The UK's new Challenger Banks - Who are they?
The 2008 financial crisis led the UK's regulators towards enhancing processes to improve competition in the banking sector. Today, prospective banks are supported through an interactive two-stage process, jointly led by the Prudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA) via the New Bank Start-Up Unit.
Some 1,700 firms and groups are supervised by the PRA (including over 900 banks, building societies and credit unions and nearly 700 insurers of all sizes) while some 70,000 financial services firms are regulated by the FCA. In July 2016, a further 20 banking licence applications were underway.
We've seen the launch of 4 new banks in 2016 - namely Atom Bank, Habib Zurich, Masthaven and Zenith. This year, Ford Money received permission to extend its banking licence to accept deposits while Civilised announced on 24 May that they have received their banking licence with a view to serving the public from early 2018. Amicus and Zopa are amongst others who have also noted their intention to obtain a banking licence.
Challenger banks benefit from starting afresh, avoiding the legacy debt of the more established financial institutions. Many are able to build out modern processes to enhance client experiences and adapt to the needs of the Generation X and Millennials service users.
The Bank of England has noted the positive impact of new banks in identifying (and later satisfying) gaps in the market, "whether it be the service they provide, the customers they target, the products they sell or the technology they use."
This enhanced opportunity for savers and borrowers is driving better results through increased competition. Our Rates Bulletins show challenger banks consistently providing the highest savings rates for savers.
Should you wish to learn more about these providers, do get in touch and we'll be happy to discuss the savings accounts on offer that will allow for you to spread your monies further under the depositor protection legislation while also typically enhancing the return that you'll be set to make.