London loses title as world’s top financial hub to New York
Issues around Brexit have cost London its crown as the world’s leading financial centre, with New York taking the top position, according to the seventh annual Global Regulatory Outlook (GRO) report, published by New York-based consultancy Duff & Phelps.
The report, which surveys senior professionals in financial institutions across the world, found that respondents perceive New York as the world's pre-eminent financial centre, reclaiming the title from London as Brexit continues to cast a shadow of uncertainty over the UK economy.
The company found that 52 per cent of the respondents view New York as the world’s financial centre, a 10 per cent increase from 2018.
Now, only 36 per cent currently see London as the foremost global financial hub, a 17 per cent fall from last year.
Five year outlook
Looking ahead five years, respondents’ confidence in New York maintaining its place fell to 44 per cent and only 21 per cent of respondents said that London would be the world’s financial centre.
And 12 per cent of respondents said that Hong Kong would take the title by 2024, a significant increase from the three per cent who held this opinion in 2018.
“Whether located in traditional financial centres or not, the finance executives responsible for governance, risk management and compliance are grappling with significant threats arising from increasing obligations relating to the anti-money laundering programs, data protection and privacy, cybersecurity defences, whistleblowers and 'big data' and technology”, said Ken Joseph, Managing Director and Head of the Disputes Consulting practice at Duff & Phelps.
"These professionals confirmed in our survey that organisations are compelled to devote more and more resources to address compliance obligations and to navigate a regulatory environment that is complicated by a web of geo-political uncertainties, including trade tensions and Brexit."
The survey found that the most pressing issues facing the global financial community this year with respect to regulatory compliance continue to involve anti-money laundering (AML) and whistleblowing.
Technology also a factor
Technology and budgeting have also emerged as factors affecting firms’ compliance functions.
Other insights from the GRO survey indicated that:
- While most financial firms rated themselves as being effective at AML, 30% rate at least one of their AML components as being either ‘not at all effective’ or only ‘somewhat effective’;
- Nearly a quarter of firms gave themselves low marks in their internal audit of AML risk, an essential element of AML risk management;
Cyber Security and Data Management
- Three of the top four technology concerns for firms involve data: developing a holistic data strategy, having accurate and up-to-date data, and then having adequate cybersecurity to protect that data;
- While a vast majority of respondents agreed that whistleblowing programs should be mandatory, a quarter of the firms have yet to establish a whistleblower program.
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