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Long Finance Scenarios for 2050 – In Safe Hands? – Launch of Report Suggests Big Questions for the Financial Services Industry

February 3, 2012

The report “In Safe Hands? The Future of Financial Services” was launched at Barnards Inn on 25th January 2012.  The report was published by Long Finance as part of the Financial Centre Futures programme sponsored by Qatar Financial Centre Authority.

The report is the result of a scenario planning exercise conducted by internationally recognised futurists and key figures from the global financial services industry.  It plots a series of possible future scenarios for the global financial services market, and considers the future of financial services over the next 40 years.  It also identifies a number of surprises which come out of the analysis, ranging from questions on the size, location and role of financial services, a question mark over the future of insurance, to a change in the nature of assets which will be valued.

The launch took the form of:

  •  A  presentation of  the report by the author Gill Ringland (slides are on the Long Finance web site as is a pdf version of the full report  – www.longfinance.net )
  • Commentary by a panel of experts – Professor Michael Mainelli, Emeritus Professor and Fellow at Gresham College, Visiting Professor at LSE, Principal Advisor to the Long Finance initiative, Paul Moxey, Head of Corporate Governance and Risk Management, ACCA and John Grout, Policy and Technical Director, Association of Corporate Treasurers
  • Discussion with the invited participants.

Key points:

  •  How will the social and corporate responsibility of financial services and its relationship with society evolve in the next ten years? The balance could be changing between personal financial and self esteem in senior levels of the financial services industry – especially in commoditised areas such as retail banking – and the views of society at large.  This may generate increasing pressure for some financial organisations to move to mutual models – or replicate their reward systems within plc models.
  •  Beyond the next ten years, to what extent will real people actually be involved in the financial services industry? Elements will become increasingly commoditised and automated systems may develop that are far better than humans at managing complex systems.  This is already happening right now but the report suggests that there may be huge paradigm shifts and no stability.
  •  Are senior people in large corporates up for thinking strategically about the long term? The report refers to US research that suggests that only 2-3% of the time of senior managers is spent thinking strategically.  Some  industries are more committed than others.  Retailers tend to focus on the short term whereas those with long infrastructure and resource planning requirements (such as  the oil industry) tend to be more interested in long term thinking.  But even in the oil industry there is a big divergence between those who are interested and those who are not.  On the plus side, Shell has suggested  that it can make decisions 3-6 months faster than the competition by using scenarios. Other may disagree.
  • What is the future for insurance? In the short term the trend has been towards increasing pressure on underwriting in the EU and USA because of ethical considerations.  This has included bans or restrictions on the use of genetic information and, most recently in the EU, a ban on the use of gender as a risk factor for any insurance.  The report suggests that in the longer term there may be different business models based on city states or affinity groups. Insurance globally faces interesting times.
  • How far is the report influenced from a purely western viewpoint? To some extent this is inevitable given the research basis.  There would indeed be a different slant on the delivery of financial services if written by people in other parts of the world.  For instance, China is investing directly in western infrastructure without the involvement of the external global banking system.
  • Are the boundaries of financial services and other industries  blurring with amalgamation of supply chains? This is already well advanced, certainly in areas such as defence and infrastructure, also sales of furniture to consumers.  The report also discusses the amalgamation of services with insurance, as with Lloyds Register.

Written by Gill Ringland, CEO of SAMI Consulting and the Chairman of L3F

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