My observations are there are some basic issues with value with the traditional retail banking model that render most of a retail banks value over the medium term . To explain,

  1. £4tr investments are managed at a cost of £400bn pa, but the value of these investments has not gone up?
  2. Overheads enable Banks suppliers usurp Banks with their lower overheads
  3. Products are at best very misleading:
    1. Unit trusts would have to deliver a 37% return if they were to make a modest 2% return above inflation over their life time.   It’s not going to happen?
    2. Pensions plans will deliver about 2% less than the stated returns, and most pension planning suggesting early investment is flawed and fees exorbitant
    3. Annuities, current account bundled costs, equity release loans are all popular but miss sold to the banks profit when there are far better alternatives

Banks are very lucky in that the majority of the public are financially illiterate for example; most people don’t realise that a smaller budget deficit means that debt goes up, and have no grasp of the huge compound effect of small increases in interest rates!

There is more of a fundamental review required of the retail banking business model and the best way to deliver this value.      Improving customer service in banks just enables bank customers to switch away to their more nimble competitors such as Metro bank!

The banking industry in Africa is now dominated by mobile phone transactions without infrastructure,   if a bank is now an obsolete business model why are we trying to save them?