Gone are the days of queuing up in a bank branch to deposit
a cheque as a number of digital banks in the UK have popped up – making it as
easy to transfer money or get a loan on a smartphone as it is to post a picture
on Facebook.
Britain is one of the global leaders in this space due to a
thriving fintech sector and a regulatory landscape that encourages challenger
banks to break up the dominance of the so-called “big four” through the
government’s open banking initiative.
A recent study by the Competition and Markets Authority
(CMA) found these banks – Barclays, Lloyds Banking Group, HSBC and The Royal
Bank of Scotland Group – retain a 70% share of current accounts.
But online and app-based banks are now aiming to disrupt
this market, with GlobalData research showing that 28% of UK respondents – and
35% globally – are now willing to use a digital-only bank.
For example, Monzo is one of the most high-profile digital
banks in the UK
Monzo was founded in 2015 by Tom Blomfield, Jonas
Huckestein, Jason Bates, Paul Rippon and Gary Dolman, originally under the name
Mondo. The five founders first met while working for Starling –
another digital-only bank.
Monzo was granted a banking licence in April 2017 when it
launched its first current account. The bank recently registered its one millionth customer but
despite £2bn being spent through Monzo so far, the company is yet to post a
profit.
The app gives real-time updates on spending and features
different tools to monitor personal finance. It also allows users to send instant payments to friends and
users can withdraw up to £200 abroad free of charge.
Other, high-profile digital bank in UK is Starling Bank which offers both a digital-only
current account and business banking for its customers.
The London-based fintech company was part of the first wave
of disruptor banks in the UK and was founded in 2014. Like Monzo and N26, Starling cards use a globally-accepted
exchange rate when spending abroad and doesn’t add any charges.
At the close of the bank’s financial year in November 2017,
Starling had a total of 43,000 personal current accounts open with the bank. This total increased to 210,000 current accounts in 2018 and
has monthly transaction volumes of £200m.
(excerpt from longer overview of digital banks in UK, found on
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