Regional Rewards

London has been heralded as the UK’s financial epicentre, but the regions are growing considerably as hubs. Here, Alex Miller explores what they have to offer.

For hundreds of years, the City of London has been regarded as the beating heart of the UK’s financial services sector, home to the headquarters of thousands of major companies and some of the world’s top talent. However, outside the Square Mile there are a number of established and emerging geographic hotspots being taken advantage of by international finance businesses, for a variety of reasons. 

A report released last year by lobby group TheCityUK, called Enabling growth across the UK 2018, shows that while London remains the country’s largest financial centre, the industry truly is a national asset, making a significant economic contribution to regional and national economies. 

Collectively this amounted to £174bn in 2016, with two thirds of the 2.3 million industry jobs based outside London. 

According to the report, the biggest financial centres outside London are Edinburgh and Manchester, which have overtaken Birmingham, previously in third place. Historically, the South West, North West, the Channel Islands and Scotland have all been popular areas for organisations to lay down additional operational roots in the UK. 

Large incumbent businesses such as JP Morgan, Aviva, Nationwide, Hargreaves Lansdown and Zurich have a considerable presence in these locations. Opportunities to work for major financial services companies such as HSBC, BlackRock, JP Morgan and Lloyds, exist all across the UK. 

For example, JP Morgan’s Bournemouth Corporate Centre is home to more than 4,000 employees, including many who work directly with clients of its Corporate & Investment Bank (CIB) and Commercial Bank, as well as a large number in operations, technology, audit and compliance. “We provide employees with a dynamic, high-performance workplace, state-of-the-art technology tools and first-rate amenities,” the firm boasts. “Every day more than five million financial transactions are managed by the Centre.” 

PwC has also outlined plans to expand outside the capital. “We have 60% of our people in London and I can see, over the next four years, it will probably be more like 50%, because we are looking for growth outside London,” says Stephanie Hyde, UK head of regions at PwC. 

The North

The North continues to benefit from government investment in the Northern Powerhouse, with cities such as Birmingham, Manchester and Leeds seeing their reputations as financial hubs continue to grow. For smaller players, the fintech firms, challenger banks and market disrupters, that either don’t need to or have no desire to be London-centric, establishing themselves in these regions has added appeal. 

Atom Bank, for example, is based in Durham and was recently named in the world’s top 10 financial innovators, according to the Fintech 100 rankings compiled by H2 Ventures and KPMG. The report notes that Atom was the first bank designed specifically for digital, with users able to log in using face and voice recognition, and 24/7 support. 

The bank recently raised a further £149m of investment to support its growth and allow it to expand its technology and business capabilities. Atom CEO Mark Mullen says: “This significant injection secures the bank’s place as a disruptive force in the mainstream of UK banking.” The bank has created around 300 jobs in Durham. 

In Leeds, BankNorth is preparing for launch and setting its sights on the highly popular SME lending market. Its founders, Nancy Butler, Craig Iley and Jonathan Thompson, all have plenty of experience in banking. 

These challengers and fintechs are often trying to be different and create new trends. With this comes an operational model that goes against the traditional nature of established financial services firms, who have instinctively wanted to be based in the existing corporate hubs. 

In terms of specific sectors, Manchester is the UK’s biggest legal services and management consultancy centre after London. Glasgow is the biggest insurance centre and Edinburgh has the largest centre for banking as well as being a major international location for fund management. 

Richard Hatchett, senior manager, Hays Insurance and Financial Services, says the financial services market in the North West is buoyant, along with Birmingham and Leeds. Employers are hiring, as many invest in new sites despite some restructure activity in the banking sector.

“In the North West in particular, we are seeing activity from a lot of start-up fintech companies which is encouraging – largely because the North West is one of the top regions for private equity backed companies,” he explains. 

With regards to insurance there is a lot of activity as London brokers who want to develop a presence in the North are investing or buying firms in Leeds, Manchester and Birmingham predominately. 

“Additionally, we hear of big corporates who continue to want to northshore following the examples of Royal Bank of Scotland and the Bank of New York who have done this particularly well in Manchester,” Hatchett adds. 

As more challenger brands emerge and as businesses continue to reduce cost pressures on their bottom line, it is likely the trend of regional expansion and establishment will continue. With it is likely to come a rebalance of the roles, progression and talent across the UK. 

The South

Bristol is now the biggest financial services centre in the South West and one of the main financial hubs outside London. The city has a long history of specialising in insurance, legal services and banking, employing 33,500 people in financial services – one fifth of total employment in the industry in the South West – and is contributing £1.8bn to the economy. 

Key sectors in the region, according to Enabling Growth across the UK 2018, include banking, insurance, security broking, fund management and legal services. 

A stream of highly skilled graduates from universities in Bristol and Bath have played a key role in solidifying the area’s status as a financial centre.

Stephen Noakes, TheCityUK city chair for Bristol, adds: “Bristol supports a strong and diverse financial and related professional services industry. Over recent years we have seen the development of a fast-growing and highly-innovative FinTech cluster that is providing broader support to the existing ecosystem.” 

Major UK centres with more than 30,000 employed in financial and related professional services now include Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester. 

Plus, TheCityUK says there are several key clusters of different financial and related professional services activities around the country. 

Regional benefits

Chris Henson, senior manager, compliance and risk, Robert Half UK, says digitisation is a major contributory factor behind growth in the regions.

“The digitisation of business and the growing recognition of the value of work-life balance among employees means that more businesses want to – and are able to – be flexible in their approach,” he says. 

“Perhaps the founder of a business used to work in the City for years and would now rather grow their company closer to home to avoid long-distance commuting. 

“Ultimately, many decisions on where to open and establish businesses rest on costs. Somewhat unsurprisingly, labour and office space come at a premium in the capital. So, while this is another key driver for new companies choosing areas outside London in their early days, we also see many firms setting up in areas where they can get the most leverage in terms of their client base, for example international payments, wealth management, consumer credit or car loan firms.” 

Hatchett agrees that work-life balance tends to be better in smaller organisations who will recruit local staff and invest in training them. This results in less commuting and greater flexibility. 

“We are seeing more and more finance professionals requesting forms of flexible working up front including remote working and part-time requests. Again, smaller organisations are often better at accommodating flexible working requests initially,” Hatchett explains. 

“To attract candidates from a diverse talent pool, organisations will have to improve their flexible working offerings, so they can attract the talent they need in a skill-short market.” 

Skills differences

The kinds of roles across the regions vary greatly. Front-office roles, particularly those within wealth management and financial planning, are plentiful in Jersey, Guernsey and the Isle of Man. Edinburgh is the largest centre for banking, while EY plans to expand its data analytics team in Newcastle upon Tyne. 

Watford has one of the biggest accounting clusters outside London (12,000 jobs), while cities such as Leeds, Brighton and Bristol are home to high-skilled activities. Telford and Middlesbrough have a high share of their financial and associated professional services workforce linked to retail bank sales or customer services. 

Other cities such as Sheffield, Sunderland, Northampton and Swindon tend to be home to lower-skilled activities – more back office in their function. 

Barclays, for example, has its investment banking activities in Canary Wharf, but its call centre activities in Sunderland. 

“Over the past few years we have started to see many of the operational functions that have been based in London being moved to regional cities,” says Henson. “An example of this is a compliance function called client onboarding or know your customer (KYC). Given time, you might have a model whereby most KYC roles are outside London, as essentially it is document checking and can be conducted remotely at lower cost.”

Living costs

PwC pays its graduate trainees and newly qualified staff about 30% less in the north of England than in London, but says living costs can be as much as 60% cheaper – meaning it is, in real terms, a higher salary. 

Robert Walters’ managing director of UK regions, Chris Poole, says experienced specialists often do not have to accept a pay cut at all to move to the regions. 

“If you’ve got a niche skillset and you’re in demand, then absolutely you can negotiate parity with your London salary – and sometimes an uplift,” he says.

And while there are compelling reasons to move to London, there are plenty of opportunities in other main hubs such as Manchester, Leeds and Birmingham. 

“Not only are rents cheaper but there is a lot of investment and we are starting to see more unicorn companies with a presence, as technology is driving expansion,” adds Hatchett.

Consequences for those outside the capital include fewer opportunities to progress and the potential for early-morning train journeys to London. 

But from 2026, with the opening of the £56bn HS2 high-speed rail line project, journey times will be slashed and rail capacity boosted between London, Manchester and Leeds. 

As the presence of financial services companies increases up and down the UK, so too does the need for the talent to run them. 

Cities such as Leeds and Bristol are benefitting from the diversification of strong job prospects, offering skilled workers competitive salaries and strong employee benefits. More opportunities are likely to emerge in the regions too.