms showed that business volumes rose across industry sub-sectors including banks, building societies, and parts of the insurance industry.

Indeed, 37% of financial services firms said they felt more optimistic about the overall business situation compared with three months ago, while 9% said they were less optimistic, giving a balance of +28%.

Kevin Burrowes, Financial Services leader at PwC, said: "The financial services industry is benefiting from the effects of economic recovery, but that is proving to be a double-edged sword for some. The prospect of growing volumes and revenues is tempered by concerns about competition.

"Banks and insurers see a growing competitive threat from non-financial services companies and new entrants are also trying to capitalise on the improved conditions.”

In terms of business volumes 48% said they were up, while 15% responded a decrease.

In the next quarter 44% of firms expect business volumes to increase compared to 7% who expect them to decrease.

Optimism in both the banking and building society sectors improved last month, amid growing business volumes.

Life insurance recorded significant optimism, yet general insurance respondents were less optimistic than three months ago.

Optimism among insurance brokers revived last quarter, having weakened in Q1 2014, amid growing business volumes.

Jonathan Howe, PwC’s UK insurance leader said: "General insurers are the only key sector to report lower confidence. Competition and demand are major concerns and although economic recovery is driving an uptick in demand, this is unlikely to be sustainable.”