A KPMG report released earlier this month revealing a drop in mainstream lending also let slip a few subtle but stern warnings stating that high street banks are faced with serious threats from today’s market.

The report, entitled Bank to the future, opens with the statement: “The vital next step for UK banking is a conceptual change.” The introduction notes: “We see widespread recognition of the need for more modern, flexible technologies.”

Nick Urry, Partner in KPMG's advisory practice speaks in the report about how traditional banks are under pressure to start embracing fintech- the fusion between technology and finance. "Failure to address the inherent IT and platform risks threatens the survival of the business in the short term, and not being able to leverage IT for business advantage jeopardises bank survival in the long run."

While describing the today’s environment for traditional banks as challenging and dynamic, on the topic of short-term digitalized financial services Bill Michael, EMA Head of Financial Services at KPMG states: “Banks will need to become more agile and, in particular, get a grip on technology quickly."

He then goes on to talk about threatening prospects in a market abounding with options to switch and move providers: "The ability to pre-empt such moves and deliver services that meet the needs of ever more demanding consumers is the real disruptive threat from challenger institutions. These newcomers can’t match existing players for size or market share – but they can change consumer expectations about convenience, context and customisation."

When closing the report, pointing at a welcome growth in self-belief in the banking sector, Bill Micheal sums up today’s market as: "… a new environment, defined by the ethical commitment of banking’s new leaders, the scrutiny of society, the attentions of regulators, competition from new sources and transformative technology."

We embed the previously unpublished report below.

Kpmg 2014 Interim Results and Banking Benchmarking Report by Matei R.