On 13 August 2015, the Competition and Markets Authority (CMA) published a working paper, ‘Barriers to entry and expansion: branches’, from its ongoing investigation into the retail banking market. The working paper is a continuation of the CMA’s work looking at natural or intrinsic barriers to the UK retail banking market, and sets out the evidence it has gathered on bank branches.

Consumer research found that local branch convenience is the second most important reason for small and medium sized enterprises and the third most important reason for personal current account customers in choosing who to bank with. While firms are able to enter the retail banking market without an own-branded network, the key issue is whether banks can achieve sufficient scale to compete effectively in retail banking without a branch network. If they cannot, the cost of acquiring and maintaining branches may act as a barrier to expansion.

This is one of a series of consultative working papers which will be published during the course of the investigation. These papers do not form the inquiry group’s provisional findings. The group is carrying forward its information-gathering and analysis work and will proceed to prepare its provisional findings, which are currently scheduled for publication in September 2015.

For the working paper click here.