The Current Account: End of Year Round-Up

2023-12-18 |  Chirag Soree

As the year comes to an end, in keeping with tradition, it's time to reflect on the predictions we made this time last year and to look at the key themes that will shape our industry in 2024 and beyond.

We hope you find the insights engaging and wish you a joyful and safe holiday season from everyone here at PEN.

A brief look back at 2023…

We did well on the predictions last year, which is great….but that puts the pressure on for this year! All our predictions hit the mark and we have provided a summary of this below:  

  • Macro-economic environment: We did not expect a deep recession or high unemployment, which is the case. The UK has not gone into recession and the unemployment rate is estimated to be 0.5 percentage points higher than last year.
  • Market factors: Interest rates have remained higher than the historically low figures we have been used to. 
  • Housing Market: We expected a shaving on the value of people’s house prices, but not a significant level. Britain’s biggest mortgage lender forecasts a 5% drop over this year, which is clearly a decline but not significant. 
  • Customer movements: Whilst switching volumes have increased, customers have continued to collectively display a high degree of inertia.
  • Big Bang 2.2 Proposals: We said that the reforms the government announced would have little impact on the sector in 2023. Large-scale structural changes often take time to manifest their full effects, and immediate impacts might be limited.
  • Innovation spend and outsourcing: We saw innovation spend reduce to target cost saving, which included outsourcing non-core activities. 
  • Digital-first: Consumers continued to demand digitisation of services, and banks have definitely done the same with many of the big players significantly reducing their branch footprint.
  • AI & Robotics: There has certainly been increased investment in robotics and AI, and trend that will no doubt continue.
  • Regulating consumer tech: The move towards becoming a cashless society has continued as the volume of contactless payments has grown, along with talks of the Digital Pound. The FCA continued to monitor operational resilience in payments, retail services, and infrastructure, with ongoing concerns around Big Tech and AI, however, no significant new regulation has come in yet.
  • Green products: The market for "green" products has grown, driven by more environmentally considerate behaviours. 
  • Consumer fairness: Consumer fairness has continued to drive change across financial services, with Consumer Duty being the main driver behind this. Through our conversations and work with clients all have found it a struggle to improve consumer fairness alongside delivering other change projects, regulatory change requirements, and ongoing additional Consumer Duty guidance being shared by the FCA.

What are our predictions for 2024?

Here are our top predictions for 2024, and we will revisit them a year from now to see how we fared…

Macro-economic environment 

We predict anaemic growth for the UK whilst the wider world economy picks up at a slightly faster rate. Interest rates will start to fall elsewhere, particularly in the US, long before they come down in UK (where we expect cuts unless inflation remains stubbornly high).

Market factors 

As UK rates plateau, with a vote to reduce the rate in small increments towards the end of the year, the mortgage market will become marginally more competitive again but not back to the levels of a couple of years ago.

A cost-cutting environment

Cost reduction will be a continuing theme next year with some turning to AI to help. Large FIs will continue to make strong returns, but we see growing pressure for smaller cap FIs: some may be pushed to the limit and even have to carry out a distressed transaction.

Operating Models

Given the macro-economic forecast, the pressure on FIs to reduce costs and become more efficient will not relent, requiring further examination and development of operating models – the winners will be those that are able to balance efficiency and agility whilst not eroding employee and customer experience.


Financial institutions’ ability to move to a real omni-channel strategy will be enhanced by the introduction of generative AI, greatly enhancing limited offerings e.g., customer service chatbots. Use of AI will also broaden out in non-customer facing areas.

AI regulation

With the boom of AI, regulators will need to start thinking about how they deal with it. Financial institutions will come under increasing scrutiny for their AI use and one or two could face repercussions for moving too fast without adequate preparation, such as unauthorised use of customer data.


The march towards digitisation will continue with more bank branch closures and remaining branches evolving to reflect a changing new purpose. 

Operational Resilience 

The focus of recent years on resilience will continue and even be amplified by DORA as it comes into near-term focus. Despite the ongoing shift to digitising all offerings, we’ll see more headlines about banks struggling to prevent service outages, and as a result, denting customer confidence.

Consumer Duty

In aggregate, Retail FIs will be found wanting in their response to Consumer Duty and the regulators will apply further pressure through H2 and beyond, either sharing further guidance or giving penalties in a few high-profile cases. On the positive side, FIs will invest in developing their customer experience capabilities as businesses move away from "being compliant with Consumer Duty" towards "being customer-centric".


And going out on a bit of a limb…The threat of a Chinese invasion of Taiwan in 2025 will rock the markets at the end of the year - UK banks are the largest foreign lenders to China, with claims on a guarantor basis of about $238bn (£208bn). HSBC and Standard Chartered have the most immediate exposure.

Thanks for reading our Current Account round up of 2023! If you are interested in hearing more about any of the topics discussed here, feel free to connect with me on LinkedIn, or contact me via our website.

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