Islands face questions over future of finance

Finance professionals and experts say they are questioning the future of the industries in the Channel Islands amid global shifts.

Guernsey has been described as "standing on a burning platform", with a new report warning about the risk of "becoming too comfortable".

In Jersey, the government has set out its plan to boost the finance industry, as one expert said the island was "slugging it out" with emerging competitors.

In both islands there is an acknowledgement more needs to be done to embrace an increasingly digital financial landscape.

A recent innovation report in Guernsey cites AI adoption, geopolitical tension and a "creaking financial system" as some of the biggest questions facing the island.

Dan Wood and Alex Bezuidenhout are the co-founders of INSO, the think tank behind the report. They warn Guernsey's future could be "dire if not acted upon", with the island being at an "inflection point".

Wood stresses the island has evolved before and can do so again.

"The island's had to change its industries, stay relevant and make sure it can look after itself," he said.

Wood said Guernsey was at risk of becoming a "wealthy retirement place" and needed a "proactive stance" towards innovation.

The report, which had input from 45 industry leaders, makes the case for a deeper foray into new digital finance markets, as well as the need to address housing and residency limitations.

Katie Inder, a businesswoman and Innovate Guernsey board member, believes Guernsey is standing on "burning platform" but that it could be a catalyst for opportunity.

"We should use the worry as the fire under us to get started and actually start doing things," she said.

Inder said Guernsey needed to look to the future and examine how it could "evolve and transform, up skill and be a really exciting place to come and live and work."

Paul Gorman, chief executive of Bank Aston, contributed to the report. He said it put forward "interesting observations" such as embracing financial technology, like the trading of digital assets.

"That doesn't have that much of an impact on the man in the street day to day" Gorman said, but it would attract "lots of different types of financial service business".

Guernsey Financial Services Commission (GFSC) said it was working "to support the positioning of the Bailiwick as a trusted, agile and forward-thinking jurisdiction for digital finance".

In Jersey, similar concern about the future of its flagship industry has led the government to publish an action plan called Time to Win, aimed at "re-establishing momentum" in the finance sector.

Chief Minister Lyndon Farnham described the industry as "a cornerstone of our island's prosperity" and said that strengthening it was "essential to securing our future".

It includes recommendations from an independent panel of experts, chaired by Sir Howard Davies, a former boss of Natwest.

Davies said in the past it had been considered a "privilege to do business in Jersey", but that global shifts and increasing competition meant the island was now "slugging it out" with a lot of other centres across the world.

He pointed to Jersey's fall in international industry rankings and said that the island "ought to be able to be agile" but that it often seemed "confused and confusing" to foreign firms.

He said many of the traditional positives about Jersey remained, and that it was in the "top division" of offshore centres, but that it had "fallen behind" when it comes to new digital finance and AI.

Joe Moynihan, Jersey Finance chief executive, said he "doesn't lose sleep" over international rankings and questioned their usefulness based on their methodology.

"I have never in all my years in Jersey had anybody say to me I'm not doing business with you because you've dropped in the rankings," he said.

He said islanders needed to "realise that we are in a competitive marketplace".

He said the suggestion the island was not doing enough on emerging financial technologies was "unfair", and they were working to capitalise on those opportunities.

Moynihan said the new action plan had "reassured the industry" that Jersey was "serious about finance".

Some businesses think the island needs to move faster on financial technology, AI and all things digital.

Lee Birkett, chief executive of Moneybrain, said embracing modern technology was essential, pointing to global unrest as an indicator that traditional attitudes to managing money were shifting.

"A paper dollar no longer washes and certainly not a Jersey pound...the old school method of heavy gold or even paper... is no longer viable."

Birkett said Jersey was falling behind in regard to digital adoption "by choice" and that Time to Win would hopefully address that.

He said: "They've got quite a bit of work to do but they need to do it urgently and now."

"Everybody with wealth now uses their mobile phone - it's quite frankly laughable, if you don't believe that having a fintech app is important for your economy."

In the Time to Win report, Jersey's government acknowledges that international clients "expect digital-first processes" and there is a need to "digitalise at pace".

Jersey's financial regulator, the JFSC, said its approach to digital assets would "continue to evolve in line with international standards" and that it was a "key growth opportunity for the island".

However, it added "strong regulation underpins access to global markets and attracts the businesses Jersey wants".

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