Factors that influence banks today

A typical UK bank will have relationships with a number of groups including the obvious group of customers, these relationships determine the success of the bank as good relationships mean repeat custom. This report looks into the UK banking situation analysis and the various relationships; we will also offer ideas as to how the bank can maintain its relationships. There are a large number of high street banks in the UK. They range from big companies like Barclays, HSBC Bank plc and Lloyds TSB to smaller banks, which include the Woolwich.

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Although each of the banks have similar products and services they have to compete with each other to remain profitable, for example they can do this by offering the most competitive, savings, investments, lending products and insurance. Most banks offer corporate banking, Small Business Banking and Personal Banking. We researched into the services that a typical high street bank offers by looking at a number of banks. For the purposes of this assignment as a group we will only be focusing on the Personal Banking products and services that HSBC provide.

The UK banking is a huge industry with nearly every adult in the UK holding an account information found in a Mintel report shows that Mintel estimates that nearly 40 million adults have at least one personal current account and it is undoubtedly the widest held of all financial products. Anyone that is economically active will really need a current account, particularly given the increasing reliance on the electronic transmission of money via standing orders, direct debits and debit/credit cards.

The current account market is a very mature one and new business opportunities are really limited to churn business, increased second account ownership and virgin business as a result of demographic changes. The fastest-growing age groups over the next two decades will be those aged 45-59 and 60-74. Both groups will increase by 44% on the 2001-25 period as the ageing of the general population continues to become more apparent. This would suggest that the use of direct channels for personal banking, traditionally favoured by younger to middle-aged consumers, will have finite growth potential.

However, it should be noted that many of the people moving into the older age group will be technologically aware and prepared to bank online or over the telephone, as they probably have done for many years. Mintel also states that switching accounts is now easier and because of this a bank needs to maintain its relationships Switching accounts is now easier Consumers have always perceived that switching bank accounts is not worth the hassle and may affect their credit status. This goes some way to explaining why many people remain with the same provider although not entirely happy with service levels.

People have not previously seen the price advantage in switching provider, although with greater consumer awareness this may be changing. Consumers will often cite disruption to direct debits and other automated transactions as the major reasons for not switching provider. New changes in the Banking Code, which came into effect on 1 March 2003, have made it easier for people to switch current accounts. A key point we found in the report is that: People are still concerned about the physical location of the branch

The last decade has been characterised by the development of a number of new ways in which to conduct personal banking and to access current accounts in the wake of changes in regulation and technological advances. Customers can now choose from a range of delivery mechanisms that include the telephone, via the Internet, using ATM networks, via interactive digital television and WAP-enabled (wireless access protocol) mobile phones. However, the branch network can clearly still be expected to play a vital role in recruiting new customers for the vast majority of current account providers.

This is largely because many consumers still appear to be far more comfortable opening a bank account within the secure confines of a branch environment ably assisted by the help and guidance of a member of their chosen provider’s staff. Market Size The market size of the current account sector is covered in this section of the report. Many current accounts now offer similar features to instant access savings accounts and the lines of demarcation are not as clear as they once were. Indeed, some current accounts offer better interest rates than savings accounts today as well as the added benefits such as overdraft facilities.