The UK financial services industry is preparing for a significant shift in 2026, with leaders anticipating greater investment in national defense amid converging priorities of financial stability and national security. According to KPMG‘s latest UK Financial Services Sentiment survey, nearly two-thirds (65%) of sector leaders expect increased investment into UK defense over the next 12 months, including 27% who predict it will rise “much more.”
The survey, conducted among over 150 director-level and above executives between 21 November and 2 December 2025, highlights how global instability, cyber threats, and geopolitical fragmentation are driving a structural reset in risk management and commercial decision-making.
National security is no longer viewed as a distant government concern but as a core balance-sheet issue intertwined with the sector’s resilience and growth prospects.
Key findings reveal that 38% of leaders consider “greater financial sector investment in national security” the most crucial factor for safeguarding financial stability in 2026.
This tops other priorities, such as preserving central bank independence in tackling inflation (36%) and stronger regulatory cooperation between the UK and US (35%).
Additional concerns include improving bond market structure (29%), regulating private credit (29%), and curbing government deficits (25%).
Top perceived threats to business in 2026 include weak economic growth (23%), AI-enabled fraud (16%), and gaps in cyber resilience (15%).
In response, firms are prioritising investments to bolster defences: 43% plan to focus on technology, 41% on artificial intelligence, and 36% on cyber resilience measures.
The survey also shows a balanced approach to strategic priorities, with 59% of firms intending to prioritize growth and resilience equally in 2026.
This varies by sub-sector: 78% of insurers, 64% of banks, and 41% of asset and wealth managers adopt this dual focus.
Overall, 30% lean towards growth, while 11% emphasize resilience.
Karim Haji, Global and UK Head of Financial Services at KPMG, commented:
“Financial services is entering a new era where resilience is no longer a defensive strategy – it is the foundation of growth. National security, defense investment and geopolitical stability are now being treated as balance-sheet issues, not just government policy concerns.”
He added that the rapid expansion of private credit and non-bank finance represents potential vulnerabilities, given their relative lack of transparency and stress-testing compared to traditional systems.
This evolving mindset reflects broader structural changes, where boards are urged to enhance governance, scenario planning, and rapid response capabilities.
As geopolitical risks intensify, the sector’s increased defense engagement signals a proactive stance to protect both national interests and financial ecosystems.
The KPMG survey underscores a pivotal moment for UK financial services, blending defensive robustness with growth in an uncertain environment.