Over the last decade, UK banks have seen significant changes to the environment in which they operate, including the fallout from the Covid-19 pandemic, the UK’s exit from the EU, and broader changes in the UK financial sector.

Brexit and the Covid-19 pandemic

At the start of 2021, scepticism still surrounded the Brexit deal — particularly regarding the regulation of UK financial services. After years of no change, in 2016, the Bank of England lowered the base rate (its official borrowing rate) to 0.25% due to the EU referendum to stave off a recession. Since then, the base rate has increased, but only up to 0.75%.

Currently, due to the pandemic, it’s at its lowest rate in history, just 0.1%. So, the mortgage, loan, and savings rates will also likely be driven by the pandemic more than Brexit.

Although Brexit had been expected, the country and the whole world certainly wasn’t prepared for coronavirus. Since the first lockdown in March 2020, the situation has forced individuals and businesses to change how they interact with banks.

Yet, while there’s no escaping the fact that Covid-19 has caused unprecedented disruption to the industry, today’s banking customers were already demanding ‘more choices and options. These include greater personalisation, faster solutions, self-service, and the ability to conduct transactions anytime and anywhere.

However, the pandemic has only accelerated these trends, forcing financial institutions to adopt traditional banking models to transform and find new ways to deliver their services virtually and digitally.

So, rather than trying to second-guess economic shifts, the safest approach may be to focus on your finances, which are more controllable and predictable. Plan for the worst; hope for the best. Ensure you have the cheapest mortgage and the top savings accounts and do a money makeover.

Data security and privacy

With more and more data gathering and analysing comes greater risks around the security of people’s information. Cyber-risk was cited as the biggest threat to finance behind Brexit and’ UK political risks’ in the Bank of England’s Systemic Risk Survey. Machine learning and Artificial Intelligence are expected to become widespread in financial services, increasing those hazards.

How banks use customers’ data will become even more critical, as will the responsible and legal use of algorithms. Banks need to ensure peoples’ information security. Since banks gather and use most of the data pulled by businesses today, they must begin to take a leading role in crafting privacy policy.

You should also take care of your personal information and ensure you don’t give more than required or don’t fall for phishing scams. If you need more information regarding your personal finances, you can also contact me.Dr. Patrick Tristram Bijou