There will be a reduction in the supply of credit as borrowing costs rise and interbank lending contracts in the wake of the ongoing eurozone crisis. These factors will combine with tighter capital funding requirements to precipitate further deleveraging, reducing the lending capacity of banks and placing further pressure on the mortgage market.
Virgin Money’s acquisition of Northern Rock will give it a significant high street presence, and the brand is striving to establish a reputation for honesty and fairness. The Co-operative Bank’s planned takeover of the Lloyds Banking Group divestiture give its branch network and share of the current account market a dramatic boost.
Mobile will become a mainstream banking channel in 2012, driven by growing smartphone adoption. For many consumers mobile will become their main means of dealing with their bank. Providers will bring out different mobile apps for different consumer segments, and easy-to-use apps will spur the growth of mobile payments.
2011 was an eventful year, with banks having to deal with the prospect of tougher regulation, the challenge posed by new entrants, and a stagnating mortgage market. 2012 will be just as fascinating, with lending set to come under further pressure and mobile banking predicted to become a mainstream channel, among other developments.
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