In another damaging blow for the “under pressure” banking industry, Barclays recently announced that they will be cutting a total of 19,000 jobs worldwide by 2016, with 7,000 of the lay-offs coming from their investment banking division.
The banking giant has said that the business will be ‘repositioned, simplified and rebalanced‘. CEO Antony Jenkins believes it will make them ‘leaner’ and ‘much better balanced’ in the future. He also mentioned that they will only be focusing on international banking where Barclays has ‘capability, scale and competitive advantage.’ It has subsequently been estimated that about 7,000 of the total will be from bankers based in the City of London – 2,000 of whom will be from the investment arm. High street banks in France, Portugal and Italy are also in the firing line.
The new player in the finance arena
In the wake of the news, many commentators believe that as these jobs are shed, so will be a significant part of British banking tradition.
Charlotte Webster, Campaign Manager for MoveYourMoney, said:
As 19,000 jobs go at Barclays, so too does part of British Banking history. And this is not one we remember with great affection, lets face it. Despite their scale, as one of the five banks often termed ‘too big to fail and too big to jail’ they represent the old school. Meanwhile people are talking with their feet, with 2.4 million people opening accounts with other providers that offer more transparency and don’t combine investment and retail arms. Britain is already moving on to a new financial system, with new jobs as the UK leads the alternative finance revolution. Looking for a fresh, modern approach to finance, peer to peer lending volumes in this country alone are doubling every six months. The world of finance is on the move, driven by people not the banks.
Charlotte looks spot on in highlighting peer-to-peer (P2P) lending as the future of finance in light of recent industry figures. For example, a report published by the Peer‐to‐Peer Finance Association (P2PFA) in April shows that cumulative lending in the UK at the end of the first quarter in 2014 hit £1.2 billion, compared to just £491 million at the same period of 2013. The data also highlighted strong growth in both business and consumer lending with over 5,100 business borrowers and 82,000 consumer borrowers supported by more than 94,000 lenders at the top British platforms, including RateSetter.
Commenting on the figures, Christine Farnish, Chair of the P2PFA, said:
Peer-to-peer lending is becoming mainstream and is a credible alternative to banks for consumer and business finance
RateSetter CEO Rhydian Lewis echoes these sentiments, and is quick to point out that, whilst the industry has certainly taken root since the 2008 banking crisis, P2P does not rely solely on bank weaknesses in order to prosper.
It is growing because it is offering better value and service and consumers are choosing to use it. Designed with the customer in mind and unburdened by legacy issues, it is proving to be an efficient means of matching the supply and demand of money.
With the sector now regulated by the Financial Conduct Authority, the onus is on the P2P platforms themselves to build strong businesses and continue to deliver better outcomes for savers and borrowers than has been the case with the traditional banking service.