Conditions are tough for market entrants, says banking boss
THE BOSS of digital challenger Starling Bank has said conditions are “still tough” for new market entrants despite renewed efforts to boost competition since the 2008 crash.
Starling founder and chief executive Anne Boden said a wave of consolidation in the wake of the financial crisis prompted UK regulators to launch a new authorisation process which ultimately helped usher in a string of new banks.
Royal Bank of Scotland’s takeover of ABN Amro and Lloyds Banking Group’s acquisition of HBOS, as well as the collapse of Northern Rock and Bradford & Bingley, all left a smaller banking sector in their wake.
But while a raft of new firms have entered the lending market, Ms Boden said few have managed to push on to launch current accounts for everyday retail customers.
“We were, I think, the second bank to go through that authorisation process. OakNorth was the first and they’re an SME bank,” she told the Press Association.
“But you know, there was a whole raft of digital startups going through: there was Atom Bank, Tandem Bank, Starling and Monzo.
“And these four banks went through the authorisation process. But only ourselves and Monzo ended up doing current account banking – and that’s hard, that’s difficult.”
She added: “So, although the legislation was intended to create new competition, it’s still tough and not many banks have actually managed to sort of launch and thrive.”