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.