As UK banks continue to report their interim results, the forecast remains positive for banking giants Royal Bank of Scotland (RBS) and Lloyds Banking Group. While the outlook is rosy, traditional lenders still face fierce competition from digital challenger banks, with 61% of smartphone owners opting to bank solely online.

RBS is expected to outperform analyst predictions and Lloyds’ strong financial performance is forecasted to continue. Although confidence is high, traditional institutions remain under pressure to maintain market share in the increasingly digital climate. To do so, many are focusing on securing their long-term future by improving customer-centricity, regardless of the short-term impact on profit.

Many traditional banks are looking for novel ways to raise the standard of their customer services, with features such as chatbots and roboadvisors, says Bhupender Singh, CEO of Intelenet Global Services.

Mr. Singh comments: “Despite 42% of people moving to alternative service providers for personal banking needs, over half are choosing to stick with their traditional bank, making these institutions a force to be reckoned with.

“But this does not mean that traditional lenders should become complacent - in the age of the customer, it is crucial that banks can provide advice and support that is truly in the customers’ best interest. One way that banks are streamlining the customer experience, is by using chatbots and AI technology to carry out customer interactions.

Mr. Singh continues: “For instance, voice recognition software can be paired with customer records and predictive tools to identify a specific customer and confirm which department they require before sending them there directly, without the customer having to explain their problem multiple times. This dramatically improves the customer experience and, for one bank, has reduced the average handling time by 40%.

“But while technology is a key part of the solution, it is important to remember that it is simply that – a part of the puzzle. A human touch is still essential to solve many of the financial issues that people face. Much of the best automation and AI technologies in the banking sector takes away the burden of repetitive tasks for staff, allowing them to focus their efforts on quality in-person service.”

(Source: Intelenet® Global Services)

Royal Bank of Scotland has failed the 2016 Bank of England banking stress test.

However the regulator said it has approved remedial action that RBS is already taking to improve its resilience to financial shocks.

In aggregate the Bank of England said the UK banking system is currently capitalised to support the UK in a severe economic scenario.

The 2016 test was the most severe test applied to banks yet. In many ways the scenarios tested are worse than conditions during the financial crisis; in particular the stress tests project UK house prices falling 31%.

The stress test is a worst case scenario, and the Bank of England’s main baseline projection is in fact for the capital positions of UK banks to improve in aggregate in 2017.

Laith Khalaf, Senior Analyst at Hargreaves Lansdown commented:

‘RBS is still the weak link in the UK banking chain, almost a decade after the financial crisis came close to wiping the bank out.

On the face of it the bank currently has a high capital buffer, but the 2016 stress test reveals than under extremely severe economic conditions, that would quickly be eroded.

Unlike most of its peers, RBS doesn’t have the luxury of a dividend which it can cut to support its capital position. The bank is still in the process of restructuring its business, not to mention spinning off Williams & Glyn, as well as facing potentially hefty misconduct costs in the US, all of which serve to weaken its hand.

However RBS is in no immediate danger, barring a repeat of something akin to the financial crisis, and it’s important to bear in mind that the 2016 stress test uses an extremely severe economic scenario to challenge the resilience of the UK banks to financial shocks.

Indeed the point of these tests is to identify inadequacies which require remedial action, and to that end RBS has submitted a revised capital plan which has been accepted by the regulator.

The good news from the stress test is the regulator believes that as a whole the UK banking system is in a good position to weather a particularly nasty economic storm.’

(Source: Hargreaves Lansdown)

RBS and NatWest have announced they will be opening 34 of their busiest branches this coming Bank Holiday, May 4, 2015.

Bank holidays became law in the UK in 1871 to give workers time off, which meant that other businesses, dependent on banks, followed suit. However, modern-day life means that customers are demanding greater branch access. RBS and NatWest will trial the bank holiday opening next week, with a view to opening even more branches on future bank holidays if the trial is successful.

Jane Howard, Managing Director of Branch and Private Banking for RBS and NatWest said: “Customer behaviour is changing and as we work hard to become number one for customer service, trust and advocacy in the UK, we are continually looking at ways to adapt and improve service for our customers.

“Many of our customers have busy lives but are off work on a bank holiday. At a time where many people are thinking about buying a house, we're breaking with tradition and opening our busiest branches where our customers need us. Whether that's for a mortgage or just to reflect on their finances, we're here to help. “

The 34 branches will be open from 10.00am – 3.30pm and will provide the usual banking facilities and the majority will also have their mortgage advisers available to discuss customers' mortgage requirements.

NatWest is due to open a new Canary Wharf Crossrails development in the next few weeks and this will be the first of the bank's branches opening permanently on bank holidays.

The UK’s RBS Group announced an attributable loss of £3,470 million (€4.7 billion) in 2014, compared with a loss of £8,995 million (€12.3 billion) in 2013, when it posted its 2014 financial report today.

However, the beleaguered banking group said it was making further progress towards a stronger, safer and more sustainable business.

“Last year we identified the areas we needed to improve in order to deliver our strategy - cost, complexity, capital and trust from our customers. The energy and resolve of our people have resulted in significant progress on each, and we have delivered on the goals we set for 2014,” said Ross McEwan, Chief Executive, RBS.

The 2014 results included a loss from discontinued operations of £3,445 million (€4.7 billion), which reflected a £3,994 million (€5.5 billion) fair value write-down in relation to the reclassification of Citizens to disposal groups, and a tax charge of £1.9 billion (€2.6 billion) which included a £1.5 billion (€2 billion) write-off of deferred tax assets.

Operating profit totalled £3,503 million (€4.8 billion) for 2014, compared with an operating loss of £7,500 million (€10.3 million) in 2013. This reflected improved operating results from the core domestic businesses together with significant impairment releases in Ulster Bank and RBS Capital Resolution (RCR).

Following its results release, RBS announced the following changes to its management team:

• Rory Cullinan will become Executive Chairman of CIB & Capital Resolution. He is currently CEO of RBS Capital Resolution Group (CRG).
• Donald Workman has been appointed as Executive Chairman, Private Banking.
• Rory Tapner, Chief Executive of Coutts, will step down and leave the bank, with immediate effect.

Within the overall strategic shape outlined for Corporate & Institutional Banking (CIB) in 2014, RBS said it is making further changes to improve its medium-term returns, building a stronger, safer and more sustainable business, focused mainly on UK and Western European customers, both corporates and financial institutions, supported by trading and distribution platforms in the UK, US and Singapore.