CivilisedBank, the UK's latest challenger bank, is to use cloud-based technology to challenge the dominance of the high street banking giants.
The online-only bank, which will serve small and medium-sized businesses, is expected to open later in 2015. It plans to target the UK retail market, with savings and investment products available in the future.
CivilisedBank will use a network of local bankers to serve small and medium-sized enterprise customers and will be backed up by a cloud-based technology platform. The technology is already used in Europe by BNP Paribas bank.
There has been a spate of new banks granted licences in recent months. This is significant when you consider that when Metro Bank opened its doors in 2010 it was the first new company to be granted a banking licence in 150 years.
Read more about online banking
- Computer Weekly looks at six challenger banks and their use of IT to differentiate.
- Four out of five UK consumers would trust challenger banks with their money if they had the right IT infrastructure.
- Online banking startup Charter Savings Bank has been awarded a banking licence, so it can now target customers of traditional UK banks.
These news banks, which usually target a niche market as opposed to offering a broad service line, have the advantage of not being hampered by legacy IT systems. They can implement modern technologies such as cloud, social media and big data to differentiate.
Getting technology right vital
A recent survey of 2,000 people by banking software supplier Fiserve revealed 80% of people would trust a bank if it had the right technology in place. More than half (56%) said a new bank would have an advantage over rivals if its IT was reliable.
Some of the new banks in the UK include Atom Bank, Fido Bank, Starling, Charter Savings Bank, Hampdan and Lintel. For more information about these banks see Computer Weekly’s Six challenger banks using IT to shake up UK retail banking.
Atom Bank, which will bedigital only and plans an online-only current account, said it is building a bank with “none of the baggage of the past”.
Meanwhile, Fidor Bank, which is based around social media and Web 2.0, uses social media to overcome the cost and complexity of traditional banking, while increasing customer trust through an online community.
Web 2.0 gave us the chance to set up a new bank, then the financial crisis and the behaviour of the banks involved said to us that setting up a new bank was a must
Matthias Kroner, Fidor Bank
It operates in Germany – where it has been since 2007 – and Russia, and is going through the process of getting a licence in the UK. It also plans to launch in the US.
According to Fidor Bank CEO Matthias Kroner, the bank was born at a time when trust in banking was diminishing.
"Web 2.0 gave us the chance to set up a new bank, then the financial crisis and the behaviour of the banks involved said to us that setting up a new bank was a must,” he said.
Starling is a digital bank being set up by ex-Allied Irish Bank banker Anne Boden, who hopes to gain the first part of the bank's licence in late spring 2015, before raising the capital needed and getting a full licence. Boden is aiming to change banking in the same way Amazon changed retail and Apple changed music.
Charter Savings Bank has been awarded a banking licence, meaning it can now target customers of traditional UK banks. The new bank, which is part of Charter Court Financial Services (CCFS), will focus on savings and plans to launch an online savings account.
Hampden is a private bank based in Edinburgh. It will start operating in the first quarter of 2015 and will use a cloud-based banking platform from Oracle. Previously known as Scoban, it is using Oracle Flexcube and cloud services for its digital banking operations.
Lintel is in the process of applying for a banking licence. Through online and telephone services, a few branches and “state-of-the-art IT”, its founder – former IT professional Nazzim Ishaque – plans to offer current accounts, mortgages, loans and more to small and medium-sized businesses.