Customers to ‘cash in’ with new online banks set to cut fees and charges
New companies to be based online with no human contact with customers
BRITAIN is set for a huge banking war with up to 20 newcomers taking on high street dinosaurs, say industry figures.
It could leave millions of savers and borrowers quids in as so-called challenger banks win over customers by cutting unnecessary fees, charges and overheads.
Companies with names such as Starling, Mondo, Tandem and Atom will be mostly based online.
Some even hope to have no human contact with customers at all.
Every transaction would be through PCs and smartphones and using the new generation of automated “chatbots.”
They believe younger customers in particular will move to new firms not tainted by the last recession, often blamed on greedy City bankers.
The Bank of England is currently dealing with around 20 applications for banking licences after encouraging competition.
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Starling intends to work only via mobiles.
Mondo is mobile-based too.
The Services Family will target the Armed Forces, veterans and their families.
Atom has a licence and is based in Durham, making it one of the only ones outside London.
Fidor is an established German bank applying for a UK licence.
Andrew Bailey, chief executive of the Bank of England’s Prudential Regulation Authority, said the Bank had made it harder for failing banks to be bailed out and levelled the playing field for smaller banks to compete.
He said in the Bank’s annual report: “In my view, an important contributor to stable competition is to ensure that the orderly failure of firms is possible.
“An industry in which firms cannot be allowed to fail is also likely to be one in which few firms seek to enter and compete with well-entrenched participants.”