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Despite the fanfare, UK challenger banks have delivered a return on equity of 18.2% on average in 2014 (vs 2.1%, from the mainstream retail banks), face an uphill battle. Just over 2% of current account holders changed providers in 2014 and regulatory changes and new taxes also threaten to stunt the growth of upcoming banks as they seek to wrestle market share away from the big four.
Indeed the smaller, specialist banks that are targeting niche sectors, such as lending to housebuilders, delivered a return on equity of 18.2 per cent on average in 2014, while the larger challengers, serving the mainstream retail market, returned on average 2.1 per cent. However, all challengers, no matter their size, face the same fundamental challenge: UK customers rarely switch their current accounts and the big four high street banks still dominate this crucial relationship. Just over 2 per cent of current account holders changed providers in 2014, and Lloyds, Barclays, HSBC and Royal Bank of Scotland have 70 per cent of the market.
https://next.ft.com/content/09b68238-a95e-11e5-955c-1e1d6de94879#axzz3w6xZxkLV
