As Chancellor John Healey returns to the Treasury, he must recognise that the City’s competitive landscape has fundamentally shifted from the exchange-focused concerns of the mid-2000s toward a modern model where investment banks increasingly rely on shared, industrialised infrastructure, says Joe Channer As John Healey arrives at the Treasury –
Joe Channer
Wednesday 29 July 2026 5:13 am | Updated: Tuesday 28 July 2026 2:38 pm
As Chancellor John Healey returns to the Treasury, he must recognise that the City’s competitive landscape has fundamentally shifted from the exchange-focused concerns of the mid-2000s toward a modern model where investment banks increasingly rely on shared, industrialised infrastructure, says Joe Channer
As John Healey arrives at the Treasury – this time, to everyone’s surprise, as Chancellor – he will soon find that the City he so strongly defended under Tony Blair’s premiership has changed beyond all recognition.
When Healey introduced the Investment Exchanges and Clearing Houses Act back in 2006, his concern was that the UK needed to protect London’s market infrastructure from what he described as “creeping regulation” in the event that US behemoth Nasdaq acquired the London Stock Exchange. According to Healey, preserving Britain’s light touch regulatory regime was imperative to “maintaining London’s position as the world’s leading financial centre”.
Two decades later, the irony is that the biggest change to the City’s plumbing has less to do with exchange competition, and more to do with investment banks looking to relinquish control of the less glamorous parts of their business in a relentless efficiency savings drive. From post-trade operations and settlements to regulatory reporting and risk systems, all the nuts-and-bolts activity was largely nestled under the middle- and back-office bonnets of investment banks. Back when Healey was Financial Secretary to the Treasury, ownership was seen as control by the Square Mile. Yet while protecting Britain’s market infrastructure remains just as important today, what has changed is the sheer complexity of the world in which the City now operates.
Today, investment banks have to manage sprawling operational estates across numerous countries. This has created several challenges. Firstly, boardroom attention has been consumed to such an extent that focus is diverted away from other pressing issues. A huge amount of capital has also been absorbed which has led to a level of operational risk on a scale few could have anticipated back in 2006.
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In addition, regulation has become exponentially more demanding following the 2008 crash. And if this wasn’t enough, technology investment cycles have accelerated and cloud migration remains painstakingly complicated. Oh, and now there is the not so small matter of AI exposing the limitations of fragmented infrastructure built for a different time.
Often portrayed as something banks can simply layer over existing systems to boost productivity, AI actually only thrives in scalable and well governed environments. The trouble is that many banks operate in precisely the opposite environments because their operating systems have become somewhat disorderly through acquisitions, sticking plaster tech decisions, and underinvestment that has left them managing multiple versions of what are often fundamentally the same platforms. Therefore, before AI can harbour any hope of reshaping investment banking as we know it, the boring infrastructure beneath it must be rebuilt.
That is why this City as we know it is moving towards a fundamentally different model. Banks are increasingly externalising infrastructure they once insisted on owning. This is not outsourcing in the traditional sense, more the industrialisation of financial market infrastructure. A world in which technology operations, cloud, governance and automation are delivered through shared platforms serving multiple institutions rather than individual firms. The logic is that banks now want lower operational complexity, and for their fixed costs to become variable. Crucially, they also want access to modern technology without repeatedly funding expensive transformation programmes themselves.
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Increasingly, this also reflects the emergence of specialist infrastructure providers that can justify sustained multi-year investment because these capabilities are profit rather than cost centres, allowing banks to benefit from modern platforms without carrying the investment burden alone.
Other industries have already embraced this model. Few companies still own their own data centres because cloud computing transformed the economics of technology infrastructure. The sooner Healey understands the City is reaching a similar turning point, the better.
Perhaps most importantly, though, this also changes what we mean by market infrastructure. Focusing on exchange and clearing house competition back in the 2000s was understandable given intense rivalry from other parts of the world. But remaining globally competitive today also means ensuring the UK keeps pace with developments in digital assets, as other financial centres like New York are investing heavily in these areas.
Increasingly, however, critical infrastructure is migrating into the service layer behind the markets themselves. Large banks are externalising entire operational environments, legacy platforms are being modernised through shared infrastructure, post trade operations are becoming software led, and even pricing and market risk are becoming candidates for industrialised platforms.
Healey once argued in the House of Commons that protecting Britain’s market infrastructure was essential to safeguarding London’s competitiveness, and that principle still very much holds. What’s fundamentally changed is that the plumbing that will determine the City’s future is unrecognisable, and all together more subtle, from what Parliament debated 20 years ago. The banks that succeed over the course of Healey’s time in Number 11, and goodness knows Chancellors need to prove themselves quickly these days or be damned, will be those that increasingly adopt largely shared infrastructure where appropriate, freeing them to invest in the areas that will drive genuine growth.
Joe Channer is CEO of Delta Capital
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