Banks across the world upped their spending on consultants by 8.4 per cent last year as they tried to navigate changing regulation and fight off the challenge from more nimble, newer competitors.
Globally banks spent $13.6bn (£10.2bn) on consultants, a rise from the $12.5bn spent during the year before, according to data from Source Global Research, far above the 1.1 per cent inflation seen in the rich member nations of the Organisation for Economic Cooperation and Development.
The broader financial services sector increased spending on consultants by 8.3 per cent.
The rise in spending by the financial sector matches that of the broader industry for management consultants, who raked in $133bn in fees in 2016, Source said.
Separate figures from the Management Consulting Association, a professional body, showed growth across the UK industry of 4.76 per cent in 2016, while fees per consultant rose by £10,000. Financial services accounted for the largest share of consulting fee income, at 29 per cent.
The US, the German-speaking European nations and the UK remained the three largest consultancy spenders.
Another driver of increased consultancy spending was the challenge posed by smaller fintech players targeting more profitable niches of the industry. Banks have been forced to invest heavily in digital technology to stay ahead of smaller firms who threaten to disrupt their business model.
Zoe Stumpf, Source Global Research head analyst, said: “With these challengers working in a more agile manner, and with customer propositions much more suited to the digital age, they represent both a threat and an opportunity for banks.”
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