Personal customers

Competition

Of the UK retail banks

The changing environment and activities

The analysis of the activities and of the summary balance sheet of the retail banks provides an overview of what the banks currently do, but not of how this has changed over time and is likely to change in the future. This section provides a brief overview of the way in which the environment, and hence the activities, of the retail banks has changed in recent years.

The major change in the environment within which the retail banks operate is that it has become much more competitive. This has come about not only as a consequence of deregulation within financial markets, but also as a consequence of innovation by participants within those markets. The result of this has been that the domination of the market for banking services by the retail banks in the UK has come under attack. With regard to the market for personal customers, a major source of increased competition has been the building societies which, mainly as a consequence of the changes brought about by the Building Societies Act 1986, have started to offer a much more comprehensive range of banking services including, on a limited basis, personal loans for purposes other than house purchase. It has also been suggested that the general public is now much more financially sophisticated than say, 10 years ago, so that they are better able to evaluate alternative financial products and are more willing to move funds between different financial institutions to lake advantage of better interest rates or other facilities.

The ability of the retail banks to attract funds from their personal customers was seen to be under threat, and they have responded in a number of ways:

- Instead of offering just the one type of savings account, the 7-day deposit account, a range of savings accounts with competitive interest rates are now offered with, often, improved access to the funds by the customer.

- Improved current account facilities, in the form of interest-bearing cur­rent accounts, free banking subject to certain (more generous) criteria, facilities such as automatic overdrafts, and the provision of debit cards.

- Improved the access to current account funds, by means of automated teller machines, longer opening hours and home banking facilities.

- Expanded advertising and marketing to increase customer awareness and to improve the image of the retail banks.

- Purchases of building societies by some banks: Lloyds bought Chelten­ham & Gloucester; Abbey National bought National & Provincial and the Bank of Ireland intends to buy Bristol & West.

- Merger - in the autumn of 1996, Lloyds Bank announced its purchase of TSB Bank and they intend to merge the two businesses in perhaps 1998; meanwhile the separate branch networks continue.

Дата добавления: 2014-12-29