Investment in cyber security to tackle growing risk is now an investment priority for nearly three quarters (70 per cent) of UK banks, according to research from Lloyds Bank.

A sentiment survey for the lender canvassed the views of more than 100 senior decision-makers at UK financial services firms - from global banks and insurers to intermediaries, investors and asset managers - finding that impact of Brexit continues to weigh heavily on optimism about UK economic growth.

The three most significant risks cited by respondents remained unchanged from last year’s survey, with the UK’s departure from the EU top (58 per cent), followed by economic uncertainty (36 per cent) and new regulation (31 per cent).

But the risk posed by cyber crime (29 per cent) leapt from eighth place to fourth in the last year, as the rate and complexity of attacks targeting UK financial institutions increased.

Last year 46 per cent of respondents said one of their firm’s top three technology investment strategies for 2018 was to improve cyber security, closely behind improving customer satisfaction (49 per cent) and reducing operating costs (48 per cent).

In addition, with Brexit-related disruption looming large, the majority of senior executives were now less optimistic about the future of the financial services industry than they were 12 months ago, with the number of firms expecting domestic growth to slow over the next year doubling to 58 per cent.

However, despite these concerns, two fifths of firms still expect their own revenues to increase, with only 17 per cent seeing income falling in next year.

More than half of firms felt they were prepared for the UK’s departure from the EU, with 59 per cent stating they are ready for a ‘no deal’ Brexit, with little or no dependency on a transition period and no further extension.

The remainder of firms surveyed were dependent to some extent on a transition period to complete their contingency planning, with almost a third (29 per cent) stating that they have a limited dependency and 12 per cent saying that they have a significant dependency.

Robina Barker Bennett, managing director, head of financial institutions at Lloyds Bank Commercial Banking, said: “In 2019, firms are arguably more dependent than ever on technology – with this rapid advancement, the risks from cyber crime are increasing, placing extra pressure on financial institutions to change the way they operate.

“Against a backdrop of on-going global economic turbulence, it is unsurprising that sentiment among financial institutions towards the sector and the wider economy is lower than in previous years. That said, the responses to this survey show the sector’s resilience during difficult times and it is especially encouraging to see that firms plan to continue investing in the UK.”

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