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Financial services to outpace economy with strong growth

The global financial services industry is predicted to grow at three times the rate of the world economy next year.

A report by consultant Mercer Oliver Wyman says the industry is set to outpace the global economy for a third consecutive year. After growing by 15 per cent in 2005, the firm forecasts market value growth of between 5 per cent and 14 per cent in 2006.

It says financial services is becoming increasingly polarised between a few “premier performers” which consistently outperform institutions and “market performers”which grow in line with the economy.

Premier performers increased their share of the worldwide industry’s market value from 6 to 9 per cent last year due to strong performance.

The report, The State of the Financial Services Industry, shows that around 60 per cent of chief executives predict market growth of between 5 and 14 per cent this year.

Emerging markets and acquisitions are seen as potential key growth areas.

Over 70 per cent of chief executives intend to review their IT systems as a potential for unlocking value but regulatory issues are a growing concern, with Basel II, Mifid and Solvency II imminent.

President John Drzik says: “A few consistent performers have broken away from the pack over the last five years and overturned the conventional wisdom that firms need to trade off short-term performance against longer-term strategic gains.”

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