The UK has one of the most competitive, efficient and secure domestic banking systems in the world. Banking represents about 50% of UK-based financial services by GDP, employment and tax revenue. Additionally, some 241 foreign-owned banks have offices, branches or headquarters located in London, managing over half of UK banking sector assets worth about £8,000 billion, mainly on behalf of non-UK customers.

What do retail banks do?

Retail banks provide banking services, loan facilities and financial advice to businesses and members of the public through large branch networks. More commonly known as high street banks, they serve individuals and small businesses; this often includes promoting products such as car loans, insurance products, savings products, credit cards and credit facilities.

Most banks offer business banking, with dedicated staff specialising in assessing and supporting the various financial needs of small businesses in different industries and usually in early stages of growth.

By contrast, private banks manage the wealth of high-net-worth clients with large sums (£500,000 or more) to invest. This involves recommending where individuals should place their savings, identifying suitable investment products and attending to pension provision and financial protection. The main banking groups offer services that cover the full spectrum of retail, corporate and private wealth management, so there is plenty of scope for a long and varied career virtually anywhere in the country.

Retail banking in the recession

The retail banking market has become very highly concentrated since the credit crunch in 2008. The Office of Fair Trading reported in January 2013 that the four large providers – Lloyds Banking Group, RBS, Barclays and HSBC – now have around 75% of the market. While there have been two new entrants in recent years – Metro Bank in 2010 and M&S Bank in 2012 – neither is yet in a position to provide a significant challenge to the established providers.

Retail banking is under constant scrutiny to ensure that services to members of the public remain competitive and understandable, however the regulation of retail banking is complex and expensive, which poses a significant barrier to entry for new competitors and therefore wider consumer choice. The financial crisis and recession have also weakened the smaller providers’ ability to compete. While bank lending has become easier to obtain than in the aftermath of the credit crisis, EU regulations now require the banks to maintain increased levels of capital, which acts as a constraint on how much money they can lend out.

Clearing

The UK’s banking network has a unique clearing system which enables the participating ‘clearing banks’ to process money on behalf of their customers more efficiently and cheaply than in many other parts of the world. Cheques and other paper items are physically transferred between banks at the same time as the electronic data is processed. Although the paying bank receives some of the data electronically, the physical items themselves must also be transferred so that they can be examined by the paying bank for security and fraud prevention purposes.

The clearing system works within a three-working day period, with the net balances settled each day between the banks across accounts held at the Bank of England. This clearing system is managed by the Cheque and Credit Clearing Company (C&CCC).

As well as clearing cheques, the system processes bankers’ drafts, building society cheques, postal orders, warrants, government payable orders and travellers’ cheques. The C&CCC also manages the systems for the clearing of paper bank giro credits (known as credit clearing), euro cheques (euro clearing) and US dollar cheques (the currency clearing for US dollar cheques drawn on UK banks).

Job roles in retail banking

Jobs in the high street branches are predominantly customer facing, such as working as a cashier, financial adviser, small business adviser or branch manager. These roles support the public’s need for cash, banking services, credit cards and loans; financial advisers are qualified to recommend savings, insurance, mortgage and pension products.

Retail banking is highly dependent on technological excellence. The increased technological demands, coupled with the rise of online banking, has led to a country-wide expansion of roles within call centres and operational centres, from front-line customer support to sophisticated technology-based roles. There are also important specialised functions, such as fraud prevention and detection, recruitment, training, legal, financial and compliance departments. A degree is not a requirement for entering retail banking, but successful entrants onto graduate training schemes are fast-tracked and can attain management roles quickly.

What’s it like to work in retail banking?

Working hours may be easier than many other areas of banking, but retail banking is still not necessarily a nine-to-five job – bank branches are open long hours and technological advances have encouraged customers to expect round-the-clock service via telephone and internet every day of the year.

Retail banking doesn’t offer the ‘rock star’ salaries available in the highest echelons of investment banking, but you can still make good money and there is plenty of opportunity for the career progression for ambitious graduates.

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