2.1 Industry Background3
2.2 PEST (EL) analysis4
2.3 Summary of the PESTEL analysis11
3.Porter’s Five Forces on retail banking industry.12
3.1 Rivalry among Existing Companies13
3.2 Entry barrier14
3.3 Supplier power16
3.4 Buyer power17
3.5 Availability of Substitute products19
3.6 Summary of the Porter’s 5 Forces analysis20
5.Method Evaluations and Writing Limitations22
B014351 Xin Li
Msc. Finance and Management 2010
Is UK Retail banking industry still ‘charming’?
A Report on the UK Retail Banking Industry
Imagine what life would be if there were no banks around us. Corporations would fail to generate growth without banks financing supports, or the deals between sellers and buyers would all rely on in-person trading and the trust crisis is enlarged even more. Banks, to some extent, are holding the economic fate all around the world and also ensure the people’s daily life to last normally. As a learner of business and management, I always need insights into this issue and concern about the banking industry. Especially, when retail banks come to life, which is an essential element we talk about every day, and when people enter their chosen banks back and forth to make their investing decisions, the retail banking became as my most concerned sector from the whole banking industry.
After those ‘dramas’ that are going on the global economy, retail banks developed and survived till now and still are stepping into an unknown future. Consequently, I believe it’s necessary to deliver a market report about this specified industry. In this report, the main aim is to make an analysis on the remote environment of retail banking and what made UK financial market an attraction for developing retail banks. This report is structured following the below flow chart, and some points which this report is trying to achieve:
HSBC, Barclays, RBS
·Porter’s Five Forces
·Effects on players in
2. Industry Analysis
2.1 Industry Background
After the establishment of the first bank in England, Bank of England in 1694, which started to play the role as the monetary manager and supply lendings. As time went by, the role was gradually shift to center on the national currency and the Bank of England became the core of British financial system. In the subsequent decades, derived financial services were needed by the customers, such as depositing service, and transaction payments began to rely on the banking system. Bank didn’t make its appearance in a retail form until a century ago (Congdon, et. al., 2009). A retail bank is a financial institution who deals with transactions directly with the individuals, servicing saving deposit, mortgage, and transaction among accounts, personal loans, and credit/debit card.
Before the year of 2007, retail banks were surrounded in a booming mortgage market from the beginning of the 21st century. During this period, the CAGR (Compound Annual Growth Rate) of some mega countries was all over above 10 %( Figure 1) (Word Retail Banking Report 2009). Figure 1: Mortgage Market Growth, 2001-2007 (CAGR)
Resource from: EMF, Bank of England, US census Bureau etc.
This trend drove retail banks to focus on this profitable mortgage products, and this era became a prosperous time for the financial market and the mortgage return were kept growing fast. Unfortunately, in 2007 the credit crisis attacked the world. The big recession started. Firstly, the crisis started from United States and spread to UK soon. During the same...