Bernard Ginns: Three good ideas which could change the face of finance

I say “all important” because industry in general desperately needs to fund growth and create wealth and support employment. The financial services industry is hugely important in itself because it directly employs something like 50,000 people in Yorkshire alone.

The industry is at a turning point.

Internationally, the City of London’s reputation as been damaged by a succession of scandals, including rate-rigging scandal at Barclays, admissions of money-laundering at HSBC, catastrophic systems failures at RBS and widespread mis-selling of products to households and businesses.

Yorkshire Building Society chief executive Chris Pilling told me that the banking industry is lurching from “one unbelievable set of announcements to another”.

“Just when you think the trust can’t get any lower, it’s the crisis that keeps on giving,” he 
said.

Good for mutuals, but not so good for the banks, which are significant employers and big contributors to regional prosperity.

David Wootton, the Bradford-born Lord Mayor of the City of London, told me that the scandals engulfing the capital’s banks could damage Yorkshire’s financial services industry.

“Because of the interconnectedness of the financial sector in Yorkshire with the City, if the City loses so will Yorkshire,” he said.

We know the challenges. What of the solutions?

The first good idea at our Business Club event came from Barry Dodd, the manufacturer who chairs York, North Yorkshire and East Riding Local Enterprise Partnership. He said: “The future of the financial services sector is very simple.

“We have got to get businesses to grow.

“ If they don’t grow, you don’t have a successful future. The task of the whole financial services community in Leeds is to come up with the ethos that if you have a half-good idea then the financial community can get it funded.”

In response, John Hooper, executive director of Yorkshire Bank, agreed, but said the idea would need collaboration to work.

He added: “What we need to be able to do is build networks between people who can provide various forms of risk to companies throughout their life.

“It will need various slices of risk takers coming to the table.”

The second good idea came from Martin Allison, the PwC consultant and former head of international banking services at RBS.

He said: “University research is radically needed to understand where we are, to environmentally scan and find out constantly where the next growth areas are. I encourage the universities to do it together and do it for free.

“We have pockets of expertise locally, but they are in silos.”

Mr Allison added: “Find the entrepreneurs and game changers in financial services and surround them with personal, academic, funding and professional support.”

I asked the White Rose University Consortium to respond.

CEO Julian White said: “I would certainly support a role for research in the identification of growth areas and in bringing academics closer to the business base to assist in innovation and business development.

“This would be across many sectors, not just financial services.

“One would have hoped that the recent bids to host the Green Investment Bank, would have based their claims on the size of the region’s financial services industry on sound research!”

Not sound enough clearly, because Edinburgh won the bid.

Moving on, the third good idea came from Mr Allison and involves bringing in market-lading expertise from Yorkshire’s clever little digital companies.

He said: “Financial services businesses must continually learn about computing and technological advances in order to survive and compete.”

John Hooper warned that it is “extraordinarily difficult” to bridge the gap between what consumers want – mobile banking – and security.

His institution gets between 40-80 cyber attacks every week. Challenging, but not insurmountable.

To conclude, Yorkshire must build a network of finance providers to work together, rather than in isolation, to fund businesses with growth
potential.

It needs some sound academic research to map the scale of the industry, post financial crisis, to identify strengths and weaknesses.

Financial services industry leaders need to get together with counterparts in the digital sector to see where they can help each other out. Simple.