Issue 9 / February 2010 Trends: Key Themes for 2010
by Benjamin Ensor,
Forrester Research,
bensor@forrester.co.uk
Trends: Key Themes
for 2010
The banking industry has
Although the economic outlook is a little Secondly, many UK banks were actually New channels and technologies will 2. Growing Internet use means that banks The bank branch is no longer the sole,
changed radically in the
brighter, most of the factors that governed racking up massive losses, with the continue to disrupt customers’ buying and risk losing touch with some of their best or even the primary, source of information
the fortunes of banking in 2009 – shortage apparent profits generated through risky service patterns as the use of the Internet customers. As customers move toward and advice for many customers, whether
past two years. After the
of capital, a long economic recession, lending and inadequate provision against continues its steady growth, branch visits increased self-service, personal contact retail or business. Customers are rapidly
disorientating shock of the insecure customers, lost trust and onerous loss. That has made the UK banking decline and early adopters start to make diminishes. People who have been adopting social technologies - blogs,
financial crisis, 2010 will seem
regulatory changes – will remain with us market far less attractive to foreign entrants, use of mobile services. According to online longer are less likely to use discussion forums, customer review
altogether more stable and
in 2010. Preserving capital will remain a many of which have similar problems in Forrester’s Consumer Technographics data, branches and less likely to speak to sites like MoneySavingExpert and
strategic imperative for all banks. their own domestic businesses. nearly two out of five adults now use online branch advisors. Banks risk losing the social networking sites like Facebook
benign for banking executives.
Politicians, regulators and banking banking. By 2012, we expect 44% of adults opportunity to cross-sell products to are becoming increasingly important.

executives will continue work to fix the
Thirdly, most remaining UK banks have
to use online banking in the UK, or nearly them through their most effective sales UK banks have been slow to adopt social
systemic weaknesses that the crisis
a diminished appetite for new lending,
22 million people. The steady growth of channel - the branch. media compared with banks in most
revealed. Forced disposals, mandated by
withdrawing some products from the
self-service use over the past decade is other countries, particularly Canada,
the European Commission, will further
market and reducing or reallocating
changing the way people use other
3. Growing Internet use exposes
the US and France.
reshape the UK’s banking industry.
advertising budgets accordingly.
channels like the branch and the telephone.
banks to greater product competition.
Forrester expect competition to be
This growing use of the internet, particularly
The internet is increasingly popular
Unsecured consumer debt looms as sustained by the banks that came through
by upmarket customers, is a mixed blessing
for researching and buying products
another potential crisis. Fragmented IT the financial crisis relatively unscathed,
for three reasons:
like car insurance, savings accounts,
systems mean that many banks still have like HSBC, the Co-operative Bank and mortgages, and credit cards.
According to Forrester’s
work to do to monitor and manage risk. Nationwide Building Society. Tesco is also 1. Growing use of lower-cost channels Customers who research online
Consumer Technographics
poised to use its strong brand and wide should help banks’ cost-income ratios, are more likely to visit a financial
Competition in the banking market
distribution to take advantage of the but in reality the potential cost savings comparison site than their bank’s
data, nearly two out of five
has been substantially reduced by the
weakness of the UK’s retail banks. are hard to realise unless branches can website, attracted by the product
financial crisis:
adults now use online
be closed or staffing levels reduced. and price comparison features that
Fears about their finances will continue
Firstly, and most obviously, the crisis has The Lloyds and Santander banking independent comparison sites offer.
banking. By 2012, we expect
to shape customers’ appetite for banking
reduced the number of competitors – groups are both likely to take advantage
products. While many businesses need
44% of adults to use online
HBOS, Alliance & Leicester and Bradford of their mergers to eliminate some
capital, consumer appetite for new debt
& Bingley have been absorbed into larger marginal or overlapping branches
banking in the UK, or nearly
is likely to remain limited, apart from
groups. Smaller firms like Britannia Building during 2010.
overstretched borrowers seeking to
22 million people.
Society and Standard Life Bank also have
refinance their debts. Competition for
new owners. At these groups, and those
retail deposits will remain strong as
that are being forced to make disposals,
banks seek to cut their dependence
scarce management time and IT resources
on wholesale funding.
will inevitably be consumed by integration
(or separation) to the detriment of their
ability to compete or innovate.
4 / Perspectives on the future Perspectives on the future / 5
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