Quarterly results show signs of recovery
• The quarterly results showed a lot of promise, with a number of Banks (Lloyds Bank, Natwest, Barclays) publishing better than expected results.
• These hint at signs of the first green shoots of recovery, with talk of high street banks being allowed to re-start paying dividends.
• With the UK going into various levels of lockdown all of the banks remain cautious.
• Furthermore despite some promising results at HSBC, they are suggesting charging customers for current accounts - if HSBC go down this route, we don't expect others to follow.
The future of the workplace
• It’s still unclear what the long term effects of the Covid-19 pandemic will mean for the workplace. Research this month indicates 75% of City firms are assessing their current office space.
• A number of banks have halted their return to office following new restrictions in September (HSBC and Barclays), while others have confirmed home working will continue well into 2021(LBG targeting spring and RBS had planned for a 2021 return) – this all before the latest government announcement.
• We’re seeing a range of decisions being made on the workplace; one of our clients is taking a very radical approach which can be summarised as “digital first”, and another is committing to permanently moving contact centres to remote working. While at the other end of the scale, some of our clients envisage a return to the pre-COVID workplace model.
• However, we believe most will converge on moderate change somewhere in between; not too radical, but recognising that the environment is evolving. This requires a review of your overall workplace and people strategy; not just some analysis on the number of desk-spaces.
• For more insight from us, visit our blog on the future of the workplace.
Challenging lending market
• The mortgage market has been hit by high demand resulting from the stamp duty break – operationally lenders are struggling to keep up thus having to withdraw products and increase rates, all in an effort to slow down the demand.
• On top of the operational challenge, banks have to consider balancing meeting the needs of clients while at the same time mitigating any risk linked to the COVID pandemic – with lending criteria changing just as much as rates.
• It is now looking like the wider loans market will be affected as a result of risk mitigation, as increased interest rates and restricting products on credit cards and unsecured loans are expected.
• Organisations are becoming more agile and adopting new practices that ultimately enhance their products and services - banks have acted quicker than ever to adjust, add and remove products.
• This could result in new opportunities for lenders through a more targeted approach for parts of the market they want to operate in - there might be higher margin business available.
And in case you missed it…
• The FCA published their Banking Regulatory Initiatives Grid. What stands out for us in here for the banking sector are the operational resilience policy statement, fintech strategic review, Open Banking implementation and outsourcing, and third party risk management policy statement. All are due to progress in Q1 2021, so a busy start to the New Year.
• Open Banking has grown significantly with an estimated 2 million UK customers, however thoughts should now be turning towards Open Finance – giving banking customers access to a wider range of sectors.
• While there are calls to replace the BBL scheme, there is a need to maintain the accessibility to those who need it but avoid any further fraudulent activity and exploitation.