Twenty or so new banking licences have been granted since 2010. The UK Retail Banking Sector is incredibly diverse but this is often disguised by the single label of “Challenger Banks” which hides far more than it reveals. UK Retail Banking is a very diverse sector with players with very different focuses and motivations.
In compiling their report “Who Are You Calling A Challenger Bank?”, PwC has interviewed dozens of CEOs and senior executives and, worked with YouGov to establish consumers’ views and preferences. In doing so they have produced a grounded, well-researched analysis (it’s free – check it out) that sheds light on how competition is improving customer choice and driving innovation in UK retail banking.
Darren Meek has 26 years at PwC and joins us today in conversation about the must-know, main important themes of the vibrant scene that exists today.
Topics discussed include:
- Hindu architectural influence across South East Asia
- Darren’s career journey within PwC; the rewards of working in business recovery and in New York; now focused on the UK Retail Banking Market
- the mismatch between fixed linguistic terms (Fintech, Challenger Banks) and rapidly changed underlying phenomena
- defining Challenger Banking in the negative – ie Retail Banks minus the old players
- five main sub-categories of Challenger Banks:
- digital-only – Monzo et al
- specialists in niche areas – Aldemore
- non-bank brands – Tesco, GE, Ford
- full-service banks – TSB (ex part of Lloyds)
- miscellaneous, hard to classify – Metro (retailing POV, high-street), Handelsbanken, Triados (ethical)
- why we are seeing this profusion and speciation right now
- the new ideas brought by the new banks – eg geolocated expenses, faster mortgage application times (Atom did their first 9 days application to mortgage recently), face and voice recognition, investigating banking via Alexa
- how successful in terms of longevity can all these new banks be?
- folks are differentiating these days between current accounts and banking services per se
- 57% of people who switched current accounts in recent years have done so due to financial incentives not dissatisfaction with their existing provider
- the need to differentiate between retail and commercial banking
- the UK govt has supported the banking business website which aims to be a TripAdvisor for the sector – ie reviews of performance
- many banks are publishing feedback on their websites
- structural challenges to further competition in the UK:
- capital – internal models approval for large banks only tilts the table in their direction
- regulatory requirements and reporting can be a greater burden in relative terms on newer banks
- access to the UK central payment systems (FPS) – and eg ClearBank the first new UK clearing bank in over 250yrs (!!)
- ongoing trends – increased consumer expectations re quality; speed and convenience; transparency; trust (eg only 18% of folks surveyed would open a digital-only bank account); accessing different banks for different services; bespoke service – effectively non-commoditisation
- existing banks are also upping their game in response
- PwC’s work in re at present:
- work re greater competition
- PwC de novo service – a digital front-door to their FS practice
- innovation, digitalisation
- customer experience
- “Bank in a Box” – largest market share of helping wannabe banks get authorised
And much much more 🙂
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