Retail & Corporate Banking

Market Comment

If 2009 was about stabilising the banks and 2010 focussed on rebuilding shattered balance sheets, what does 2011 hold for the retail banking sector.

One thing is clear, regulation will continue to be a driving factor. Whilst it is unlikely that the competitive landscape will change radically, there will continue to be disposal of assets as the large retail banks streamline their operations and the new players, Metro Bank for example build out their high street presence. For several of the largest UK players the work to digest and integrate their ill fated acquisitions will continue against a complex regulatory backdrop of tightening capital adequacy, EU driven stress tests, impacts of the Retail Distribution Review and the on-going threat of Living Wills.

2011 will require a delicate balancing act between regulatory compliance and business progress, innovation versus consolidation and the on-going issue of rebuilding the trust which has been lost over the last few years.

Areas of Growth:

The value of a retail bank is broadly thought to be as a deposit gathering institute. Pre 2007 the majority of retail banks were driven by their lending activities but in the current risk adverse environment, the loan book has taken a back seat to the search for "sticky" deposits and cross selling of products to existing clients. Since product differentiation is extremely difficult to sustain, banks are looking at customer service levels, extended product portfolios and "value add" services to boost their revenues and customer retention.

- Simplified advice

One of the potential consequences of the Retail Distribution review will be to create a large and underserved market as the advisor network migrates to the high net worth clients in order to make their fee paying businesses work. This presents a fantastic opportunity for the banks to step into the breach with simplified advice and direct to consumer offerings. Bluerock has extensive experience of designing and building these types of distribution models, including direct to consumer and workplace solutions.

- Tools

As consumers become more demanding and the internet provides great functionality and transparency, and services, many banks are starting to think about supplementing their commodity products with useful analytical tools. Whether it is simple budgeting or sophisticated investment modelling, the range and complexity of tools being developed is increasing rapidly. Bluerock has been working with financial institutions and tools providers from multiple countries over the last few years. We have built up an unparalleled knowledge of the tools market, and customer behaviours with regard to financial planning.

- Multi channel / product distribution

As banks extend their product ranges to boost profitability, they need to find the right blend of banking, investment and protection products which will appeal to clients without requiring extensive (and expensive) explanation and support. Bluerock has been working with asset managers, life companies and banks to help define the appropriate product mix, channels and operating models to maximise their profitability.