United Kingdom

Details

  • Industry: Financial Services, Banking
  • Type: Benchmarking study, Business and industry issue
  • Date: 08/04/2014

Reinvention of UK Banking - the absolute priorities 

We believe that providing the right returns to shareholders and the right products to the customers and meeting much more onerous regulations will require nothing less than a complete metamorphosis of business models. The absolute priorities are:

Strategic choice of customers and markets


Banks have to fundamentally re-evaluate what customers and geographies they can really serve well and at a profit which delivers acceptable returns. They must also revisit their product portfolio and pricing strategy to significantly boost their RoE to secure access to capital, a critical ongoing need for the sector.

 

Strategic choice of customers and markets

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Product innovation, done in the right way


The total bill for litigation, fines and customer redress since 2011 has reached £28.5bn or a staggering two-thirds of the cumulative profit of the five banks. This needs to change in terms of how products are offered and distributed and this will require significant innovation. The new business model has to deliver the right outcome at the right price for customers and banks must develop products which meet rapidly changing customer needs. The key to this is likely to be much better use of information about customers and their needs, and new ways of working with customers. Digital platforms, mobile banking, smart phones and tablets have undoubtedly revolutionised the way customers buy products.

 

In a recent survey, 64% of global banks said they have either gone live or are planning to roll-out mobile applications for corporate clients. On the client side, while 25% of US businesses and corporations had adopted mobile banking at the end of 2013, the number is expected to rise to 40% in the next two years.

 

Strategic choice of customers and markets

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Game changing technology


Technology is “mission critical” to the future health of the banks, and not just because of the customer. Significant changes are required in operating platforms and data analytical capabilities to improve the ability to serve customers, enhance risk management and counter the increasing risks of cyber crime.

 

New and improved systems will also help address the need to radically revisit the cost base to deliver customers the products they need, at a price they are willing and able to pay, at a return that meets shareholder demands. These will require a massive level of investment right now, but in the long-term, will provide the banks with more efficient, robust and user friendly platforms.

 

Strategic choice of customers and markets

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Contact


Richard McCarthy

Richard McCarthy

Head of Banking

KPMG in the UK

020 7694 2785

Email Richard