I have written in the past about how the financial services industry is changing in the UK, in particular how customer loyalty is being affected by the proliferation of price comparison engines and new start-ups offering services that are better and cheaper than the big banks. But will there be a tipping point in 2016 where traditional banks find that the market has shifted so much that they can no longer control how the average customer uses banking services?
A new bank called Tandem recently received their full banking licence from the Bank of England, the fifth new bank in the UK in 2015 and the 21st since 2012. New banks like Tandem and Atom are both hoping that customers comfortable with technology will be happy to buy into their app-only (plus voice support if needed) business model.
They might not have the brand identity of the big established banks, but they believe that they can offer better deals to the customer by offer the same type of services without the need to maintain a national branch network.
It’s a view that many in the banking industry echo. Many industry insiders fear that the Financial Technology (fintech) explosion will see new firms eat at least half of all the traditional banking business. KPMG just published their fintech 100 list for 2015 and they believe that 2016 really is going to be the year that banking changes forever.
Fintech investment was £12bn globally in 2014. This year it was over $20bn and this is growing fast with over 10,000 small companies around the world competing to offer new services. KPMG believes that the big difference in 2016 is that this is when the big banking groups will wake up to the threat and invest hundreds of billions of dollars into making this technology work for them – invest next year will probably top $30bn.
The big traditional banks have hundreds of years of heritage and trust. Those brands still really mean something, so if they are finally going to start investing in making fintech work for their own customers then this is going to be an exciting year ahead.
What do you think about the fintech boom? Leave a comment here or get in touch via my LinkedIn profile.
Photo by Tech in Asia licensed under Creative Commons.