FSF Fintech Breakfast Event - 26 November 2019

On Tuesday morning, Teamspirit was very pleased to welcome members from the Financial Services Forum to our offices in Holborn for a breakfast discussion looking at Fintechs and their race to achieving a primary banking relationship status. It has been 2 years since Teamspirit last hosted an event on this topic and in that time so much has changed.

Back in 2017, our research showed that the challenger banks were often appealing for a monoline product, such as free cash withdrawals abroad. Consumers didn’t yet trust the challenger banks with what they called ‘the heavy stuff’, such as direct debits, salary payments, mortgages. Fast forward to 2019, and not only has London been crowned the top city for fintech investments, globally, but the impact of the growth in the sector is all around us – fintech employs over 76,000 people and the UK boasts the highest consumer adoption rate in the West, with over half of UK consumers using fintech in some capacity. It feels like every week a challenger bank secures more investment for international expansion and every other week a new challenger bank launches in the UK.

In terms of attracting customers to transfer over to their platforms, early 1m people in the UK switched accounts in the last year – with Monzo and Starling coming in 4th and 5th respectively behind Nationwide, HSBC and Natwest. Does this mean that challengers are now being trusted with the heavy stuff? Have the old guard caught up with their digital first solutions? With the challengers starting to offer more traditionally profitable services lines such as savings accounts and loans, is there much difference between the two?

Joining us for the discussion was: • Alexandra Frean, Head of Corporate Affairs, Starling Bank • Will Sorby, UK General Manager, N26 • Michael Pearson, Founder & CEO, Clarus Investments

The conversation began with a brief analysis of the sector, where brands are headed towards as we enter the new decade and how we now have enough data to be able to identify trends and a clear lifecycle for challenger banks. Looking at the make up of the top 10 fintech start-ups, brands that represent ~63% of fund tech funding in the UK, it becomes clear that there is still a huge amount of potential in the sector as start-ups begin to mature and crossover from being part of a group of banks people occasionally use to slowly becoming a major primary bank for the wider population.

This topic brought the conversation around nicely to introducing Alexandra Frean from Startling Bank and N26’s Will Sorby, two of the UKs leading challenger banks. The over-arching theme of the early exchanges was one of excitement for how new developments in technology allow users to manage their money effectively and brands can offer real value to customers around the country, not just the London bubble and other metropolitan centres.

This topic was quite relevant as challenger banks face the prospect of convincing the rest of the population to make the change. As a country, we have been brought up with a local bank branch, and a unique outlook of “I hate my bank, but I could never leave them!”. How does a brand trying to establish itself aim to overcome this way of thinking? Put simply, when it comes to money, the challenge brands face is one of trust. Appearing on TV builds exposure and stature, and couple that with a continuous presence through outdoor, press and social advertising, it all adds up to establishing a brand that consumers can feel comfortable with moving to and ultimately can compete with the established banks on the high streets.

The subject of premium accounts raised an interesting discussion, with the Spotify model being held up as an example of people being prepared to pay a premium for access to extra digital services as people become more and more used to paying for services in this way.

The discussion concluded with a Q&A session with questions from the floor raising interest in how SMEs and challengers can help each other, how challengers build emotional connections and where the panellists see the industry moving towards in the new decade.

Interested in reading more about the UKs fintech sector? Download our Whitepaper from earlier in the year, Welcome to the UK, The Fintech Capital of Europe.

Thank you to all the speakers for giving us their time and sharing their valuable insight. We’ll have another Financial Services Forum Breakfast in early 2020, for details on how you can attend contact a member of team at hello@teamspirit.uk.com.