London finds a new sense of balance

Sushil Saluja, head of Accenture's financial services operating group in the UK, believes the City will respond innovatively to new post-credit crunch realities.

by Matthew Gwyther
Last Updated: 09 Oct 2013

Matthew Gwyther: There is a broad perception that the difficulties we find ourselves in as a nation are partly down to the institution of the City and its dominance within our economy. Some adjustments surely have to be made. You have long experience of the workings of the City. Do you think it will continue to thrive in the post-crisis era?

Sushil Saluja: I started working in the City around the time of the Big Bang in the late 1980s, when the London Stock Exchange was de-regulated. A huge amount of change has gone on since, but the constants remain the same. Indeed, if you go right back to the City's origins - the famous 18th-century coffee houses - the fundamentals that helped make London successful as a financial centre are still present today. I think there are three key areas: innovation, talent and trust.

London is a place where it's easy to do business and where people are creative. It knows how to pull together many different strands of business: providing greater access to capital, funding innovation, opening up new industries and creating jobs. In addition, I think the educational system continues to be a major advantage for London to attract talented people. Those who choose to relocate and bring their families here have access to world-class education. This coupled with the language and the time-zone advantage means that London has continued to be an attractive place for people to live, work and do business.

MG Even so, the last two years have been a bit bumpy, to say the least. Where do we go from here?

SS It is clear that there are lessons to be learnt, both internationally and domestically, from the events of the past couple of years. It will take some time for the country as a whole to digest some of those lessons and respond to them. However, there is a danger that issues such as governance will be addressed in isolation, rather than in the context of what is occurring globally, such as the macroeconomic environment and the structural shift in flows of capital from West to East.

And the question remains as to what role the UK wants to play in the global financial services industry and in shaping the regulatory environment on a broader European scale. The UK can now take a view on how to engage with Europe in the future and the extent to which it wants to help shape the EU's direction and agenda. This is especially true in financial services.

MG How would you judge the mood in the City at the moment? Do you think there is a sense of contrition there?

SS Ultimately, there is a sense of quiet optimism that at a broader economic level some of the most difficult times are behind us, and that things are looking more positive. A lot of water has flowed under the bridge; I think there is a bit of 'wait and see': some directions are clear; some things need to be worked through.

MG Do you think the current government is City-friendly? Its members made some harsh comments while in opposition.

SS The intent of the government to help the UK balance its budget deficit and maximise the country's position both at a European and global level is very sound. The fundamentals of what make the UK great, including financial services - such as education, talent, our national entrepreneurial flair and innovation - remain critical, and I am pleased to see the continued focus on these things. Clearly, the specifics and implications of some actions need to be worked through, and that is where the 'wait and see' comes from.

MG Do you think there is a risk that the City's image has been tarnished and that younger people coming in will not be of as high a quality as they were before?

SS There are a great number of talented people working in the financial services industry and I believe there will continue to be opportunities for people to develop their careers in financial services. More broadly, I think a strong UK economy is the most important thing for the people who live and work in Britain and that requires a certain level of balance. It is more about allowing each of the major sectors of the UK to flourish than it is about having strong competition between the different sectors.

MG Clearly, leading up to 2008, there was a greater and greater appetite for risk, which then proved an appetite too far. Has that now been reined in?

SS Risk has moved very much to the front of the agenda. There is greater understanding of the level of complexity that exists in the financial services industry today. I think that complexity has increased significantly in the past five or 10 years, and it has really become evident more recently that this level of complexity needs to be reflected in the aggregated level of risk capability. Banks are very mindful of the errors that led to the crisis and the damage to trust. We now need to get that in balance; risk is an area that most institutions are looking at much more rigorously and holistically than before; that is a good thing.

It is about balance. You have to be careful in all risks, but that is not to say you have to shy away from risks; it is about finding a reasonable balance. Of course, one person's judgment of a reasonable balance may not be another's. That applies to financial services as well as other walks of life. If we look back to the origins of what made London a driving force in the financial services industry in the 18th century, it is those who took a balanced view of risk and were prepared to be creative in the coffee shops who will ultimately have been very successful. Similarly, at Accenture, we believe the same is true today for financial services companies in the City which seek to become high-performance businesses.

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