Called To Account: The UK Financial Services Sector
The last year was the most turbulent for the UK financial services industry in at least a decade. The collapse and subsequent nationalisation of Northern Rock, which once provided almost 20 per cent of UK domestic mortgages, was unprecedented among post-war British retail banks.
In the so-called credit crunch, UK and US banks have become increasingly reluctant to lend to each other because of fears over bad debt, especially in relation to sub-prime mortgages for consumers with poor credit records. This has put at risk the capital liquidity which is a key part of the modern financial services sector.
In the wider economy, developments are also moving fast. After growing an average of 170 per cent in 10 years, UK house prices have cooled. Lenders have culled mortgage ranges, particularly for 100 per cent and buy-to-let products. High street retailers are suffering as consumers rein in spending and forecasts for future UK economic growth have been cut to their slowest in almost 20 years.
Financial marketers have to respond to this changing backdrop. Even in buoyant times, the sector struggled to address public mistrust, scepticism and confusion. In a slowdown, negative attitudes may harden further.
In this brief overview, we have combined data and insights from several sources, including papers from WARC Online's Spotlight on Finance section, to ask two main questions:
- What is the state of the UK savings, credit and mortgage markets?
- What are the underlying current and future trends in provision of these types of financial services?