A New Landscape: Challenger Banking Report 2016 | KPMG | KY

A New Landscape: Challenger Banking Report 2016

A New Landscape: Challenger Banking Report 2016

Our review of the Challenger banking landscape proves that Challengers are here to stay, and are once again outperforming the Big 5 retail banks in growth and ROE

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Related content

The Game Changers, our 2015 review of Challenger banks outlined how Challengers were seeking to be different, either through differentiation driven by resources or the capabilities they have. These continue to be defining characteristics of the Challenger.   

In A New Landscape, we additionally delve into the emergence of digital-only banks, the potential impacts from changes to the But to Let market – a core area of lending for many of the participants, and margin improvement through management of cost funding.

 

Challenger growth, Big 5 decline

  • Balance sheets have continued to expand, with lending assets for Challengers increasing by 34.4% compared to a decline of 10.9% for the Big 5 UK retail banks: Barclays, HSBC, Lloyd’s Banking Group, Royal Bank of Scotland and Santander
  • Smaller Challengers’ return on equity (ROE) reached 17% against 15.8% in 2014, which contrasts with the average ROE of the Big 5.

Buy-to-let changes: a sign of things to come?

  • This new breed of Challengers are giving incumbents a run for their money through personalisation, open ecosystems, transparency, predictive intelligence and the commercialisation of data.

Digital-only banks: a splash of colour in 2016

  • This new breed of Challengers are giving incumbents a run for their money through personalisation, open ecosystems, transparency, predictive intelligence and the commercialisation of data.

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