Table of Contents
Executive Summary
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- Market Size
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- Figure 1: UK MFIs Sterling Deposits from UK Resident Businesses, by Quarter End, 2016-17, (£ Million Outstanding of Deposit Liabilities, Excluding Under Repo, Not Seasonally Adjusted)
- Figure 2: MFI Sterling Deposits of UK Resident Non-Financial Businesses, by Industry Type, Top Eight, December 2017, (% Share of Total)
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- Figure 3: UK MFIs’ Net Loans to Non-Financial Businesses, Q4 2015 - Q4 2017, by Size of Business, (£ Million, Not Seasonally Adjusted)
- Market Trends
- ‘Fintech’ collaboration driving operational model change
- Business confidence influences borrowing demand and continues to cast shadow on prospects
- Commercial lending rates rise in 2017 after 2016 dip
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- Figure 4: Average Interest Rate for UK MFI New Advances to PNFCs, at December 2013-17, (% Not Seasonally Adjusted)
- Demand and availability of credit remained low in 2017
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- Figure 5: Demand for Corporate Credit to PNFCs in the Last Three Months, Q1 2012 - Q4 2017, by Business Size, (Net Percentage Balance)
- Market Factors
- Brexit could lead to greater capital requirements and costs whilst the BoE attempts to promote stability
- Business investment levels continue to rise while profitability remains stable in the private sector
- Highest number of inward and domestic M&A deals since 2012 with the low value of the pound attracting investors
- Companies
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- Figure 6: Profiled Companies’ Combined Income, 2012-2016, (£ Million)
- Forecast
- Stable growth expected in deposit levels despite ongoing uncertainty
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- Figure 7: Forecast UK MFIs Sterling Deposits from UK Resident Non-Financial Corporations, 2018-2022, (£ Billion at 2017 prices)
- Growth expected in SME account balances despite gaps in service provision
- What We Think
Key Insights
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- How can banks meet the threat posed by the new wave of technology-led providers?
- Can open banking provide opportunities to the larger banks or will it pose a threat to their dominance?
Introduction
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- Definitions
- Methodology
- Abbreviations
Market Positioning
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- The supplier
- The customer
UK Economy
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- Key Points
- Overview
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- Figure 8: Forecast GDP development 2017-21, (% Annual Growth)
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- Figure 9: UK GDP Quarterly Development, 2007-17, (% Quarterly Growth and GDP in £ Billion)
- Inflation
- Interest rates
- House prices
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- Figure 10: UK House Price changes, 2006-2017, (12 month % change)
- Consumer spending
- Manufacturing
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- Figure 11: UK Manufacturing, 2014-17, (Index, 2013 = 100)
- Business investment
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- Figure 12: UK GFCF, 2007-17, (£ Million, Chained Volume Measures, Seasonally Adjusted)
- Imports
- Exports
Market Factors
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- Key Points
- Brexit could lead to greater capital requirements and costs whilst the BoE attempts to promote stability
- Annual GDP growth likely to have slowed in 2017, with further challenges ahead
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- Figure 13: GDP Growth Rate, 2013 - Q3 2017, (% Change on Previous Quarter)
- Figure 14: GDP Growth Rate, 2013 - Q3 2017, (% Change on Previous Quarter)
- Large corporates account for majority of private sector turnover
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- Figure 15: Business Population in the UK, Private Sector, by Company Size, 2013-17, (Number, £ Billion and Millions Employed)
- Business investment levels continue to rise while profitability remains stable in the private sector
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- Figure 16: UK PNFCs Net Rate of Return, Q3 2012 - Q3 2017, (% Return)
- Figure 17: UK PNFCs Net Rate of Return, Q3 2012 - Q3 2017, (% Return)
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- Figure 18: UK Total Business Investment, 2012 -16, (Chained Volume Measures and Not Seasonally-Adjusted, £ Billion and % Annual Change)
- Figure 19: UK Total Business Investment, 2012-16, (Chained Volume Measures and Not Seasonally-Adjusted, £ Billion)
- Rise in company insolvencies reduces opportunities for banking services
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- Figure 20: Company Insolvencies in England and Wales, 2013-17, (Number and % Annual Change)
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- Figure 21: Company Insolvencies in England and Wales, 2013-17, (Number)
- Highest number of inward and domestic M&A deals since 2012, with the low value of the pound attracting investors
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- Figure 22: Mergers and Acquisitions of UK Companies, 2012 -2016, (Units)
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- Figure 23: Mergers and Acquisitions of UK Companies, 2012-2016, (Units)
- Regulation has altered the way banks operate and added barriers to recording strong profitability
Commercial Banking Market
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- Key Points
- Latest annual bank stress test reveals industry robustness
- Commercial deposits rise over 2017
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- Figure 24: UK MFIs Sterling Deposits from UK Resident Businesses, December 2015-17, (£ Million Outstanding of Deposit Liabilities, Excluding Under Repo, Not Seasonally Adjusted)
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- Figure 25: UK MFIs Sterling Deposits from UK Resident Businesses, by Quarter End, 2016-17, (£ Million Outstanding of Deposit Liabilities, Excluding Under Repo, Not Seasonally Adjusted)
- Professional, scientific and technical activities account for largest share of total NFB deposits
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- Figure 26: MFI Sterling Deposits of UK Resident Non-Financial Businesses, by Industry Type, December 2017, (% Share of Total)
- Figure 27: MFI Sterling Deposits of UK Resident Non-Financial Businesses, by Industry Type, Top Eight, December 2017, (% Share of Total)
- Small businesses continue to perform strongly
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- Figure 28: MBBG Deposits of Small and Medium-Sized Businesses, September, 2013-17, (£ Billion)
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- Figure 29: MBBG Deposits of Small and Medium-Sized Businesses, September, 2013-17, (£ Billion)
Commercial Borrowing
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- Key Points
- Net lending remained positive in 2017
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- Figure 30: UK MFIs’ Net Loans to Non-Financial Businesses, Q4 2015 - Q4 2017, by Size of Business, (£ Million, Not Seasonally Adjusted)
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- Figure 31: UK MFIs’ Net Loans to Non-Financial Businesses, Q4 2015 - Q4 2017, by Size of Business, (£ Million, Not Seasonally Adjusted)
- Commercial lending rates rise in 2017 after 2016 dip
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- Figure 32: Average Interest Rate for UK MFI New Advances to PNFCs, at December in 2013-2017, (% Not Seasonally Adjusted)
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- Figure 33: Average Interest Rate for UK MFI New Advances to PNFCs, at December 2013-17, (% Not Seasonally Adjusted)
- Demand for and availability of credit remained low in 2017
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- Figure 34: Availability of Corporate Credit to PNFCs in the Last Three Months, Q1 2012 - Q4 2017, by Business Size, (Net Percentage Balance)
- Figure 35: Availability of Corporate Credit to PNFCs in the Last Three Months, Q1 2012 - Q4 2017, by Business Size, (Net Percentage Balance)
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- Figure 36: Demand for Corporate Credit by PNFCs in the Last Three Months, Q1 2012 - Q4 2017, by Business Size, (Net Percentage Balance)
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- Figure 37: Demand for Corporate Credit to PNFCs in the Last Three Months, Q1 2012 - Q4 2017, by Business Size, (Net Percentage Balance)
Market Trends
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- Key Points
- ‘Fintech’ collaboration driving operational model change
- Online business banking remains most used banking service feature...
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- Figure 38: Use of Business Banking Features in the Last Three Months, June 2017
- ... as market seeks to improve the payments process
- Business confidence influences borrowing demand and latest index figures continue to cast a shadow on prospects
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- Figure 39: Business Confidence Index, per Half-Year, 2007-2017, (Index Figure)
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- Figure 40: Business Confidence Index, per Half-Year, 2007-2017, (Index Figure)
- Write offs on loans to non-financial companies fell to a seven-year low in 2016 with 2017 set to decline further
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- Figure 41: Write Offs of Loans to PNFCs from Banks and Building Societies, 2012-17*, (£ Million, Not Seasonally Adjusted)
- Figure 42: Write Offs of Loans to PNFCs from Banks and Building Societies, 2012-17*, (£ Million, Not Seasonally Adjusted)
Brand Communication and Promotion
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- Key Points
- Ad spend declines again in 2017
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- Figure 43: Advertising Expenditure on Business Banking Services, 2013-17, (£ 000)
- Figure 44: Advertising Expenditure on Business Banking Services, 2013 and 2017, (% of Total Ad Spend)
- Santander claims position as largest campaign spender
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- Figure 45: Advertising Expenditure on Business Banking Services, by Advertiser, 2013-2017, (£ 000)
- Figure 46: Advertising Expenditure on Business Banking Services, by Advertiser, 2013 and 2017, (% of Total Ad Spend)
- Outdoor advertising overtakes digital as main recipient of advertising expenditure
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- Figure 47: Advertising Expenditure on Business Banking Services, by Media Type, 2013-2017, (£ 000)
- Figure 48: Advertising Expenditure on Business Banking Services, by Media Type, 2013 and 2017, (% Share)
Industry Structure
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- Key Points
- Industry Development
- Presence of challenger banks yet to offer meaningful threat to the dominant banking groups...
- ... but RBS funding plan could boost challenger ambitions
- Open banking will also lead to commercial banking changes
- The number of banks and building societies rose in 2017
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- Figure 49: Number of Banks and Building Societies Operating in the UK, 2013-2017, (Number)
- Figure 50: Number of Banks and Building Societies Operating in the UK, 2013-17, (Number)
- Government continues to scale back involvement in the banking sector
- In total, £137 billion has been disbursed by the Treasury since the crisis. By the end
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- Figure 51: Cost to UK Government of Financial Interventions in Banking Sector, at 31 October 2017, (£ Billion)
- RBS
- Lloyds
Company Profiles
Aldermore Bank
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- Figure 52: Financial Analysis of Aldermore Bank plc, 2012-16, (£ Million)
- Company Strategy
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Barclays PLC
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- Figure 53: Financial Analysis of Barclays plc, 2012-16, (£ Million)
- Company Strategy
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Clydesdale Bank PLC
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- Figure 54: Financial Analysis of Clydesdale Bank plc, 201317, (£ Million)
- Company Strategy
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Co-operative Bank
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- Figure 55: Financial Analysis of Co-operative Bank plc, 2012-16, (£ Million)
- Company Strategy
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HSBC
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- Figure 56: Financial Analysis of HSBC Bank, 2012-16, (£ Million)
- Company Strategy
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Lloyds Banking Group
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- Figure 57: Financial Analysis of Lloyds Banking Group, 2012-16, (£ Million)
- Company Strategy
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Royal Bank of Scotland Group
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- Figure 58: Financial Analysis of RBS Group, 2012-16, (£ Million)
- Company Strategy
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Santander UK PLC
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- Figure 59: Financial Analysis of Santander UK plc, 2013-17, (£ Million)
- Company Strategy
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- Figure 60: Profiled Companies’ Combined Income, 2012-2016*, (£ Million)
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Commercial Banking Forecast
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- Key Points
- Uncertainties around the nature of the post-Brexit business environment will impact market development
- Stable growth expected in deposit levels despite ongoing uncertainty
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- Figure 61: Forecast UK MFIs Sterling Deposits from UK Resident Non-Financial Corporations, 2018-2022, (£ Billion at 2017 prices, % Annual Change)
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- Figure 62: Forecast UK MFIs Sterling Deposits from UK Resident Non-Financial Corporations, 2018-2022, (£ Billion at 2017 prices)
- New restrictions in the scope of the bank levy removes a disincentive for banks to remain headquartered in the UK
- Growth expected in SME account balances despite gaps in service provision
Further Sources and Contacts
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- Trade Associations
- Trade Magazines
- Trade Exhibitions
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