Translation Tax: Financial Services Companies Losing £298K Annually Due to Foreign Language Barriers

With ongoing pressures to push into new markets for economic opportunities, a new study reveals that UK financial services leaders estimate they are losing an average of over £298,000 in revenue annually due to foreign language barriers – a silent cost now being dubbed the “Translation Tax”. Nearly half (48%) say language barriers are having a regular impact on their business.

In areas like digital finance, breaking into emerging markets is a core revenue focus. McKinsey estimates fintech revenues in Africa, Asia–Pacific (excluding China), Latin America, and the Middle East will account for 29% global revenue in aggregate by 2028. Over a third (38%) UK business leaders who have experienced challenges admit that their company has not maximised international growth potential because of language barriers, and 57% say that these challenges are directly affecting negotiations and commercial outcomes.

In fact, nearly two thirds (59%) of UK financial services leaders believe the UK is falling behind other global economies due to language barriers in business.

This is according to a survey of 2,500 UK professionals* by DeepL, revealing that language barriers are choking productivity, damaging morale, and quietly sabotaging global growth in banks and financial services firms.

Internal impact of language barriers 

Language barriers are also impacting work. Despite 68% of financial services workers speaking another language, only 18% use that language more than once a week at work. 57% say there are significant issues for internal communication between offices and teams and half (50%) encounter communication challenges due to language differences at least once a week. It is also slowing cross-border collaboration, where communication with partners and clients in different countries is proving a challenge for over half (55%) of financial services.

According to data from CCAF and WEF, the majority of FS firms report that micro, small and medium enterprises (MSMEs) (57%), low-income individuals (47%) and women (41%) constitute significant portions of their customer base, which are predominantly in emerging markets and developing economies (EMDEs). Despite this, English is still considered the ‘lingua franca’ in financial services firms, with six in ten (67%) admitting that, when conversing with colleagues from another country, they always ‘default’ to English.

Turning to tech

Tackling these issues, financial services are turning to emerging technologies. In fact, four in ten (43%) state that their organisation has invested in AI tools, including AI powered voice, writing and/or editing tools. Financial service sector companies are also hiring bilingual employees (38%), adopting language training for employees (36%) and outsourcing translation services (24%). Only 3% of financial services say they are not exploring ways to break language barriers.