Online investment platform BankToTheFuture is just one of the new challenger banks emerging, as it looks receive regulatory approval and potentially improve competition across the banking sector.
BankToTheFuture allows investors to invest in businesses and entrepreneurs through its online platform. Investors can start with as little as £10 and directly choose what happens to their savings and investments.
Simon Dixon, co-founder of the equity crowdfunding platform, stated the firm was currently in the early stage talks with the Prudential Regulation Authority (PRA).
Speaking to FT Adviser, Dixon said, “We saw an opportunity when the PRA reduced its barriers for entry and although banks such as Metro Bank are rare cases of traditional clearing bank pushing through the barriers and challenging the top four meaningfully, we believe we an offer a compelling alternative.”
He added that he was also helping four other contenders raise finance to meet the new capital reserve requirements set out by the PRA. He suggested that the contenders would offer consumers something different and diversify the banking sector.
Dixon added, “The process is proving lengthy, even when banks have sufficiently prepared teams and a solid business model. But it is clear that there are many interesting and new models coming through, some of the with fairly niche localised elements and other with a strong online presence.”
Speaking to Blue & Green Tomorrow previously about crowdfunding, BankToTheFuture and the problems it aims to solve, he said, “The major problem with banking today is the lack of transparency. No matter how many regulations are implemented, it does not change the fact that depositors, investors and shareholders have no idea what happens with the money.”
He added that bank loans tend to go to either the least risky or most profitable investments, which is why around 80% of major UK banks’ loan books go to either property loans of financial speculations. “Last in line is a business”, Dixon added.
It was revealed in November last year that the Financial Conduct Authority (FCA) was holding informal talks with 21 firms that wanted to apply to launch new banks. The FCA manager commented they were hoping to approve application within nine months in order to increase competition in the sector and added that banks that valued customer service were the future.