The prominence of Scotland within the UK financial services network is apparent, with 29% of respondents with ambitions for growth deciding to move from other UK locations to invest in Scotland.

The research – including in-depth surveys conducted with 21 leading financial services leaders with significant market share in the Scottish market – was carried out prior to COVID-19. It details the strengths of the Scottish financial services sector as well as its ability to secure new or expanded sector investment.

The power of attraction could extend beyond the UK with Scotland predicted to top the rankings for life satisfaction in 2021 compared to the other countries with notable financial centres in Europe, including the UK, the Netherlands, Ireland, Germany, France and Luxembourg.

Scotland has consistently improved its life satisfaction score, climbing from fourth in 2011 (behind Luxemburg, Ireland and the Netherlands) to second in 2016 (behind Luxemburg). This contrasts with the downward trend for France and London with the UK capital demonstrating the biggest decrease both recorded (between 2011 and 2016) and predicted (from 2011 to 2021).

Sue Dawe, head of financial services at EY in Scotland, said: “Markets are fluid and competition remains global with many different factors influencing decisions. Every financial hub is constantly being reviewed and Scotland has an extremely strong case to compete and be a top choice for relocation on an international scale.

“Highly skilled job opportunities and the relatively low cost of living contribute towards Scotland’s quality of life which is rated by both the individual and employers. It is an important factor to help boost the talent pool and propel the industry forward.”

Access to a skilled workforce is the most popular reason for financial services companies to operate in Scotland, with 81% of respondents stating this. Low attrition rates in Scotland were also referenced as a positive market feature, as tenure is typically four times longer than it is in the London financial services sector. Some respondents also commented on the strong work ethic and resilience of employees in Scotland.

Low set-up costs and good quality of life for employees ranked as the second and third main reasons for firms to choose to operate in Scotland, with 38% and 33% (respectively) of surveyed industry leaders listing these as attractive aspects.

Scotland’s financial services industry demonstrated strong growth prior to COVID-19, with 86% of respondents reporting an increase in their company’s headcount between 2014 and 2019. Most growth was in technology and digital roles, where 67% of respondents attributed headcount expansion to these areas.

Ms Dawe concluded: “Financial services will play an integral role post-COVID-19 as Scotland and the UK seek to strategically reflate the economy. Scotland has long been the home to a thriving financial services industry, so it comes as no surprise that organisations highly rate home-grown talent, operational value and a well-developed industry infrastructure. Scotland’s ability to attract, develop and retain talent will prove critical to the future success of the financial services sector. Ensuring we have the depth of skills required for future growth will need on-going collaboration within the industry, cross-sector and in partnership with governments.”

Philip Grant, Scottish Financial Enterprise chairman, added: “Scotland’s financial services sector recognises the vital economic role and societal responsibilities it has to customers, colleagues, the climate and our communities. Delivering on this has never been more important as we navigate the COVID-19 pandemic.

“We know from speaking to SFE members there are five key enabling priorities in supporting the economic recovery ahead – skills development, digital innovation, promoting the industry, sustainability and navigating geopolitical uncertainty. While the pandemic has adjusted the weighting, these priorities and the broad sentiment of our members are reinforced by the themes in this report by EY.

“Our sector, and indeed many others, will be forced to make difficult decisions in the months ahead as new challenges emerge. However, I firmly believe collaboration across our industry can make a positive difference to people’s lives and the communities in which we live – now and in the future. This demands our absolute focus, now more than ever.”