IT Professionals

Start-ups changing the face of banking

Since 2013, the banking landscape has changed immeasurably.

There is no doubt that the credit crunch and subsequent negative publicity surrounding high street banks regarding mis-sold PPI, IT failures and exorbitant pay rises for executives, fuelled demand for greater customer service and choice.

It began with the ruling which saw customers able to change banks within seven days, rather than the traditional month. Somewhat predictably however, take-up of this opportunity was slow. After all, what motivation was there to switch to another bank, all of which had similar offerings and limitations?

Then, banking rules were changed, which opened up opportunities for new banks to penetrate the market, with six new banks approved in the last year.

As you might expect, the majority of these banks are digitally-based, on the premise that customers are tech-savvy and above all, want easy, effective banking – not just digital versions of paper documents, as favoured by many of the big high street banks.

New names such as Atom Bank, Fidor Bank, Starling, Charter Savings Bank and Hampden all have the same objective, even if their target markets and offerings differ.  An excellent customer experience and increased personalisation is the top of everyone’s agenda, with fewer overheads meaning digital banks are able to offer higher interest rates on savings and lower borrowing rates.

To simply set up a new bank in order to compete with the existing high street banks would be commercial suicide, however. Many new banks are financially backed by entrepreneurs and need to demonstrate substantial growth from the outset. The best way to achieve this is not to try and compete on a like-for-like basis, but to specialise in a particular area. Lintel Bank for example, which is currently in the process of applying for a banking licence, aims to serve purely SME businesses and, if it is successful, promises to process and open business current accounts in less than two minutes.

Recent research by banking software supplier Fiserve, revealed that over half of the 2000 individuals surveyed, said that they would now consider moving to a new bank, it its IT infrastructure and systems were proven to be reliable and gave added benefit.

Start-up banks have the advantage of being able to use the latest technology, rather than having to rely on making costly, constant amends to existing, outdated sites. Some claim that they will focus principally on social media and online communities as a means of communicating quickly and efficiently with customers – no more lengthy telephone conversations with call centres abroad, and being passed from one department to another.

All technology is irrelevant however, unless a bank’s products are attractive to its customers. Both factors need to be in place and with this in mind many start-up banks are using technology to offer more personalised products and services to individuals.

What’s worth noting is that it isn’t only banking professionals who can now start up new banks. IT professionals are getting in on the act too. Nazzim Ishaque of Lintel Bank, worked as an IT expert for banks for a decade before setting up his own financial and investment companies.

This changing face of banking therefore, isn’t just good news for customers. It presents a golden opportunity for entrepreneurs and IT contractors to really make a difference to the marketplace.

Discussion

No comments for “Start-ups changing the face of banking”

Post a comment