Deal activity is picking up in UK investment banking, but the recovery looks different from what came before. Global dealmaking has rebounded, but capital is becoming harder to retain as it shifts into private markets and towards New York. Add rapid advances in AI and a run of new regulation, and there’s a lot for any firm to track. Here are nine trends shaping the industry, and where each one is heading.
Key Takeaways
- Public markets are shrinking as capital flows towards rival financial centres and into private hands, changing where banks earn their fees.
- For all the UK’s deregulation to win back business, from ring-fencing to the senior-manager regime, Basel 3.1 is a reminder that capital rules are tightening too.
- AI now handles routine banking tasks, from screening deals to drafting pitch materials.
- Cyberattacks are increasingly targeting the confidential deal information banks hold.
- Whatever the trend, acting on it requires connected, dependable technology.
Understanding the Current Investment Banking Landscape
Globally, investment banking is booming again. After the deal drought of 2022 and 2023, mergers and acquisitions have come roaring back, with JPMorgan counting $3.2 trillion (£2.3 trillion) of M&A worldwide in the first half of 2026 alone. Most of that activity is landing in the US, which now takes 60% of global investment banking fees. London is competing for its share of a strong market, but it’s been on the back foot.
The UK’s recovery has come later and more slowly. High interest rates and geopolitical shocks, from trade-tariff turmoil to conflict in the Middle East, left borrowers cautious. London’s IPO market went quiet enough to raise real questions about its appeal as a listing destination, with some companies delisting or moving to New York. That’s now changing as inflation eases and borrowing costs come down from their peak. A sweeping overhaul of listing rules has also stripped out hurdles that once deterred companies from going public. Seven firms listed on the London Stock Exchange in the first half of 2026, raised £577 million between them, more than triple the amount raised a year earlier, but as EY sees it, the question for issuers is shifting from “if” to “when”.
Beyond IPO activity, capital itself is on the move. A growing share of it is bypassing public markets for private ones, particularly private credit, where non-bank lenders provide financing that once would have come from traditional banks. The Bank of England puts global private credit alone at more than $2.5 trillion (£1.8 trillion), with the UK second only to the US. Meanwhile, investors are increasingly weighing London against larger, more liquid markets abroad. They’re also settling transactions through digital infrastructure that regulators are still piloting. Each of these developments changes where banks earn their fees and how they compete for them.
9 Investment Banking Trends to Watch in the UK
Investment banking strategy is being pulled in many directions at once. The following nine trends are some of the most impactful to UK institutions today. Here’s where each is headed.
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Technology Transformations
Banks have been modernising their technology for years, but AI has changed the pace. What was a pilot a couple of years ago is now a daily tool, with the Bank of England and FCA reporting that three-quarters of UK financial firms already use it. In investment banking, the impact is most visible in routine, time-intensive tasks. Document review and drafting pitch decks that once took hours now take a fraction of the time. Even so, only 2% of AI use cases in UK finance run without a human in the loop, a level of caution that suits an industry where a single unchecked error can sink a deal. The models themselves are quickly becoming commodities, readily available to any bank. The real edge goes to firms that have done the hard work of cleaning and connecting their data, because that’s what turns AI output into something a banker can trust.
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Regulatory and Compliance Shifts
The UK government is actively working to ease regulation. It’s moving to relax the ring-fencing rules that separate retail banking from investment banking, and to pare back the accountability regime for senior managers, all to make London’s financial sector a more attractive place to do business. Not all regulations are getting lighter, though. Capital requirements are tightening, with Basel 3.1 increasing the reserves banks must hold against their trading and lending exposures from January 2027. The hard part for banks isn’t tracking any single rule change, it’s the constant stream of them, which rewards those whose compliance and reporting systems can adjust smoothly.
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Redoubling Cybersecurity Efforts
Cybercriminals target investment banks for both the cash they handle and the information they’re entrusted with. A deal that hasn’t been announced or a position that will move a share price once it’s public is worth a fortune to someone who can get a glimpse ahead of time. Security chiefs across finance increasingly report break-ins aimed at exactly that kind of non-public information, which feeds the black market with inside knowledge. Criminals keep honing their methods to break in and steal it, using AI to build convincing deepfakes and phishing, or targeting shared suppliers, such as cloud platforms or market-data feeds that many banks depend on at once. UK regulators have responded by making operational resilience a hard requirement, one that now extends to third-party vendors and cloud providers banks use.
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Sustainable Finance
The early hype around sustainable finance (financial products designed to support environmental goals) has subsided, but the market itself keeps growing. Green bonds, which raise capital specifically for environmental projects, remain its largest segment, and in the UK, banks are now the principal issuers. Financial institutions made up an estimated 64% of UK green bond issuance in the first half of 2025, up from 50% the year before and nearly double the global average. The bigger opportunity now is transition finance, which funds high-emitting companies as they work to cut emissions, not just those that are already green. New industry guidance and an FCA push to make the UK a transition finance hub is opening that market up. Regulation is raising the bar on what counts as green too, through the FCA’s anti-greenwashing rules and Sustainability Disclosure Requirements.
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Capital Market Trends
London’s IPO market has recovered from its 2023 lows, but even amid that recovery, the overall pool of public companies keeps shrinking, which is one of the deeper challenges facing UK investment banking. The share of UK companies choosing to list in London rather than abroad fell from 71% in 2019 to 46% in 2025, and the London Stock Exchange has lost more companies to delistings than it has gained in new listings every year since 2022. Public markets have contracted, but deal activity has not. UK M&A is rebounding after the slowdown, but the value is concentrating in fewer, larger deals, many led by overseas buyers or by private equity taking public companies private. Take-privates reached around 20% of UK private equity deal value in the first half of 2026, up from about 13% a year earlier. For banks, that changes where fees come from. Less now comes from guiding companies onto the public market, and more from advising on the deals that take them off it, or from advising companies that stay private altogether.
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Private Market Growth
Private credit has become one of the fastest-growing areas of finance. It refers to lending by investment funds, not banks. Companies borrow directly from these funds instead of taking a traditional bank loan or issuing bonds. These direct lenders now compete for the same borrowers banks once served, offering speed and certainty that public markets can’t easily match. Rather than fight that, banks are finding ways to profit from it. In the UK, the likes of HSBC and Barclays lend to the credit funds themselves, earning a return from the very firms disrupting them. The Bank of England is watching closely. In December 2025 it launched its first system-wide stress test focused on private markets, wary of the leverage building up and how hard these private loans are to value.
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Workforce Upskilling
As AI takes on more routine work, junior bankers’ roles are shifting. Their value lies increasingly in what the software can’t do, including reviewing outputs for errors, understanding context that models miss and quickly developing the judgement that comes with experience. That changes what banks hire for. Technical fluency with AI and data is now expected, and demand for quants and technologists keeps climbing. But those skills are in demand in various industries, which can make retention harder. Banks are responding with higher pay. The recruiter Dartmouth Partners, which surveyed more than 100 London bankers, reported analyst pay rising 5-10% year-on-year by summer 2025, after two years of flat or compressed bonuses. Renewed deal activity and competition for talent spurred the increase.
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Tokenisation
Tokenisation turns an asset such as a bond into a digital token on a shared ledger, so it can be traded and settled electronically in near real time. This creates a market where trades that once took days can now clear in minutes, and the same bond can be used as collateral the moment it changes hands. This could reshape the plumbing beneath capital markets, and the UK wants to lead the way. The Digital Securities Sandbox, run jointly by the Bank of England and the FCA since 2024, lets firms issue and settle tokenised securities under regulatory supervision. By 2026, 16 firms were taking part. The flagship project is DIGIT, a tokenised government bond expected to be issued through HSBC in early 2027, which would be the first of its kind from a G7 country.
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The Rise of Fintech
The UK is the world’s second-largest fintech market, behind only the US, and larger than any EU market by a large margin. For investment banks, fintechs have become suppliers and clients, not rivals. They provide the data and settlement technology banks increasingly build on, including a new wave of AI agents in fintech. That is why most large UK banks now run programmes to find and partner with them. Fintechs are also generating M&A activity. Late-stage funding for UK fintechs fell 45% in the first half of 2026, and firms that can’t raise the growth capital privately often look to sell instead, the kind of deal investment banks get paid to advise on.
Finance Futures: Tomorrow’s Vision
How ERP Software Helps Investment Banks Stay Competitive
Keeping pace with all of these trends at once is hard work, and much of the load falls on the systems and data a bank runs on. NetSuite ERP Software for Financial Services consolidates accounting, billing, regulatory reporting and compliance controls in one cloud platform, so business-wide teams work from the same connected data instead of wasting time reconciling between disconnected tools. Segregation of duties and audit-ready records help firms meet FCA and PRA expectations without a scramble when the rules change, as they will under Basel 3.1. Built-in AI adds anomaly detection and automated reconciliation, and because it runs on the same data the rest of the platform uses, its output is reliable enough to act on.
Capital has more places to go than ever, and the UK is fighting to keep its share. To hold onto it, UK policymakers are working to cut the friction that drives issuers away and build the market infrastructure that comes next, such as looser listing rules and trials of digital gilts. Banks are working the same problem at their own level, building the capacity to keep up through steadier processes and technology foundations solid enough to keep them nimble.
See NetSuite for the Financial Services sector in action here (opens in a new tab).
Trends in Investment Banking FAQs
What are the biggest trends affecting the investment banking industry?
The biggest is the movement of capital out of public markets and into private ones, especially private credit. On top of that, AI is changing how deals get done day to day, and UK regulators are loosening some rules while tightening others to keep London competitive.
What technologies are investment banks investing in?
The biggest area is AI, particularly generative AI (GenAI) tools that speed up document-heavy work such as research and pitch preparation. Banks are also investing in cloud and data infrastructure, and in the distributed-ledger technology behind tokenised assets. Much of the return on these investments depends on connecting and cleansing core data.
What skills are most in demand in UK investment banking?
Comfort with AI and data now sits alongside the traditional grounding in accounting and valuation. As routine tasks get automated, banks increasingly want people who can apply keen judgement earlier in their careers. At the same time, demand for quants and technologists keeps climbing.
