Overview of the UK Banking Sector: Size, Influence, and Challenges

Banking Industry in UK
1.0 Introduction
The UK Banking sector is the world’s third largest in terms of Return on capital & efficiency after USA and Japan. Around 3.5% of the total UK’s workforce is working in banking sector and it is providing services to 95% of the population. UK is considered as Investment Hub for Private Banking & Investment in the international Market. 2.0 Size and Importance of Banking Industry to National Economy The UK Banking sector is one of the largest sectors to the contributor of nation’s economy.

Last year, financial services and Banks contributed to 7% of the Country’s GDP. The Jobs in Financial services and Banks have increased by 29% from 2011 January. The financial services and Banking sector comprised 8.9% of the total GDP share in year 2010 and employing with over 1 million people. The Financial services pay over £63 billion of tax from employees and companies. This comprises form 12.1 % of the total Tax collection. The industry is the largest earner of net exports and Banks contributes revenue of £24.

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7 billion out of total industry’s revenue of£ 41.4 billion in year 2010. 2.1 Number and Size of Companies in the Industry

There are large numbers of banks compete in the domestic market. The Top Five Banks in terms of market Capitalisation in UK are HSBC (£122.5 billion), Royal Bank of Scotland (£50 billion), Lloyds Banking Group (£44.3 billion), Barclays Bank (£38.4 billion), and Standard chartered (£37.2 billion. The UK banks are providing services for customers all over the world in savings accounts and personal current accounts. There are around 147 million debit and credit cards in issue.

These Banks are processing with excess of four million standing orders and direct debits each year, operating more than 9000 branches, processing 775 million cheques and the value of 11.2 million mortgages has worth above 1.2 trillion. 2.2 Significant Issues Facing the Industry

The UK Banking industry has faced a radical shift with market liberalisation through resulting competition and deregulate. Takeovers and mergers was also the other transformational shift in UK banking industry. In 2011 the UK banking sector was expected that borrowing costs will face pressure from government and private companies. The UK Banks will have to cut down their activities and adapt to the changing conditions. The Total UK based banks have declined from 400 banks to less than 100 and the financial power and average size of banks have increased. The Building societies which accounts for 20% of mortgages and personal deposits have also decline in the country. The UK banks are spending highly in IT sector. The speedy expansion of E-Banking is the biggest driving force for developments in UK Banks. The UK citizens are getting access to call centres, ATM and Internet.

3.0 Conclusions and Recommendations
In collective, the Balance sheets of UK Banks are higher than 500% of the yearly UK GDP. The first three largest Banks have individually higher assets as compared to annual UK GDP. In the period of acquisitions and mergers, the competition among the Banks is severe. In order to compete successfully, UK banks will have to invest in Technology and develop core solutions.