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UK Commercial Banking and Finance market report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Commercial Banking and Finance market, and the behaviours, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry and how fast are its rates of growth? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Expert analysis from a specialist in the field

Written by Lewis Cone, a leading analyst in the B2B sector, his extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Banks must confront the challenges of digital structural change and redesign their operating models. By strategically connecting their businesses with the vast amount of data available to them, such as through the cloud, they can build intelligence on customers’ evolving needs, which can drive value. Lewis Cone
Research Analyst

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Table of contents

  1. Executive Summary

      • Market Size
        • 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)
        • 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
              • 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
              • 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
                      • Figure 6: Profiled Companies’ Combined Income, 2012-2016, (£ Million)
                    • Forecast
                      • Stable growth expected in deposit levels despite ongoing uncertainty
                        • 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

                            • 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

                                  • Definitions
                                    • Methodology
                                      • Abbreviations
                                      • Market Positioning

                                          • The supplier
                                            • The customer
                                            • UK Economy

                                              • Key Points
                                                • Overview
                                                  • Figure 8: Forecast GDP development 2017-21, (% Annual Growth)
                                                  • Figure 9: UK GDP Quarterly Development, 2007-17, (% Quarterly Growth and GDP in £ Billion)
                                                • Inflation
                                                  • Interest rates
                                                    • House prices
                                                      • Figure 10: UK House Price changes, 2006-2017, (12 month % change)
                                                    • Consumer spending
                                                      • Manufacturing
                                                        • Figure 11: UK Manufacturing, 2014-17, (Index, 2013 = 100)
                                                      • Business investment
                                                        • Figure 12: UK GFCF, 2007-17, (£ Million, Chained Volume Measures, Seasonally Adjusted)
                                                      • Imports
                                                        • Exports
                                                        • Market Factors

                                                          • 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
                                                                • 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
                                                                • 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
                                                                • 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)
                                                                • 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
                                                                • Figure 20: Company Insolvencies in England and Wales, 2013-17, (Number and % Annual Change)
                                                                • 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
                                                                • Figure 22: Mergers and Acquisitions of UK Companies, 2012 -2016, (Units)
                                                                • 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

                                                                • Key Points
                                                                  • Latest annual bank stress test reveals industry robustness
                                                                    • Commercial deposits rise over 2017
                                                                      • Figure 24: UK MFIs Sterling Deposits from UK Resident Businesses, December 2015-17, (£ Million Outstanding of Deposit Liabilities, Excluding Under Repo, Not Seasonally Adjusted)
                                                                      • 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
                                                                      • 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
                                                                        • Figure 28: MBBG Deposits of Small and Medium-Sized Businesses, September, 2013-17, (£ Billion)
                                                                        • Figure 29: MBBG Deposits of Small and Medium-Sized Businesses, September, 2013-17, (£ Billion)
                                                                    • Commercial Borrowing

                                                                      • Key Points
                                                                        • Net lending remained positive in 2017
                                                                          • Figure 30: UK MFIs’ Net Loans to Non-Financial Businesses, Q4 2015 - Q4 2017, by Size of Business, (£ Million, Not Seasonally Adjusted)
                                                                          • 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
                                                                          • Figure 32: Average Interest Rate for UK MFI New Advances to PNFCs, at December in 2013-2017, (% Not Seasonally Adjusted)
                                                                          • 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
                                                                          • 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)
                                                                          • Figure 36: Demand for Corporate Credit by PNFCs in the Last Three Months, Q1 2012 - Q4 2017, by Business Size, (Net Percentage Balance)
                                                                          • 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

                                                                        • Key Points
                                                                          • ‘Fintech’ collaboration driving operational model change
                                                                            • Online business banking remains most used banking service feature...
                                                                              • 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
                                                                                • Figure 39: Business Confidence Index, per Half-Year, 2007-2017, (Index Figure)
                                                                                • 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
                                                                                • 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

                                                                              • Key Points
                                                                                • Ad spend declines again in 2017
                                                                                  • 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
                                                                                  • 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
                                                                                  • 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

                                                                                • 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
                                                                                            • 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
                                                                                              • Figure 51: Cost to UK Government of Financial Interventions in Banking Sector, at 31 October 2017, (£ Billion)
                                                                                            • RBS
                                                                                              • Lloyds
                                                                                              • Company Profiles

                                                                                                • Aldermore Bank

                                                                                                      • Figure 52: Financial Analysis of Aldermore Bank plc, 2012-16, (£ Million)
                                                                                                    • Company Strategy
                                                                                                    • Barclays PLC

                                                                                                          • Figure 53: Financial Analysis of Barclays plc, 2012-16, (£ Million)
                                                                                                        • Company Strategy
                                                                                                        • Clydesdale Bank PLC

                                                                                                              • Figure 54: Financial Analysis of Clydesdale Bank plc, 201317, (£ Million)
                                                                                                            • Company Strategy
                                                                                                            • Co-operative Bank

                                                                                                                  • Figure 55: Financial Analysis of Co-operative Bank plc, 2012-16, (£ Million)
                                                                                                                • Company Strategy
                                                                                                                • HSBC

                                                                                                                      • Figure 56: Financial Analysis of HSBC Bank, 2012-16, (£ Million)
                                                                                                                    • Company Strategy
                                                                                                                    • Lloyds Banking Group

                                                                                                                          • Figure 57: Financial Analysis of Lloyds Banking Group, 2012-16, (£ Million)
                                                                                                                        • Company Strategy
                                                                                                                        • Royal Bank of Scotland Group

                                                                                                                              • Figure 58: Financial Analysis of RBS Group, 2012-16, (£ Million)
                                                                                                                            • Company Strategy
                                                                                                                            • Santander UK PLC

                                                                                                                                  • Figure 59: Financial Analysis of Santander UK plc, 2013-17, (£ Million)
                                                                                                                                • Company Strategy
                                                                                                                                  • Figure 60: Profiled Companies’ Combined Income, 2012-2016*, (£ Million)
                                                                                                                              • Commercial Banking Forecast

                                                                                                                                • 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
                                                                                                                                        • Figure 61: Forecast UK MFIs Sterling Deposits from UK Resident Non-Financial Corporations, 2018-2022, (£ Billion at 2017 prices, % Annual Change)
                                                                                                                                        • 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

                                                                                                                                          • Trade Associations
                                                                                                                                            • Trade Magazines
                                                                                                                                              • Trade Exhibitions