Nearly two-thirds (65%) of financial services leaders expect the sector to invest more into UK defence in 2026, with more than a quarter (27%) anticipating investment will rise “much more” over the next 12 months, according to KPMG’s UK Financial Services Sentiment survey. *
The quarterly poll, which tracks sentiment among more than 150 leaders in the sector, also found that most firms (59%) say they will prioritise growth and resilience equally in 2026. 78% of insurers are balancing growth and resilience, followed by 64% of banks and 41% of asset and wealth managers. **
The findings reflect a structural change in how the sector is defining risk and opportunity, as global instability, cyber threats and geopolitical fragmentation increasingly shape commercial decision-making.
National security and financial stability converge
KPMG asked leaders what they consider to be most crucial to safeguarding financial stability in 2026, the most prevalent response was ‘greater financial sector investment in national security’ (38%). Followed by:
- Preserving central bank independence in tackling inflation (36%)
- Stronger regulatory cooperation between the UK and US (35%)
- Improving bond market structure (29%)
- Regulation and oversight of private credit (29%)
- Curbing government deficits (25%)
- Advancing internationally agreed prudential standards such as Basel 3 (23%)
- Greater scrutiny of non-bank financial institutions (22%)
- Regulation of stablecoins and digital assets (21%)
“These findings point to a growing recognition that national security, geopolitical alignment and market integrity are now inseparable from the stability of the finance sector”, commented Karim Haji, Global and UK Head of Financial Services at KPMG. “What also stands out is the growing focus on private credit and non-bank finance as potential fault lines in a crisis. These markets have expanded rapidly and now sit at the centre of corporate funding, yet they are still less transparent and less tested in extreme stress than the traditional finance system.”
The research also found that firms now see a broad range of structural risks as threats to business next year. The top threats cited for 2026 are weak economic growth (23%), AI-enabled fraud (16%) and cyber resilience gaps (15%).
How firms are strengthening resilience for geopolitical and cyber risk
We asked leaders what they will do differently in 2026 to strengthen resilience to major geopolitical events and cyber threats, firms are prioritising technology and security-related investment:
- 43% plan to invest in technology
- 41% in artificial intelligence
- 36% in cyber resilience
Karim concluded: “Financial services is entering a new era where resilience is no longer a defensive strategy - it is the foundation of growth. National security, defence investment and geopolitical stability are now being treated as balance-sheet issues, not just government policy concerns. What is striking is how clearly firms now link their own commercial future to the UK’s security, cyber capability and international regulatory alignment. This is not a short-term reaction to global uncertainty - it is a structural reset in how the sector plans, invests and grows.
“The challenge for firms is to ensure that resilience does not put the brakes on growth. Striking the right balance will require boards to invest not just in capital and controls, but in governance, scenario planning and the capability to respond at speed when shocks hit”.
