So many new banks – how many can succeed?

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I am surprised how many new start-up banks there are in Britain.  My list so far includes physical distribution players such as:

• Santander (a challenger?) that moved to the UK in 2004 with the acquisition of Abbey
• Banco Sabadell’s acquisition of Lloyds spin-off TSB
• the soon-to-launch RBS spin off William & Glyn
• Vernon Hill’s Metro Bank which IPO’s tomorrow
• Virgin Money that, after rebranding Northern Rock has a substantial branch base
• Handelsbanken, which has quietly built up 200 branches in the UK
• One Savings Bank, formerly Kent Reliance Building Society
• Aldermore Bank, a retail bank focused upon small to medium enterprise (SME) businesses

And digital first banks including:

• Atom Bank, backed by BBVA*
• Fidor Bank, passported over here from Germany
• Starling Bank, created by former banker Anne Boden*
• Mondo, which raised £1 million in a crowd-sourced funding round last week in just 96 seconds*
• Tandem, led by the indominatable Ricky Knox*
• Secco, being launched by former Lloyds visionary Chris Gledhill
• Lintel Bank, a Fintech lending bank based upon the vision of Nazzim Ishaque
• Monese, a bank service targeting expatriates

Along with specialist banks such as:

• Charter Savings Bank will focus an online savings account
• Hampden Bank, a private bank based upon honesty, integrity and fairness
• Civilised Bank for SMEs
• OakNorth Bank for supporting SMEs
• Shawbrook Bank, also focused upon SMEs
• Loot Bank, a bank for students from a student

*In a decent article by Scott Carey for TechWorld, you can find out more about Atom, Tandem, Mondo and Starling.

This does not even include the long list of other movers and shakers like Zopa, Funding Circle, Ratesetter, CrowdCube, Seedrs, Nutmeg and more.

We must not forget there are other small banks out there too, such as the recently spun off banks Clydesdale and Yorkshire, formerly owned by NAB.  There is also a large Building Society sector, with Nationwide effectively a large bank.  There are also specialists and credit unions, but not any of significance.

It does seem however, that we have a market that is now over-banked and not all of these players can survive, especially when the Big Four banks own 77% of deposit accounts and 85% of SME business.  Getting these customers to switch is going to be the biggest challenge of all.  It doesn't mean they won't, just that it's a challenge.

The only other markets that are seeing so much innovative change must surely be China and India.  China because Alibaba and Tencent have launched banks, along with an explosive P2P lending market that some would say is shadow banking run rife; and India because they have 23 new banks too:

UNIVERSAL BANKS: IDFC and Banhan

PAYMENTS BANKS: Aditya Birla Nuvo, Airtel M Commerce, Cholamandalam Distribution, Department of Posts, Dilip Shantilal Shanghvi, Fino PayTech, National Securities Depository, Reliance Industries, Tech Mahindra, Vijay Shekhar Sharma and Vodafone M-pesa

SMALL FINANCE BANKS: Au Financiers, Suryoday Micro Finance, Capital Local Area Bank, Disha Microfin, Equitas Holdings, ESAF Microfinance and Investments, Ujjivan Financial Services, Janalakshmi Financial Services, Utkarsh Micro Finance and RGVN (North East) Microfinance

Are these the most exciting times for new bank offers or what?

Meanwhile, in the USA, there’s:

• Start Community Bank (New Haven, CT)
• Bank of Bird in Hand (Bird in Hand, PA)
• Lakeside Bank (Lake Charles, LA)

Oh ...