Home / Grid / Too many banks

Too many banks

I’m losing track of the number of new banks that have announced they are launching in Britain.  I say there’s 40, but there appears to be a new one every day.  The latest one is Zopa, the P2P lender, who are branching out … not that they have any branches to begin with.

So, from memory, the list of just UK new banks includes:

  • Aldermore
  • Atom
  • Bnk to the Future
  • Civilised
  • Fidor
  • Ffrees
  • Hampden & Co
  • Handelsbanken
  • ipagoo
  • Islamic Bank of Britatin
  • Lintel
  • Loot
  • Metro
  • Monese
  • Monzo, formerly Mondo
  • Neat
  • Numbrs
  • OakNorth
  • One Savings
  • Shawbrook
  • Starling
  • Taqanu
  • Tandem
  • Tide
  • Triodos
  • TSB
  • William & Glyn
  • Zopa

That list is not exhaustive but, even so, it’s a helluva list.  Some of these are full banks with branches, some are digital banks, some are just front end apps, some are emoney firms … but they all claim to be banks with bank in their name one way or other.

My question: how are they going to differentiate?  How are they going to get customers?  Why so many of them?  Can they all survive?

Bear in mind few people ever even change their bank, how are they going to persuade enough people to switch, especially if they have no physical presence?

I’m not being negative, but I’m just trying to say that with 77% of people tied to the Big Four banks – HSBC, Barclays, RBS/NatWest, Lloyds – and many other smaller banks with branches out there already – Nationwide, Clydesdale, Yorkshire and the building societies – do we really expect there to be a need to have 40 new upstart banks?  If yes, which ones are really going to make a mark, as we’ve had challenger banks for years – Virgin Money being case in point – and none of them have made any real dent yet, bearing in mind that in 2002 the Big Four only had 69% of the UK deposit accounts and now it’s 77%.

Just saying. 

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

Check Also

dead

Blockchain is dead, long live the Blockchain

I’ve noticed a great deal of schadenfreude related to the R3 bump.  Lots of people …

7 comments

  1. We need to change mind. These are not traditional banks, they are startup banks, few of them plan to be mainstream banks, and they may focus on the long tail. The cost of failure is so small with technology being main investment.

  2. crossing the fingers for the investors

  3. Think your number is very low…. https://thebanks.eu/compare-countries-by-banking-sector shows 367 for the UK. However this still places UK 7th by quantity in the EU. Other countries thrive on many more, so why not UK?

  4. Monizo, Pariti, Community Bank, Osper, GoHenry, Secco…

    Agree totally Chris. The same is true of FinTech’s, once the funding drys up and without growth…pop !

    Startups that survive will have truely differentiated customer offering or have created a new business model for banking products, not just a digitisation of existing banking services and products.

  5. There are possibly too many banks offer traditional banking, some transforming and many new that are digitised variants of the old style of banking. There is room for a huge number of new “banks” but these won’t be seen as banks and may not operate with their own licences. The will make money out of the customer engagement in different ways to existing banks:

    1) MarketPlace’s – some will act as aggregators (some with advice) introducing 3rd party products (like a MoneySupermarket or YourWealth)

    2) Vertical Integration – some will vertically integrate to target specific customer segments. For example Monizo is a “bank for freelancers”, their service is to help Freelancers so they provide invoicing, expense tracking and also an account. This approach will spur a growth of “deposit takers”, each with a different mix of value added services around the account.

    3) Engagement – some will sit on top of existing accounts and improve the customer engagement, a good example are chatbots like MeetCleo and Plum. With PSD2, this becomes much easier and will provide the ability to engage across all accounts a customer has to further enhance engagement.

    So there is room for many more, but they won’t be the same as we have today…
    Banks for Clubs (helping to manage subscritions and memberships, issue newsletters, diaries for events…
    Banks for Landlords (helping to manage property portfolio, and take rents…)
    Banks for taxi drivers (oops that Uber ;o)
    ….

Click on a tab to select how you'd like to leave your comment

Leave a Reply

Your email address will not be published. Required fields are marked *