Entrepreneurial fintech innovation is spurring the modernization of banking for new players, traditional players, and customers alike in the United Kingdom. The utilization of Banking-as-a-Service created a starting point to improve the customer experience by adding new services. Start-ups such as Revolut, Starling, and Wise created disruption leading to eventual adoption by traditional players. As Philipp Buschmann explains in IBS Intelligence:
“Traditional players in UK banking are already getting in on the action. Lloyds is working with Thought Machine, RBS with 11:FS. By integrating with some of the most innovative companies in the world they are able to vastly expand and improve their own offerings with relative ease. The most exciting bit is it’s not just banks doing this. Any retail business can now offer a vast ecosystem of financial products.”
The next steps of innovation could be impacted by potential economic challenges. The movement of traditional players to embrace fintech and potential global economic volatility may result in a tightening of investment in newer startups, with the market becoming more dependent on current, agile fintech players that already have a foothold in the ecosystem to continue development and expansion of BaaS.
Overview by Jordan Hirschfield, Director of Research at Mercator Advisory Group