Exclusive: 28 new banks in the pipeline
A rush of new challenger banks is in the pipeline with 28 applications now awaiting approval by the UK authorities.
It represents the biggest surge in attempts at creating new banks for many years and while some of the licences will not succeed, the number of new entrants is likely to make a significant dent in the current status quo.
Some of these new banks would attempt to operate on a different model, particularly in leveraging technology in better ways. There are also applications from foreign banks wanting to set up in Britain.
Financial services leaders attending a fringe event on banking at the Liberal Democrat conference in Glasgow today heard that the level of interest in creating new banks is at a new high.
But despite the number of applications, the barriers to entry remain high, particularly the requirements to hold significant capital reserves. This is why some of those which have already been granted a licence are opting for a stock market listing. They include Aldermore, which is due to list next week valued at £800m, Metro Bank, One Savings Bank and Virgin Money.
Today’s event on how diversity can be created in the banking and wider financial services sector heard that other business models, such as mutuality and credit unions, were continuing to take market share in the savings market. The building societies still account for 30 per cent of all mortgage lending.
There was agreement among those attending that trust in the banks to complete transactions remained high, but trust in the relationship with banks was low.