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UK challenger bank gives up banking licence to focus on fintech

CivilisedBank plans to serve small and medium-sized enterprises with savings and investment products

UK challenger bank CivilisedBank has decided to give up its banking licence for now to focus on being a financial technology (fintech) company.

The online-only bank, which plans to serve small and medium-sized enterprises (SMEs) with savings and investment products, received regulatory approval in 2017 with a plan to launch in 2018.

CivilisedBank, which is built on cloud-based software, said it plans to use a network of local bankers to serve SME customers with a turnover of up to about £25m backed up by a cloud-based technology platform that is already used in Europe by BNP Paribas bank.

At the time it was granted its licence, CivilisedBank founder Chris Jolly said technology can turn a banker into a mobile bank. “With modern technology, you don’t need a branch network,” he said. “A local banker can have a laptop, a phone and all the systems that go with that.”

Jolly also said every town and city in Britain would have a local banker by 2023. 

But, according to reports, CivilisedBank has relinquished its licence and may reapply at a later date, which has been supported by the industry regulators.

“For us, it is essential that we can deliver an optimal customer offering, so we prefer to delay this stage of our development and have more time to get it right,” said Jolly. In an increasingly competitive fintech space, getting the technology right is vital for challenger banks to differentiate themselves. 

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A statement on CivilisedBank’s website at the time it was granted a banking licence said: “We’ll make it faster and easier so you can be productive on your desktop, tablet and smart phone. Even innovative technology is best when you don’t have to think about it. That’s civilised online banking for you.”

The challenger bank and fintech community is maturing and businesses have decisions to make. Some challengers have already been acquired, some traditional banks have reinvented themselves, while challengers such as Starling Bank have set their sights on becoming fully fledged retail banks.

For example, French banking group BCPE acquired German challenger bank Fidor, which was set up in 2009 and gained a UK banking licence in 2015. Meanwhile, UK high-street bank TSB has reinvented itself as a challenger since it was acquired by Sabadell in 2015, and many traditional banks are partnering with fintechs or even taking stakes in them. Meanwhile, RBS and Virgin Money are setting up their own digital banks.

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