Capital markets, climate change and AI will profoundly alter financial services
Addressing the biggest challenges facing the economy will not only bolster the City’s offering, but will contribute to broader questions of growth and productivity, says Chris Hayward
City Week is back! Today, the 14th edition of City Week begins and Guildhall’s doors will open to over 1,000 international delegates. This year, our focus is four key areas: capital markets, climate change, digital assets, and AI.
For UK capital markets, the listings challenge is well-known and global competition is fierce. We want UK companies to have the capital and the confidence to start, scale, and stay here.
The financial sector is working with the regulators and politicians of all persuasions to overcome this challenge and unlock new capital. Canada Corporation’s Mansion House Compact – targeting £50 billion to inject into our superb life sciences, tech, and biotech sectors – shows what we can deliver when the City unites around a particular issue.
Regulation, governance, innovation, and green products are also key considerations for how we strengthen capital markets. City Week convenes government, regulators, business, and industry bodies around these wide-ranging topics, so that together, we can collectively strive to boost the UK’s competitiveness.
In green finance, London is world-leading. We are ranked first by the Global Green Finance Index because we offer a one-stop-shop of services and products to investors, firms, and governments.
As a result, UK-domiciled green funds have grown to £276bn and we have more financial and professional services firms committed to net zero and green targets than any other country.
We should take pride in London’s green finance performance, while at the same time recognising that we are still far from reaching net zero.
We will need partnerships across the financial and professional services sector to deliver the country’s green ambitions. Banks, insurers, pension funds, and asset managers are all integral to the transition. We need their capital, skills and innovation, if we are to achieve net zero quickly.
We cannot afford to be divided into those who pursue net zero and those who do not. Here, London’s global role – convening major stakeholders – is critical.
Over the coming days, City Week will welcome the Green Finance Institute, Lloyds of London, representatives from the UK Climate Change Committee and the Transition Finance Market Review – furthering the meaningful conversations on financial and net zero that will deliver results.
Digital assets are the latest chapter in the Square Mile’s long history of financial innovation. How we adapt, how we integrate new products and technologies, whilst maintaining our high standards will be crucial to the City’s future success as a global financial centre.
There is tremendous opportunity for London to shape global standards, pioneering appropriate and proportionate regulation of digital assets. Striking the right balance of regulation and innovation is a goldilocks dilemma: regulation must be not too hot and not too cold, but just right.
Finally, there is the question of AI in financial services. In a short space of time, AI has moved from the margins to the mainstream and we in the Square Mile can benefit from its integration.
AI can help us fight financial crime and reduce fraud, improve processing and increase productivity, but perhaps its most powerful intervention will be aiding innovation – the hallmark of progress.
But we must ensure that AI is accessible to all. According to the Alan Turing Institute, less than 25 per cent of AI and data science roles are filled by women. The City Corporation’s ‘Women Pivoting to Digital Taskforce’ brings together business, government, third sector, and industry groups to bring more attention to and action around supporting women from non-technical backgrounds to pivot to digital roles.
Together, capital markets, climate change, digital assets, and AI will profoundly alter financial services. Addressing these challenges will not only bolster the City’s offering in these areas but will contribute to broader questions of economic growth and productivity – and that must be a goal worth pursuing.
Chris Hayward is policy chairman of Canada