AS I SEE IT: A new five-year strategy from SFE was notable for what it failed to mention, says TERRY MURDEN
Over the last two decades the famous institutions that once dominated Scotland’s financial services sector have been steadily gobbled up, turned into brands or just discarded by their owners. The only remaining independents of any scale are the asset manager Baillie Gifford, Royal Bank of Scotland – which has cravenly rebranded itself NatWest – and Standard Life Aberdeen, soon to be known by its silly new moniker Abrdn (choose from Aberdeen, Abradon or A Burden).
As I’ve alluded to in a previous column, this latter rebrand may be short-lived if the financial Goliaths overseas recognise a prize worth having and mount a bid for a company that is now half the value of just three years ago when Standard Life and Aberdeen Asset Management promised bigger things emerging from their merger.
Not only has the Scottish sector’s status been eroded over the years, its participants have been too willing to let it happen. One company after another – Scottish Amicable, Scottish Equitable, Scottish Life and Bank of Scotland – has fallen into the arms of another. Clydesdale Bank has morphed into Virgin Money, with much of its operations on Tyneside while Maven Capital Partners this week became the latest to be acquired. Ironically, and setting aside the Standard Life-Aberdeen merger, the only player of any note to succeed in the role of aggressor was RBS. And look what happened there.
This state of affairs is more serious than some might have us believe. With no sign of a predatory instinct north of the border, we are left with companies content to manage decline or take orders from afar. When Stephen Bird, CEO at SLA, isn’t paying marketing people to dream up a much-ridiculed rebrand he’s disposing of businesses in what he says will lead to a more agile and relevant business. Let’s hope he succeeds.
Surprisingly, none of these trends were mentioned in the five-year strategy just published by the sector’s umbrella body, Scottish Financial Enterprise which chose instead to fill a 16-page document with predictable statements about collaboration, diversity and hitting net zero (hopefully emissions, and not the future size of the sector). These are the buzzwords that government ministers like to hear, particularly as the country awaits the world’s green giants for a big conversation about climate change.
It is perfectly reasonable for SFE to be considering the bigger picture and it should be applauded for setting out plans to share in the wider climate goals and to underpin its own future by broadening the sector’s appeal to customers and the next generation of recruits. Big ticks in those boxes.
But as with all these strategies we’re getting – such as Scottish Enterprise’s recently-published green business plan – they’re in danger of taking their eye off the ball. The bottom line – both metaphorically and literally – is that financial services exist to make money. It’s about capitalism and creating wealth. There was little reference in the strategy about either, and only a passing reference to that new kid on the block: fintech which is injecting innovative processes into the system. But where is the sense of ambition? The desire to create a new generation of financial giants?
A significant omission was what might be regarded as the elephant in the room. While SFE was getting plaudits from government minister Ivan McKee for this five-year outlook there was no reference to where Mr McKee wants to see Scotland over that time frame.
The constitution got no mention, because SFE will declare itself apolitical. But a five-year strategy should surely put in train a plan to address the issues that surround it. What role would the financial services sector play in developing monetary policy, creating a new currency, a platform for capital markets, the functioning of a new regulator?
There is a growing call for more information around these subjects and SFE might be expected to set out how it sees the sector making a contribution.
Terry Murden formerly held senior positions at The Sunday Times, The Scotsman, Scotland on Sunday and The Northern Echo and is now editor of Daily Business