UK and KSA: A new chapter for the financial services sector
The UK’s financial services sector remains a global powerhouse, but there’s no room for complacency. The international competition among financial centres remains fierce, keeping the UK more competitive as a whole, and making it more competitive, means taking on difficult questions. This includes examining the UK’s attractiveness to global investors versus other financial centers.
The UK is the world’s leading exporter of financial services, to a value of $71.35 billion (£64billion). London is home to more foreign banks and accounts for more international bank lending than any other global centers. The scale of financial services as a component of the economy means sector has a central role to play if the UK is to take full advantage of the opportunities ahead – whether that is addressing technological disruption, meeting the challenge of climate change, adjusting to a post-Covid world or looking at strengthening bilateral ties with other countries.
To achieve this, innovation and technology should be at the heart of a new framework. A far greater predictor of success than regulation, technology will be key to the UK’s future competitiveness, and the finance sector ecosystem must be an incubator for wholesale innovation in capital markets. For example, encouraging the widespread development of tokenised securities. This also requires the UK to be able to finance its promising future companies from start-up to scale-up, and nurture them into UK-based world-beating companies. Bold leadership on all things green finance should be high on the list of priorities.
The UK is well positioned to lead in the growing innovation space across a range of dimensions, building on existing strengths. The country’s capital markets have long been thriving – a diverse cluster of financial services, a large pool of skilled talent, and the robustness of our legal system are just a few factors that we all benefit from.
And although ‘Brexit’ remains contentious, since its exit from the EU at the end of 2020 the UK now has greater flexibility in building partnerships beyond Europe. A renewed global perspective has included efforts to forge deeper ties with GCC countries, including KSA, with substantive talks on a free-trade agreements.
The kingdom of Saudi Arabia is already well-established as one of the UK’s most important international trading partners. Currently, both countries are exploring ways of enhancing cooperation on trade and financial services, particularly in the fields of FinTech, Open Banking and Green Finance.
For its part, the financial services sector in KSA is undergoing a remarkable transformation. KSA has set several key objectives within that sector, including developing a diversified and effective financial sector to support the development of the national economy, diversify its sources of income, and stimulate savings, finances and investments.
As part of the Saudi Vision 2030 to diversify the country’s economy, the UK’s expertise opens up infinite possibilities for closer partnership in financial services, acting as a key enabler of diversification and a source of funding. Saudi Arabia also has an emerging and vibrant FinTech ecosystem and an ambition to become a leader in that space, creating potential for two-way exchange of capabilities.
The UK is not only good at drawing capital into its borders but also strong at spreading capital throughout the globe. By working together with our KSA counterparts, the UK can help unleash the great potential of the Saudi financial service sector.
A willingness to share knowledge, data and technology will help the financial services sector uncover innovative methods and clear actions, as well as continuing the successful collaboration between the two nations. This is a promising start for the new chapter of the financial services sector.