1.1 Preliminary Market Analysis
The UK banking industry has become well known over the turn of the last century for having adapted to and for having introduced innovative services to its consumers. It has done so by making use of technological developments that compliments the banking industry and by providing consumers with increased accessibility through user friendly interfaces (Data Monitor 2003). Before the global recession began to show signs of the soon to occur damage that was to take place, the UK banking industry was thriving on loans from the consumer loans sector which accounted for over half the market value that the banking industry held (Buckle and Thompson 2004). The UK banking industry enjoyed a positive global reputation before the recession.
The UK banking industry is highly consolidated in nature with major categories being consumer loans, interbank loans and other assets coming together to form the market. Acquisitions and mergers have seen an increase in frequency over the decade, resulting in increased competition and a struggle by financial institutions to keep hold of their market share (Data Monitor 2003). The mergers and acquisitions, while serving to decrease the number of players in the market, have led to the emergence of non-banking financial institutions and services. High street retailers are a popular and well known segment in this regard. The banking industry has reached a standing where a single merger can result in a significant increase in the industry’s consolidation. An example can be found in the merger between Halifax and the Royal Bank of Scotland which came together in 2001 to form the HBOS group and caused HBOS to become a major and key company in the UK banking industry (The Stationery Office 2006). Leading players in the UK banking industry include those such as HSBC holdings, Barclays PLC, HBOS plc and the Royal Bank of Scotland Group PLC (Data Monitor 2003). Services such as Mortgage lending, consumer credit, asset management, capital market services, corporate banking, online banking, treasury and capital market services and savings programs are key services offered by the industry.