The UK Banking Sector’s Dynamics And Recent Developments

  • Jan 21, 2019 GMT
  • Team Kalkine
The UK Banking Sector’s Dynamics And Recent Developments

According to the recent Bank of England’s survey that began in 2007, the British Banks are in for a low as the consumer spending or demand for credit loans is expected to decline in the first quarter of 2019. The information only added confirmation to the ongoing political turbulence in the United Kingdom leading to the overall slump. Thus, businesses and consumers are apprehensive of taking major financial or risk associated investment decisions.

However, it has also been lately reported that small banks would benefit from certain models being tweaked and developed in the Brexit referendum to encourage them to take on their larger rivals. Essentially, there will be no degradation of standards. In fact, these banks would have to comply by fewer yet tougher rules. It’s only a major possibility as of now given the tarnished relations between EU and the UK.

If the two units fail to converge to a comprehensive deal, the United Kingdom will have to conform closely to the Brussel Foreign banks regulations to remain a part of the single market in the wake of the cancellation of regulatory norm that allows the financial firms to sell products and services across the EU countries.

Recently, British business finance intermediary MarketInvoice, incorporated in 2010 and that began services in 2011, has secured EUR26 million in a series B funding round from the banking giants Barclays and Santander. Besides, it has also bagged a EUR30-million debt facility from Viola Credit, an Israeli lending fund. The MarketInvoice essentially assists small to medium enterprises sell their unpaid invoices via an online platform to gain access to a number of working capital loans. It is the UK’s first start-up that enables small-to-medium enterprises to sell their unpaid invoices via an online platform to gain access to working capital loans. The debt funding will help the firm to expand its business loans provision, invest in technology and data, as well as broaden horizons and the market reach by forging new partnerships with domestic and cross-border banks in the future.

Since 2011, MarketInvoice claims to have funded invoices and business loans to UK clients worth more than EUR2 billion, thus making the largest online invoice finance platform which has till now helped thousands of companies with funding amounting to more than 170,000 invoices.

Barclays already offers invoice financing to large businesses, for which it partnered with MarketInvoice in 2018. In 2019, they are ambitiously extending their reach to smaller business clients as well amidst the flourishing and potentially rewarding start-up ecosystem.

These developments are helping the banking sector evolve and revolutionise the way businesses in the country manage cash flow and contribute to accelerate economic growth.

Talking of the international linkages and scenario, the recently released GDP figures of China exhibit a slightly declining growth trend which may be a cause of concern for the economies worldwide. The evidence lies in the falling consumer spending, exports and retail sales. The situation is not very favourable for the UK which is the sixth largest trading partner with China and hoping for possible support from China post-Brexit.

To add to the widespread complications, the Bank stocks in the UK have been reportedly trading low midday on January 21, 2019, closely following the air of caution instilled by the Brexit turbulence. For instance, Royal Bank of Scotland Group Plc (LON: RBS) was trading lower by 1.7% during the day.

With Bank of England reducing the interest rates to a historic low level, the spotlight is back on diverse investment opportunities. 

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