The big banks have an oligopoly in the market, the results from the Edelman’s Trust Index overshadow the current industry, but more significantly the regulators have recently relaxed the rules for entrepreneurs to set up new local banks. As we move from economic rescue to recovery, new competition is being added to the line-up of banks for customers to choose from.
If you want to set up a local bank, have access to the monies required and are personally driven by a belief to succeed – it just got a whole lot easier for you to achieve your vision. Why? Because FCA authorisation processes have been simplified, capital requirements are reduced, a new Regulator is set to ease access to the payments system and the IT infrastructure could be less costly with new technologies including SaaS.
The success of new local banks (and by that we mean smaller geographic players than TSB) will depend on whether consumers are convinced by their better products and services including improved fraud prevention. Regional banks will need to be in step with consumers’ latest technology preferences. They should offer their customers, whether SMEs or individual consumers, improved customer experiences based on quality of service – not bank sales targets. Making switching easy will not be the only factor to persuade fearful customers who are worried and disillusioned by financial service providers generally.
According to the Youbiquity Finance research in 2013 by BT and Avaya one in five UK consumers say they have tried mobile banking once a week or more. If switching to a regional bank means customers are empowered to self-serve using their own mobile devices for loans, deposits and securer payments from the new regional banks they may find it a welcome change from the reality of mainstream banking.