The banking world
- 19th September 2017
We need banking but we don’t need banks anymore - Bill Gates, 1997.
Traditional banks have bloated, costly infrastructure and are in a state of inertia, it is, in this environment that a new reality of financial services will emerge. Banking is no longer defined or hemmed in by physical artefacts or a physical distribution network, the effects of the mobile phone and internet are causing a change in the paradigm of financial practices, distribution models and the competitive landscape.
Historically, banks have generated value by combining different businesses—financing, investing and transactions. Financial firms are now breaking the status-quo and are rivalling the existing incumbent UK banks and other financial intermediaries. Retail banking is of fundamental importance to consumers and to the UK economy as a whole. There are more than 68 million active Personal Current Accounts (PCAs) in the UK and 97% of adults in the UK have a PCA; of these 70% of all PCAs are under the control of the four largest UK banks, Lloyds Banking Group, HSBC, Royal Bank of Scotland and Barclays.
Large incumbent banks have dominated the market for many years and consumer confidence in banking remains low, millions of customers have gone through a fundamental change in how they manage their finances, with the growth of both digital and mobile banking.
With all four ‘big banks’ retreating from the high street, figures show there has been the equivalent of more than one branch closing every day; there were 20,583 branches in 1988 but only 8,837 in 2012 (British Bankers Association, 2013). This is primarily due to financial innovation and societal change. These closures however, are not without controversy; the traditional role of banks within the community has changed and the withdrawal of branch networks throughout the UK has accentuated social divisions in access to services, reconfiguring broader societal and economic participation.
It is clear that the potential market for Fintech (financial technology) is extensive worldwide and throughout the financial services. The UK’s retail financial sector is a changing landscape and a mix of both new innovative technology and traditional practices is opening new opportunities for both clients and companies.
Digital technology is introducing a new demand for how financial services are delivered. In particular, Millennials – under 30 years of age – have distinct preferences regarding financial services and digital technology. Forrester Boyd Wealth Management is in the process of introducing iPad’s as a tool for all advisers, they will be used at first meetings, review meetings and to allow flexible working to meet the demands of an ever growing client base.
Consumers need a new service proposition, they want their financial services such as banks and advisory firms to help make their financial lives easier and enable them to manage their money more proactively and truly focusing on their needs. Forrester Boyd Wealth Management is in a unique position to take advantage of an opportunity to deepen the relationship with their clients and provide the service they are looking for.
Any news or resources within this section should not be relied upon with regards to figures or data referred to as legislative and policy changes may have occurred.