UK RETAIL BANKING MARKET - GROWTH, TRENDS, COVID-19 IMPACT, and Forecasts (2023 - 2028)

UK Retail Banking Market Analysis

The retail banking industry in the United Kingdom is being driven by powerful forces, creating an imperative for change. The landscape will change significantly in response to the evolving forces of customer expectations, regulatory requirements, new competitors, technology, demographics, and shifting economics. Banks need to decide what they want to embrace from impact and change. Staying the same is not an option for banks. They need to explore different retail banking trends to be agile and open. Banks must address challenges and retool to win in 2020. They must develop strategies that can keep up with the changing retail banking landscape and integrate changes in markets, customers, risk regulation, operations while implementing a large real-world scale change.

The financial services sector contributed GBP 132 billion to the UK economy, 6.9% of total economic output. The sector was largest in London, where half of the sector's output was generated. The UK financial services sector was the ninth-largest in the OECD in 2019 by its proportion of national economic output.

Retail banking, also known as consumer banking, is the provision of services by a bank to individual consumers. Services offered include savings and checking accounts, mortgages, personal loans, and debit/credit cards. The UK retail banking sector is being transformed by a range of powerful forces. The economic environment continues to bring uncertainty; regulatory requirements are evolving; customers are demanding greater personalization combined with excellent customer service; and, at the same time, technological innovation is challenging traditional business and delivery models while ushering in a further set of challenging competitors.

Against this backdrop, banks must rethink their real estate. Branch networks will need to be further rationalized and repurposed, despite the sensitivities that such moves bring. Back office functions will need to be seen as more integral to a successful banking operation than they have perhaps been to date. Meanwhile, head office functions will need to be reviewed in terms of cost, regulatory compliance, and may be subject to relocation. Furthermore, as the fortunes of retail banks become more dependent upon innovation and technological delivery, they will need to access and accommodate non-traditional tech and creative talent, and this will force change in both location and working environment.

UK Retail Banking Industry Segments

A complete background analysis of the UK retail banking market, which includes an assessment of the parental market, emerging trends by segments and regional markets, and significant changes in market dynamics, and market overview, is covered in the report.

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UK Retail Banking Market Trends

This section covers the major market trends shaping the UK Retail Banking Market according to our research experts:

Customer Centricity and Simplification

Historically, banks have been product-led, but shifting customer demands require them to now reconsider their focus. Critically, banks are becoming forward-thinking rather than reactive and are anticipating customer requirements as a whole. Alongside this, greater importance is being placed on considering the customer’s interaction with the business via multiple channels, whether that is online, mobile, or in-store. Banks are designing products that respond to the customer’s financial condition and are giving them the tools to manage their personal finances. With particular reference to organizational design, the chief operating officer’s role has become central to enabling this change in business strategy. Retail banks are increasingly seeking out COOs that can go beyond the nuts and bolts of managing centralized infrastructure in favor of leaders that can design a targeted operating model with customer-centricity at its core.

In 2020, there will be increasing work to refine the banking organizational structure through the continued centralization of core operations. Where product releases have in the past remained reliant on traditional “waterfall” practices, agile methodologies will take advantage of rapid deployment into live, real-time environments.

A redesign of the bank’s operating model requires more than a structural change. It must also be complemented with a change in mindset. Adopting a culture of agile working will enable a “minimalized banking” environment that prioritizes simplified processes, smaller teams, and shorter projects. 

As automated technologies have developed to streamline what would have previously been manual tasks, banks are relieving teams of old technology and time-consuming processes by becoming digitally enabled and API-driven. This will be especially pertinent with processes such as credit scoring and underwriting, which can be sped up from a few days to just a few minutes.

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