Overview

• Since 2019, traditional lenders have lost £100 billion in customer savings to online banks and building societies, cutting their deposit share from 84% to 80% by 2024.
• Last year’s £3.7 billion drop in pre-tax profits marked the sector’s first downturn since the post-pandemic rebound.
• Operational costs rose 6% in 2024 while worker productivity declined, exerting further strain on bank profitability.
• Regulators have moved to loosen post-2008 ring-fencing requirements following Chancellor Rachel Reeves’ announcement of reforms last month.
• KPMG forecasts returns on equity will fall from 13% in 2023 to 8% by 2027 and urges lenders to transform business models with artificial intelligence to stay competitive.