The banking crisis and the subsequent recession have resulted in the personal banking market receiving a great deal of media attention of late, with little of that attention being positive. The current situation and the negative media attention has given bank customers generally very little confidence in the sector, which has affected the way in which it works.
During the mid-2000s, the emphasis was on the expansion of personal banking services, with Internet-based start-ups utilising an era of easy credit and free access to capital in order to set up Internet-only banks. Supermarkets also got in on the act, diversifying into offering financial services products. However, following this period of expansion came the credit crunch and the recession. The global credit markets seized and neither customers nor banks could borrow the money they required. As such, many Internet banks were absorbed into much bigger, longer-standing financial institutions or disbanded altogether and the supermarkets delayed their forays into the personal banking market.
The market continues to be dominated by the ‘big four’ banks (HSBC, Lloyds, RBS and Barclays) with the current economic and financial situation making it very difficult for new players to break into the market. Furthermore, despite the financial crisis, consumers generally trust in these larger, longer-established institutions than newer ones when it comes to the deposits held on customers’ behalves. These big four banks have been undergoing a diversification process in order to supply financial services products across the range and best suit their customers’ needs, and continue to assert their dominance on the market.
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