A recently published report stressed that European financial institutions need to rethink their strategies or risk further widening the gap with competitors in the U.S. and China, especially as London’s global clout shrinks from an expected Brexit.
The report, jointly published by Luxembourg for Finance and PwC, highlighted three major areas that financial companies in Europe will need to seriously consider: the use of one-stop digital platforms to provide third party products and services; continued development of sustainable investment offerings; and preparations for a post-Brexit environment where London will play a smaller role in global finance.
Advancements in innovation aside, the report highlighted the historical precedent of a financial crisis that caused the Europeans to further lag as they struggled to cope with increased regulatory and compliance burden while the U.S. and Asia – China, in particular – were «able to forge a stronger position for itself in the global marketplace».
«China’s strong economic growth naturally contributed to booming bank business in the Asian region and local support from the government continues to be a strong driver of bank growth,» the report said, underlining that the country’s lenders now make up five of the top 10 largest banks by tier-1 capital.
More Focus on Sustainable Investing
In various fintech sectors, such as digital payment, European players are unlikely to take leading positions and will need to rely on partnerships to close or maintain the market gap. But one area that the report highlights potential is in sustainable investing where the region is strongly positioned to «gain an advantage over its regional rivals».
Nonetheless, there are few facets of the so-called future economy that China has not invested in and sustainability is no exception. The country is already rapidly making inroads into the space with strong growth in areas like financing linked to environmental or renewable energy projects.
