Page 34 - TSB G Case Study

Lloyds Banking Group, Royal Bank of Scotland and
Santander.

Since the Big Bang in 1986, increasing competition in

banking has remained a key concern of policy makers.

Daniel Tischer (2) provides a model of the UK Competitive

Banking Sector which helps encapsulate changes in this

sector over the past thirty years. This can be understood

as three policy cycles (as shown in figure 1) each geared

to increasing competition focused respectively on

demutualisation (industry concentration),

online banking (efficiency and cost savings), and

new entrants (increased competition)

“In each cycle, the aim has been to directly

encourage (or, in the case of online banking,

assume) that a combination of new entrants -

so-called challengers - and growth of minor

players, would increase choice for customers
and produce a more efficient sector. If the aim

was more competition, as outlined below, the

outcome has been perverse, leading to further

consolidation and homogeneity.” (2)