The Financial Inclusion Centre director Mick McAteer says the financial services industry risks becoming unsustainable as providers grapple with the huge challenge of unwinding their legacy business models.
McAteer, who is also a non-executive board member of the Financial Conduct Authority, believes a series of “toxic events are reshaping the financial service sector and making it incredibly difficult for the industry to become sustainable”.
Speaking at the Lansons Communications Future of Financial Services conference in London today, McAteer said one of the big themes changing financial services is the level of household indebtedness, combined with economic uncertainty and job insecurity that has not existed to the same extent in previous financial crises.
He said another factor reshaping the industry is how providers deal with inherited, old-style business models.
McAteer said: “The biggest challenge facing the industry, particularly among the more established players, is there is a real problem with legacy business models.
“Just as households have this legacy problem with debt, I think many of the big established industry players are going to struggle with unwinding legacy business models in order to be able to compete in the market.
“That is going to really hinder the ability of those firms to spawn, to become more efficient and to provide value for money products for consumers.”