Home to 1, 800 companies and employing some 28,000 people the financial services sector makes a significant contribution to the Welsh economy. The sector currently generates 5% of Welsh GDP (Source: ABI 2002) and is highlighted in The Welsh Assembly Government's economic development strategy, "A Winning Wales," as a key sector for development.
Banking and building societies dominate the sector in Wales, employing 62% of the financial services workforce, whilst insurance and pensions companies employ 21%, leaving 17% in operation and supervision.
Banking & Building Societies
Banking - retail & wholesale: Building Societies; Investment & unit trust companies; venture capital
Insurance & Pension Funding
Insurance companies - life and general; Pension companies
Operation & Supervision
Insurance brokers; Independent Financial Advisors; Fund Managers; Asset Managers; Stockbrokers; Actuaries; Loss Adjustors; Risk Management; Exchanges; Wealth management companies
UK and global players invest and reinvest in Wales
Since the early 1990s a number of UK and global financial services companies have set up and expanded operations in Wales. These include: HBOS, Lloyds TSB, HSBC, Zurich, GMAC, GE and Legal & General.
“We were firmly in favour of setting up an operation in Wales. The Lloyds TSB Group had acquired a very dynamic business in Cardiff, which had the right people and the right expertise to drive the new business forward. In addition to this the Cardiff-based company had developed a highly successful business model which we were eager to replicate across all Black Horse operations.” Ian O’Hare, head of corporate communications, Lloyds TSB Asset Finance.
2004 has seen global financial services company, ING Direct announce the creation of 300 jobs in Cardiff.
Home-grown success
Home-grown companies such as The Principality Building Society, Julian Hodge Bank, Admiral Insurance and Thomas, Carroll have also experienced significant growth in recent years.
Admiral Insurance began trading in 1993 at a site in Cardiff with 57 members of staff. Twelve years later, it has 1,700 people across two sites in Cardiff and Swansea. Admiral now has over 1 million customers and a reported turnover of £548 million in 2004.
Many smaller niche players within the sector are also demonstrating strong growth, their focus being on developing innovative products to serve the needs of specific segments of the market.
Composite Legal Expenses, for example, offers a wide range of innovative and bespoke pre-paid and after the event solutions for the legal, insurance broking and company markets. Based in Cardiff the firm has increased its pre-tax profits by over 500% last year to £2.13 million (turnover increased from £2.8 million in 2001 to £14 million in 2002).
“We have set up a centre of excellence in legal expenses insurance which is unique in the UK,” says John Mullin, managing director, composite Legal Expenses. “We need extremely talented, intelligent individuals and have a team of specialists in Cardiff, many of whom have over twenty years experience in the industry, who work hard to introduce technological innovation to keep pace with changes in the marketplace.”
A growing range of services
Growing inward investment, together with indigenous company expansions, is leading to an increase in the breadth of services offered by, and functions undertaken in, financial services companies located in Wales.
Legal & General opened its first office in Cardiff in 1996 with financial and logistical support from the WDA. Initially a contact centre employing 30 the operation expanding rapidly and now accommodates L&G’s UK service operations centre, its retail investment business, its direct business, and its medical underwriting centre. With 2,000 employees it is the company’s largest operation in the UK.
The sector has witnessed an increase in internet-based companies with businesses such as Moneysupermarket.com, InsureYourMotor.com, and Creditsafe.com establishing operations in Wales.
Cato Syversen, managing director of Creditsafe.com, maintains that “Moving to Wales has been the best strategic move Creditsafe.com has ever made.”
Building financial services on stable foundations
Companies in the financial services sector are particularly proud of their staff retention levels and attribute this to factors such as the challenging nature of the work, company culture, and high levels of motivation and commitment.
Mark Winlow, managing director of Zurich explains how the low attrition rates in Cardiff have had a positive impact on business performance: “Low attrition rates mean that morale is high, and our training and development costs are considerably reduced. Plus it improves the quality of our work. Our customers can be sure they’re dealing with people with experience. Our employees can establish real relationships with our clients, which gives us a considerable competitive edge.”
Financial services companies report a high correlation between staff retention, productivity, efficiency and, ultimately, profitability.
Collaboration and partnership fuels expansion
A cluster of support services has grown in tandem with the financial services sector in Wales which has led to several mutually beneficial partnership arrangements. Specialist software company, Target, for example, has worked together with home loan provider, FIRSTPLUS, to develop efficient processes to solve business issues.
Increasing academic collaboration is also yielding positive results for companies in the sector.
Legal & General’s medical underwriting team, which is based in Cardiff, is the largest in the UK, and is continuing to expand and develop through the company’s partnership with Cardiff University. The University now offers an Underwriting Academy tailored to meet the needs of the company. This has allowed Legal & General to create a fast track course to train new underwriters and expand the skills and knowledge of its existing underwriters.
Wales - providing the right connections for financial services businesses
The WDA has strong relationships with many financial services companies and has helped them to achieve their objectives. Dedicated account managers work with companies to provide advice, guidance and 'signposting' on a range of business issues such as marketing, strategy development, identifying suitable property, sources of expertise and comprehensive funding advice.
“I expect our relationship with the WDA will continue to develop. The beauty of Wales is that so many decision makers are available in one place and the business support mechanisms are so well developed and operate in a joined up way. We know that when we are ready to realise an opportunity to develop a new subsidiary business, the WDA has the right experience and expertise to assist us,” Peter Griffiths, chief executive, Principality Building Society.
