How the UK’s new breed of digital banks compare
As the dust settled on the 2008 financial crisis, the Bank of England started a process that would eventually open the door for a new type of bank to enter the market.
In an attempt to introduce more competition into an industry that was seen as a black box from the outside and which had lost touch with its customers, the Bank of England revealed a simplified two-step process with lower capital requirements for setting up new banks in 2013.
A YouGov survey from 2013 shows just how far the public’s trust in the banking industry had eroded. Eighty-four percent of respondents agreed with the statement “bankers are greedy and get paid too much”.
This is where the challenger banks come in. These new banks can start afresh from a reputational and technological standpoint. Not only have they not been tarnished with the financial crash but they can build their IT systems from scratch, saving on the costs of maintaining sprawling legacy systems, not to mention a network of expensive brick and mortar branches on the high street.
Fast forward to today and this new breed of bank is starting to get licensed and in one case has attracted more than one million customers. These banks are looking to appeal to digital-savvy customers with an entirely mobile, digital banking experience, with greater transparency around where your money is going and how they operate internally.