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ARTICLE · 15 NOVEMBER 2010

OFT Reports on Challenges for New Entrants in Retail Banking

SJ Berwin LLP
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The OFT has published its review of barriers to entry, expansion and exit in retail banking. A key finding is that new entrants to the retail banking sector face significant challenges in attracting customers and expanding their market shares, due largely to consumer inertia.

United KingdomAntitrust/Competition Law
SJ Berwin'S EU & Competition Team
SJ Berwin'S EU & Competition Team

The OFT has published its review of barriers to entry, expansion and exit in retail banking.  A key finding is that new entrants to the retail banking sector face significant challenges in attracting customers and expanding their market shares, due largely to consumer inertia.

The review was launched in May 2010 to identify any obstacles blocking firms from entering the sector or from successfully competing against existing firms, as well as factors preventing inefficient firms from exiting the market.

While the review found that most prospective entrants are able to meet regulatory requirements, and source the necessary inputs, new providers continue to face difficulties in attracting customers and expanding their market share. This is because personal and small business customers are generally reluctant to switch providers and have a preference for banks with a local branch.  It was noted that loan products present less of an issue, with personal customers more

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