This chapter summarises how each of the four main areas of the retail financial services sector—banking, mortgage lending, life assurance and general insurance—has changed over the last five years. It briefly describes the structure of each sector, outlines the key business trends, and the major IT challenges each faces. Most of the sectors have similar problems as described in Chapter 2, for example, the need to cut costs whilst at the same time improving quality. However, each sector has its own particular problems and these are identified too.
The retail financial services sector consists of four main subsectors: banking, building societies, life and pensions, and general insurance, but it also includes companies dealing with a range of associated services such as credit cards, finance and unit trusts which are not dealt with in this survey.
The largest sector, in terms of employment, is banking with over 370,000 employees (BBA, 1995), followed by the insurance sector with 270,000 employees, split roughly equally between the general and life sectors. In addition, the insurance sector employs a further 100,000 in associated industries plus 32,000 working on a self-employed basis (ABI, 1996). The building society sector employs 104,000 in total (CML, 1995).
All of these subsectors are major spenders on technology and employ large numbers of IT professionals; for example, the top ten banks in the retail banking sector invested an estimated £2.5 billion in 1995 and employed 15,000 IT professionals (Watkins, 1995). Estimates of IT spending in the insurance sector are: £1.7 billion in the life assurance sector (Insurance Marketing Review, 1995); and £600 million in the top six composites which dominate the general insurance sector. The top ten building societies spent an estimated £800 million on IT (Spikes Cavell, 1995,1 see End Note 1).