Product Type: Market Research Report
Published by: Datamonitor
Published: August 2006
Product Code: R313-16901Description Introduction
The retail lending market delivered a subdued performance in 2005, restrained by a weaker lending environment and uncertainty in the housing market. But what is the outlook for the future? This brief examines the five key factors that are set to shape UK retail lending in 2007 and beyond.
Scope- Covers consumer credit and mortgages in the UK.
- Provides forecasts for the retail lending sector split by the consumer credit market and the mortgage market.
- Examines the major challenges faced by the retail lending industry such as converging lending markets and reduction in fee income.
Highlights
Products boundaries are blurring giving rise to new opportunities for the market and increased competition in the retail lending market.
The loss in fee income on certain products will force lenders to alter the way in which their products are priced in order to boost revenue.
With less regulatory burden and more harmonization, cross-border M&A activities will intensify and it is highly probable that the UK retail banking sector will be impacted by this trend.
Reasons to Purchase- Learn about Datamonitor's forecasts for the consumer credit and mortgage markets
- Understand the main challenges facing the retail lending industry over the coming years.
Table of Contents - DATAMONITOR VIEW
- CATALYST
- SUMMARY
- METHODOLOGY
- ANALYSIS
- A less rosy economic climate and other specific factors will lead to a slow growth in the UK retail lending sector
- The retail lending market will grow at a slower pace to reach £539.0 billion in 2010
- The consumer credit sector will grow at CAGR of 3.8 per cent over the next five years
- The mortgage sector will grow by a mere CAGR of 2.9 per cent over the next five years
- A less rosy economic climate than in previous years will restrict the future performance of retail lending in the UK
- A few major market-specific factors will further constrain the retail lending sector
- Increasing competition from debit cards is adversely impacting on credit card lending
- Affordability pressures remain a major issue in the mortgage market
- Increasing bad debt will lead to lenders adopting a more stringent lending
- An increasing number of households are experiencing financial difficulties as a result of high levels of indebtedness
- Consequently, lenders' unsecured business is increasingly being affected as consumers struggle with their debt commitments
- Lenders are responding by tightening their lending criteria
- Lenders' shift to more selective acquisition strategies will adversely impact on the growth of the retail lending sector
- Regulatory crackdown on fees will lead to retail lenders redesigning their pricing structures
- The regulators are clamping down on excessive fees charged by retail lenders
- Regulators have recently told current account providers and mortgage lenders that their fees are excessive
- Lenders are likely to lose significant revenue
- Consequently, lenders are likely to redesign their pricing structures in order to compensate for the loss of income
- The fact that retail lending sectors are converging will lead to greater competition among players
- The delineation between retail banking products is blurring as various hybrid products have emerged and consumers have become more sophisticated
- Moreover, the way consumers are using some promotional offers is creating less distinction between products
- Consequently, some lenders have adapted their lending strategies accordingly in order to better respond to consumers' needs and enjoy a number of benefits
- By adopting a more integrated approach, lenders can expect to generate a number of benefits
- The fact that products are converging and lenders are responding accordingly implies a more competitive retail lending market in the future
- Going forward, mergers and acquisitions will redesign the shape of retail banking in the UK
- Domestic consolidation among high street lenders appears less likely to happen but will be a common feature for building societies
- Competitive pressures and increased operating and regulatory costs are forcing small players to merge
- Foreign players will play an increased role in the UK retail banking sector in the future
- EU initiatives towards the creation of a single market for financial services will open the door for more international M&A activities
- APPENDIX
- Further reading
- Datamonitor Consultancy
- Ask the analyst
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