Nine in 10 (89%) financial services firms have rated their performance as "good" over the last 12 months, with the same proportion stating they are confident they will perform well over the next year.

Research by Consulting at Davies found that, in a survey of 501 senior decision makers at UK financial services businesses, two in five (39%) ranked their performance as "very good" in the past year.

Despite this, the firm said that economic turbulence remains a "notable concern", with 44% of decision makers listing this as one of their worries moving forward.

Other challenges include regulatory compliance (43%) and cybersecurity threats (38%).

Davies said that with more economic turbulence expected as the General Election approaches on 4 July, the challenge is likely to become more pronounced over the coming months.

Furthermore, two thirds (67%) of UK financial services firms said interest rate hikes have had a "significant impact" on their offering since the start of 2022, while 66% said the same about the cost-of-living crisis.

Chief executive officer at Davies, Pino Vallejo, said: "Given the challenging economic climate that has defined the past three years, it is positive to see that the UK’s financial services sector is full of confidence. Fuelled by strong performances over the past year, the research clearly highlights that most businesses are striving for more growth in the next 12 months.

"But there is also evidence of some caution, not least in navigating further economic challenges, with the general election likely to prompt more turbulence over the summer months that businesses will have to navigate carefully."

Chief strategy officer at Consulting at Davies, Ashley Sheen, added: "The past three years have seen us move from a persistent, near-zero rate environment to one with the prospect of meaningful interest rates prevailing for at least the medium term. This has forced financial services businesses to adapt.

"While it is reassuring to see many optimistic about the year ahead, further innovation will be required to remain competitive. Customers continue to demand solutions that reflect the prevailing economic climate and embrace emerging technology. This is certainly not a time for complacency."

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