UK challenger banks: who is who

UK challenger banks: who is who

With so many new entrants trying to muscle into the UK banking sector, Banking Technology has put together a comprehensive list of the known challengers to date and the technology they are using.

We’ll be revisiting and updating this list on a regular basis. If you have any additions to the list, please get in touch with our editorial team.

Abacus
A digital bank backed by a UK-based private equity firm, AnaCap. The project is in early stages (no banking licence yet).

It is understood that AnaCap is evaluating two potential suppliers: Temenos with its T24, Connect and Insight systems; and Misys with FusionBanking Essence.

Aldermore Bank
This bank was created in 2009 with a key focus on the SME sector. It was initially backed by AnaCap, which is now planning a new digital bank (see the Abacus section above).

In 2015, Aldermore was successfully floated on the London Stock Exchange.

The bank’s HQ is in Reading, Berkshire.

For its core platform, it uses Temenos’ T24 system. For digital banking, it has got Backbase’s Omnichannel Banking Platform.

Amicus
Amicus Finance, a specialist lender providing short-term property loans, SME lending and working capital solutions, plans to become a bank. It submitted a banking licence application to the FCA and PRA in H2 2016, and hopes to get the licence in 2017.

In advance of authorisation, Amicus will convert £30 million of the debt currently used to fund its lending activities into equity and this will form the capital base of the bank’s operations.

It has also made changes to its senior management team by appointing David Fisher, Alex Shapland and Paul Stevens as non-executive directors to the board. Fisher is the former CEO of Sainsbury’s Bank, Shapland was previously a partner at PwC and Stevens is the former head of Investec Private Bank in the UK.

Amicus was set up in 2009. Its HQ is in London.

APS Financial
Advanced Payment Solutions (APS Financial) is not a bank although it competes with them. It has been around since 2006, operating with an e-money licence. It has issued over 1.3 million cards and processed £4 billion worth of payments to date.

In spring 2016, it received a credit licence from the FCA – enabling it to carry out consumer credit lending (including high-cost short-term credit lending) to micro SMEs, sole traders and consumers.

Rich Wagner, CEO and founder of APS Financial, states the company is “proof that you do not need to be a bank to offer banking services”. With both e-money and credit licences, APS Financial can offer traditional credit cards, account overdrafts and loans, and specific credit products.

APS operates Cashplus, a prepaid card (Mastercard) and current account for individuals and businesses.

Atom Bank
A digital bank that opened for business in October 2016.

It has created a hefty technology set-up in its run up to the launch: FIS’s Profile core banking system; FIS/Sungard’s Ambit Quantum and Ambit Focus for treasury and risk management; Iress’ Mortgage Sales & Origination (MSO) suite for mortgage business, front-to-back office; Wolters Kluwer’s OneSumX for regulatory reporting; Intelligent Environments (IE) for front office capabilities; CSC’s ConfidentID system for security; Phoebus Software for secured business lending and account servicing for residential lending; and WDS Virtual Agent for customer queries supplied by WDS (a subsidiary of Xerox).

Atom Bank also acquired a local digital design agency, Grasp.

In H1 2017, it announced it was suspending the launch of current accounts for at least a year.

Later in the year, it partnered with Deposit Solutions to offer retail deposits in Germany.

Axis Bank UK
A subsidiary of India’s Axis Bank. It got a full banking licence in mid-2013.

The bank implemented Infosys’ Finacle core banking system, which is already in use across a number of Axis’ locations worldwide, including India.

Babb
London-based fintech start-up Babb App is creating a bank based on a “permissioned” blockchain implementation of a distributed ledger using Ethereum smart contracts.

Babb is currently regulated as an approved payment institution (API) by the UK’s Financial Conduct Authority (FCA). It also applied to participate in the FCA’s sandbox.

In March 2017, Babb signed a deal with Contis Group (see below) to utilise Contis’ white-label licence and banking services infrastructure to provide UK bank accounts, transfer and card payment services.

Bank of Lambeth
This London-based community bank is the brainchild of Duncan Law at Transition Town Brixton (an initiative that looks to new ways of dealing with climate change, and energy and financial issues).

“Each month lots of money in salaries swills into Lambeth and most of it disappears again without much benefit to local banks. It’s held by banks ‘too big to fail’, who invest in fossil fuels but still won’t lend to local businesses,” says Law.

Transition Town Brixton’s New Economy Group wants to create a “community of community investors” and is looking to inspiration from Community Savings Bank Association (CSBA), another new challenger in the UK (see the entry below).

Bank of Lambeth intends to be part of CSBA and it would like “the first branch to be in Brixton”. Discussions with CSBA are underway.

According to the CSBA, the bank is a “group of activists” who do not plan to form a company to seek a banking licence. (If it’s part of CSBA, it doesn’t need a licence.)

BFC
A subsidiary of the Bahrain Financing Company (BFC) money transfer group. The project went through some stops and starts, but the bank finally received the banking licence in September/October 2016.

BFC opted for an outsourced “bank in a box” version of ERI’s Olympic core banking system. The system is hosted by Blue Chip.

For its anti-money laundering (AML) operations BFC uses the AMLtrac tool from a UK-based provider, iFinancial.

British Business Bank
A government-backed bank for SMEs.

Cambridge & Counties Bank
Another bank for SMEs. It is owned by Trinity Hall, Cambridge and Cambridgeshire Local Government Pension Fund. The bank already has a licence and is in operation.

It uses Phoebus Software’s front-to-back office software. The front end of the solution originates from the now defunct QTS – it now resides with Phoebus and has been integrated into its portfolio of offerings.

Charter Savings Bank
A new online savings bank launched by Charter Court Financial Services in 2015, aimed at the consumer market. Charter Court also operates Exact Mortgage Experts and Precise Mortgages.

The group uses FIS/Sungard’s Ambit Treasury Management, plus solutions from DPR Consulting and Phoebus.

In 2016, the private equity firm that owns Charter Court put it up for sale, with a price tag of up to £500 million.

CivilisedBank
A start-up that received its licence in May 2017.

For its software, the bank has opted for a packaged solution from local consultancy firm, Tusmor. It consists of Profile Software’s FMS for core banking operations, Dovetail for payments, Sphonic for risk management and AML, and Aqilla for accounting system.

CivilisedBank will offer business current accounts with deposits, transaction banking, overdrafts, FX, investments, savings and loans.

It will not have branches but will operate through a network of local bankers working in their local communities. CivilisedBank hopes that this “unique” set-up “will help build one-to-one relationships, without the traditional costs associated with high street banks”.

ClearBank
ClearBank (also known as CB Infrastructure Limited) was set up in 2015 and is registered in Norfolk. It was granted a licence at the end of 2016, and plans to open for business in autumn 2017.

It is a new venture of Nick Ogden, founder and former CEO of payments processing heavyweight WorldPay.

ClearBank will be a bank for banks, FIs and fintechs, i.e. a clearing bank, offering customers access to UK payment systems and core banking technology to support current account capabilities. It will not offer retail banking services.

ClearBank is the first new clearing bank in 250 years to enter the UK market. Ogden states it “was built specifically to create competition and aims to change the market dynamics radically”. He adds ClearBank users can save £2-3 billion annually on their transactional banking costs thanks to “the improved efficiency delivered by ClearBank’s built-for-purpose technology”.

The bank’s tech is cloud-based, built on Microsoft Azure (a combination of private and public clouds). It has a custom-built, integrated core banking system, known as ClearBank Core, and API developed in accordance with Swift’s ISO 20022 standards.

Coconut (formerly Monizo)
This start-up is a banking service rather than a fully-fledged bank.

It is planning to launch the “first” banking service targeted solely at freelancers. It will offer a bank account number and sort code.

Among its “unique” features is an ongoing real-time insight into how much tax freelancers need to pay. A future plan could be to “hook that” into the HMRC (UK’s tax collection office) so freelancers can pay bills with ease.

In terms of the back-end technology, Coconut is looking to partner with a Banking-as-a-Service provider.

Community Savings Bank Association (CSBA)
Co-operative society CSBA intends to set up a UK-wide network of independent, customer-owned, regional banks. These banks will support local communities and businesses.

“The UK is made up of distinctive regions, each with their own character and priorities,” CSBA states. “Strong regional banks that share those characteristics and have only those priorities is something we’re missing. We used to have it and its time to put it back.”

These banks will “serve the every day financial needs of ordinary people, local community groups, and SMEs”.

CSBA was originally working with an established bank, Airdrie Savings Bank, on this project. Airdrie was going to provide its banking expertise and IT systems to the new banks. However, the bank went out of business in early 2017.

CSBA then inked a tech deal with TCS Financial Solutions, for its member banks to use the vendor’s Bancs core banking system in the cloud.

Once they are up and running, the new banks will own and control CSBA.

Coombs Bank
Another one still awaiting a licence. It is backed by S&U plc, a long-standing niche provider of consumer credit and motor finance. S&U has been in business since the 1930s. It has around 140,000 customers and 800 staff.

It is understood that its choice of system for Coombs is MSS from Sopra Banking Software.

Copernicus Bank
A challenger bank founded and backed by Danela Ventures Partners Limited, a London-based advisory firm.

Copernicus Bank will focus on corporate banking.

DiPocket
DiPocket is not a bank, but a financial app that provides banking for “the mobile generation”. An account can be set up in three minutes on a smartphone.

DiPocket is a financial institution authorised and regulated by FCA. It says it runs “a bank-grade IT infrastructure”.

It offers payments services, underpinned by a Mastercard prepaid debit card. DiPocket is a principal member of Mastercard.

Accounts and cards are currently available in GBP, EUR, PLN and USD, and accounts in CHF. More currencies are to be added soon, according to DiPocket.

International transfers between DiPocket accounts are free.

The app also promises low currency exchange fees (Mastercard rates plus 1% commission); no FX fees for customers visiting the UK, US, Poland or any Eurozone countries; and low, flat fees for withdrawals at foreign ATMs.

The app also offers shared accounts for common expenses, and teenager accounts for financial independence under parents’ supervision.

Contis Group
Contis Group describes itself as “the home of alternative banking and payment solutions”.

The company was set up as a pre-pay in 2007, received its e-money licence in 2010 and started offering its own debit card products in 2012.

It offers credEcard – a current account for consumers that comes with a Visa debit card, online e-account facilities and a mobile app.

As of 2016, Contis is a full agency bank.

It provides white-label licence and banking services infrastructure for bank accounts, transfer and card payment services to fintechs. It also targets the European credit union market with a payments card product, Engage.

A standout feature of the offering is that Contis issues and processes in-house (unlike many other firms in this space). The company is PCI DSS Level 1 compliant.

Babb, Monese and Suits Me are among Contis’ customers.

FairFX
FairFX, a London-based multicurrency payments service, acquired Q Money and its e-money licence in early 2017. Start-up Q Money was going to build a bank for SMEs in the UK, but failed to take off due to the lack of funding.

FairFX says the acquisition – particularly the e-monye licence – opens up “many exciting opportunities”, including “the possibility of becoming the issuing bank of its own cards and internalising parts of the supply chain” and creating a digital banking offering for SMEs.

FCMB UK
A subsidiary of Nigeria’s First City Monument Bank (FCMB). The group has been in London since 2009, providing a limited set of financing services, but has now got a full banking licence.

It runs the Bankware core system from a local vendor, i-Financial.

Ffrees
The company started off as a prepaid card business but has moved into current accounts. It offers a no-frills account (and a debit card) and does not carry out credit checks on the applicants.

Ffrees describes itself as an “Unbank”.

In November 2016, it launched a new U Account, in partnership with Wirecard, Global Processing Services (GPS) and Bottomline Technologies.

Fidor Bank
A subsidiary of a high-profile German digital bank. The bank is consumer-oriented and relies heavily on social media. It uses its own in-house developed technology and also licenses it to other financial institutions (such as Penta Bank).

Fidor commenced its operations in the UK last September.

Fidor has recently been acquired by BPCE, France’s second largest banking group.

First Global Trust Bank (FGTB) – licence cancelled in late October 2016
A short-lived start-up, originally set up under the name of Llamabrook in 2011, changing its name to FGTB in March 2016.

FGTB was granted an “authorisation with restriction” licence from the regulators in spring 2016. It was going to be a “simple, narrow wholesale bank”. Investor and entrepreneur Bob Wigley (the former chairman of the collapsed Yellow Pages) was named as FGTB’s chairman.

However, the bank’s backer, Gordian Knot – the firm that once managed billions of dollars through a structured investment vehicle (SIV) until that vehicle’s 2008 collapse – decided to withdraw the application for FGTB “for the foreseeable future”. It cited the complex regulatory environment and innovation challenges as the main reasons. The licence was cancelled by the regulators in late October 2016.

Hampden & Co
A new private bank, formerly known as Scoban, opened for business in mid-2015 – the first private bank to launch in the UK in the last 30 years.

Its operations are supported by Oracle FSS’s Flexcube core banking system. It is supplied on a Software-as-a-Service (SaaS) basis, with the solution hosted in Oracle’s data centre in Dublin. Initially, the bank was planning to use Temenos’ T24 core system, supplied on a hosted basis by Wipro, but the deal did not go ahead.

Hampshire Community Bank
A new community-focused bank – brainchild of Richard Werner,a professor of banking at the University of Southampton

“We are all fed up with the big banks and their sharp methods. But few people are aware it is possible to build local banks that benefit the local economy,” says Werner. “This is what we are doing with the Hampshire Community Bank.”

The idea of Hampshire Community Bank was first unveiled in 2013. A community interest group – Local First – led by Werner, went public on its plans to set up a locally-owned and run bank.

The bank is modelled on Germany’s local public savings banks and local co-operative banks (Sparkasse and Volksbank). It will provide credit o SMEs and also for housing construction (buy-to-build mortgages).

The bank aims to open for business in late 2016/early 2017. Werner and Local First then plan to introduce these “public-benefit oriented, not-for-profit local community banks” to other UK cities and counties. (The idea is similar to that of CSBA – see above.)

Hampshire Trust Bank 
Not to be confused with Hampshire Community Bank above.

Hampshire Trust was created back in 1977, but moved into the banking space in 2014, following the arrival of new owners (a new management team acquired Hampshire Trust in May 2014 with the backing of investment firm Alchemy Partners). It also relocated its HQ to London.

The bank provides asset finance, property finance and commercial mortgages to UK customers. It also offers savings accounts to individuals and businesses.

For its technology, it’s a broad user of Phoebus Software’s products. Phoebus supports Hampshire Trust Bank’s savings and deposit accounts, and origination and servicing of the entire asset finance, property development finance and deposits. The bank also uses Phoebus’ general ledger module.

Iam Bank
A challenger bank from the US that describes itself the “Apple store” of banking. It targets millennials with a digital and “brick and mortar” banking proposition.

Its products will include micro-loans, micro-investments and cashback. For the latter, Iam Bank intends to create 21,000+ partnerships with retailers.

In spring 2017, it announced its intention to roll out free learning and therapy-based financial workshops across the UK (and also the US).

It is also looking to buy a small UK bank, building society or a credit union with a high street presence.

ICBC UK
A subsidiary of China’s heavyweight, The Industrial and Commercial Bank of China (ICBC). It was granted a wholesale banking licence in autumn 2014.

Lintel Bank
A start-up waiting for a licence. The bank will be targeting migrant workers and students in the UK. It will offer paid-for current accounts, money transfers, personal and SME loans, and mortgages. The applicants will be able to set up a bank account quickly, with most of the process (including checking personal information) completed before the person arrives in the UK.

On the IT side, the bank says it’s keen to use off-the-shelf software that can be easily deployed (and easily replaced with a better alternative at a later stage).

Loot
Loot is not a bank, but a mobile banking service. It was launched in spring 2016, initially aimed at students. In summer that year, it raised £1.5 million in Series A round from Austrian early-stage fund Speedinvest and decided to re-launch its app for a broader millennial audience – “generation Snapchat”.

Loot offers a prepaid Mastercard account. The card is linked to a money management app that lets people track their spending and gives them insight into where their money is going.

Loot uses the aforementioned GPS for processing and Wirecard for issuing.

Marcus
A newcomer from the US. Marcus is a digital finance platform launched by Goldman Sachs in 2016 in the US. Named after Marcus Goldman (one of the firm’s founders), the platform provides consumer loans of up to $30,000 for periods of two to six years. It aims to rival the likes of Lending Club, SoFi and Prosper.

In September 2017, Goldman Sachs unveiled its plans to move into the UK retail banking market with Marcus, stating with savings and deposits. Loans might be added at a later stage. It will be a greenfield site, although Goldman Sachs does not exclude a possibility of buying an established book of deposits, if the opportunity came its way.

For its technology, Marcus uses Infosys’ Finacle core banking platform.

Masthaven
An established mortgage specialist, Masthaven Finance, has recently received a banking licence.

Masthaven will offer mortgages and savings products to retail customers that struggle to get service from mainstream banks and lenders.

For its tech, Masthaven is implementing a banking system from DPR Consulting. This is a new product, front-to-back office, aimed at providing a single, integrated solution for savings and lending ops. Masthaven is among its first takers.

Metro Bank
When Metro Bank opened for business in spring 2010, it became Britain’s first new high street bank in over 150 years.

The brainchild of US entrepreneur Vernon Hill, Metro Bank is a full-service banking entity, which aims to attract the disillusioned clients of established financial institutions.

At the outset, the bank placed a major focus on physical branches – or “stores”. They are open seven days a week, and have longer working hours than other high street banks. They also have coin-counting machines and are dog friendly.

Customers applying for a current account in store can start using it the same day and get their back card and chequebook printed there and then.

The model was largely based on a similar venture created by Hill in the US, Commerce Bancorp (acquired by TD Bank in 2007), which gained the nickname of “McBank” as Hill applied his knowledge of the fast-food chain business to the bank.

Metro Bank’s co-founder Anthony Thomson left in 2012 to set up rival Atom Bank (see above).

Metro Bank has implemented Backbase’s Omnichannel Banking Platform for its digital banking front-end. It also uses FIS/Sungard’s Ambit Asset Liability Management solution, and outsources its mortgage processing to BancTec.

For back office processing, the bank has been using Temenos’ T24 core banking system from the outset. The system is supplied on a hosted/application service provider (ASP) basis, with Metro Bank being Temenos’ first ASP customer in the UK.

The bank also rolled out Glory Global Solutions’ Vertera 6G teller cash recyclers (TCRs) across its stores.

Metro Bank is also connected directly to the Faster Payments system.

Monese
Another start-up targeting expatriates and immigrants, and focused entirely on mobile. It says people can open bank accounts anywhere in Europe on their smartphone with Monese in as little as three minutes. The account comes with a monthly charge of £4.95.

The bank does not hold a commercial licence, meaning that at this time it can’t offer credit or loans. Instead it hopes to offer low-rate international money transfers as well as the ability to hold a number of currencies in the same account. In-store transactions, Monese says, will be free of charge, but ATM services and transfers abroad will come with a charge of 50p.

It claims to have a waiting list of 56,000 potential customers.

Monese uses Contis Group’s white-label infrastructure to provide bank accounts, transfer and card payment services.

Monzo (formerly Mondo)
Monzo was granted a full banking licence in early April 2017.

This challenger bank positions itself as a “mobile first” bank. It will be offering a current account with a contactless debit card and a mobile banking app. The mobile app’s standout features are intelligent notifications, instant balance updates and financial management.

It has partnered with Thames Card Technology for debit card production and personalisation.

For banking ops, it decided to build its own platform. Technology used is mainly open source: Linux, Apache Cassandra distributed database (used by the likes of Apple and Twitter), Google’s Go (golang) programming language at the back-end and PostgreSQL relational database. The system is hosted at two data centres in the UK on Mondo’s own hardware. There is a team of 16 people working on this.

GPS is the processor for Monzo.

OakNorth
A start-up focused on lending to SMEs. It has also regulatory approval to accept deposits and make savings products available to individuals and small businesses.

The bank uses Mambu’s core banking system at the back-end, as well as the Sage and Almis systems. For the middle office, it has Ncino. It also uses Facebook Workplace for internal operations. At the front-end, there is an in-house developed solution.

Oaknorth is the first bank in the UK to have its core banking system in the cloud (Amazon Web Services, AWS).

OneSavings Bank
A result of bringing together a number of financial services businesses owned by US-based private equity firm JC Flowers. OneSavings Bank has a balance sheet of £3 billion. Other OneSavings constituents comprise Kent Reliance (residential mortgages and savings products), Interbay Commercial (commercial mortgages), Prestige Finance (secured loans), Reliance Property Loans (property financing) and Heritable Partners (development finance).

United, OneSavings Bank provides savings, loans and investments.

For its tech, the bank uses Phoebus’ lending platform to service mortgages (back office operations) and a DPR Consulting solution at the front-end. Phoebus replaced a bespoke development based on a legacy processing system, Bastion (originally built by IBM).

The Kent Reliance business uses Sandstone Technology’s digital banking and customer onboarding software.

Paragon Bank
A banking subsidiary of a well-established specialist finance provider, Paragon Group. The bank was launched in early 2014. It offers savings and loans (including development and asset finance) to individuals and SMEs.

Banking Technology understands that the bank’s deposits operations are outsourced to Newcastle Strategic Solutions, the IT and outsourcing arm of Newcastle Building Society.

Pockit
Not a bank but a prepaid MasterCard. Pockit has been around since 2013, focusing on the “financially excluded” Britons, who rely on cash in the absence of bank accounts. By October 2016, it had 100,000 customers, with £100 million transacted on Pockit.

Pockit’s products have account numbers and sort codes, thus having “all the attributes of an online current account”, Pockit says. It takes two minutes to open an account. “There are no credit checks, just a simple, online form, and a one-off payment of 99p”. There are also 99p charges for a contactless Pocket card, paying in with cash and withdrawing money from the UK ATMs.

Pocket added direct debits and remittances abroad at the end of 2016. In 2017, it plans to start offering overdrafts and insurance products.

Pockit uses GPS for processing and Wirecard for issuing.

Private and Commercial Finance Group (PCFG)
PCFG has been around since the early 1990s offering loans to individuals and companies for vehicles, plant and equipment. It has 14,000 customers and a finance portfolio of over £100 million. The company is London-based and employs 45 people.

For its tech, PCFG opted for Temenos’ T24 core banking system and Sandstone Technology’s digital banking/customer onboarding tools.

PCFG got its banking licence in early December 2016.

Redwood Bank
An SME bank challenger that received a banking licence in spring 2017 and opened for business in late August 2017.

The entity behind it is Acorn Financial Partners (AFP), owned by Acorn Global Investments (AGI). AGI is controlled by David and Jonathan Rowland, who have experience in the banking and finance sectors.

The bank is headquartered on the border of the Bedfordshire and Hertfordshire counties in the UK.

It offers secured SME lending products to owner occupied businesses, as well as to commercial and residential property investors. It also provides business deposit accounts.

Revolut
Revolut is a payments and fintech start-up launched in mid-2015. It is based in Level39, a financial tech incubator in London.

The offering is a mobile money app that includes a prepaid Mastercard debit card, currency exchange and P2P payments.

A free current account (with an IBAN) is also available in the UK. It can be opened in three minutes, without a proof of address or credit check, according to the company.

Revolut says it currently supports spending and ATM withdrawals in 90 currencies and sending in 23 currencies directly from the mobile app.

The majority of its services are free of charge.

It’s “the only account for your global lifestyle”, the company says. Revolut is “beyond banking”. As of June 2017, it has 660,300+ customers that have made 29.4 million transactions worth $3.3 billion in total.

GPS is Revolut’s processor.

Secco Aura
A digital banking start-up. The bank is very vocal about high street banks being “broken”, “greedy”, too profit driven and unable to keep up with their customers’ lives.

Secco aims to allow customers to send and receive payments via a messaging service. The bank wants to do away with banking apps as well as branches. It hopes that its users will be able to exchange data as well as currency via “payloads” rather than “payments”. For example, a customer can exchange a “Facebook like and a tip” for a busker’s song or pay for their lunch and receive a recipe in return. At the heart of this messaging system will be a location-based financial social network, named Aura.

Secco describes its systems as a reverse cloud, where the data is stored and owned by the customer on their devices, as well as by the bank. “It’s like a safe with two keys. The bank has one and the customer has the other – both must consent to access the data,” it says.

Shawbrook Bank
Shawbrook Bank was formed in 2011 via the merger of Whiteaway Laidlaw Bank, Link Loans and Commercial First and owned by RBS Equity Finance. It is a specialist lending and savings bank that focuses primarily on SMEs.

It employs 550 people and has a head office in Brentwood, Essex.

It has an asset finance arm, Shawbrook Asset Finance (formerly Singers Asset Finance, acquired by Shawbrook in 2012) and an asset-based lending business, Shawbrook Business Credit (formerly Centric Commercial Finance, acquired by Shawbrook in 2014).

Shawbrook went for an IPO in 2015.

Among the bank’s tech software and services providers are Sandstone Technology for digital banking front-end, Target Group for business process outsourcing (BPO) and Brightstar with its EasySource sourcing and case management system.

For its core platform, Shawbrook uses Sopra Banking Software’s Mortgage and Savings Suite (MSS). At the front-end, Sandstone Technology provides its digital banking and customer onboarding software to the bank.

Soldo
A prepaid debit card (Mastercard) and a mobile app, available in the UK and Italy. It is a multi-user spending account, designed to enable and control the flow of money inside a group of multiple users, e.g. a family or a company.

Soldo is based in London. It was founded by tech veteran Carlo Gualandri, one of the founders of Italy’s first ever web portal, Virgilio.it. The company says it does not intend to compete with banks, but will rather complement their services. It plans to seek formal partnerships with banks and co-branded arrangements.

It runs its own in-house developed technology, which is cloud-based. GPS is Soldo’s processor and Wirecard is the issuer.

Soldo holds an electronic money licence and is regulated by the FCA.

Starling Bank
Another digital start-up with an ambitious plan to target “millions of users who live their lives on their phones”. The bank’s main proposition is a current account.

It received a banking licence in summer 2016 and a $70 million investment from Harald McPike, an American quantitative trader.

Starling went through a major management change in 2014/15, when most of the team departed to set up rival Monzo.

In mid-2016, Starling lost its second CTO, Mark Hipperson (who was also the bank’s co-founder). Hipperson resigned as he disagreed on the way forward for Starling. He is now CTO and executive board director at payments services provider Centtrip.

The bank has an in-house developed core system. It uses GPS and Bottomline Technologies for processing and payments operations, respectively.

In summer 2017 it announced the expansion to Ireland.

State Bank of India UK

State Bank of India, the largest bank in India, has had a presence in the UK through a dedicated branch in London – State Bank of India UK (SBIUK) – for many years.

SBIUK works with consumers and corporates, and provides savings/deposit accounts, lending and remittances.

In 2017, SBI formed a new entity in the UK – a subsidiary (rather than a branch) – and received a banking licence for it.

For its core banking software, SBI is a major user of Infosys’ Finacle across its international network, including in the UK.

Tandem
A digital banking start-up, which was issued a banking licence in November 2015. Tandem’s focus is on helping people manage their money rather than on direct product sales, according to its founders.

It plans offer current accounts, credit cards, plus savings and loans. In addition to the digital delivery channels, Tandem will have a “brick and mortar” call centre to deal with customer queries and more complex transactions.

In November 2016, it started inviting its community of 10,000 “co-founders” to be its first customers.

For its technology, the bank has turned to Fiserv and its Agiliti platform. Banking Technology understands that Temenos’ T24 and FIS’s Profile were also in the running for this deal. Agiliti is a shared Software-as-a-Service (SaaS) offering, hosted by Blue Chip. It has around 18 Fiserv and partner applications, including Fiserv’s Signature core banking system.

In December 2016, a UK retail chain, House of Fraser, announced a planned £35 million investment in Tandem and a partnership to start offering Tandem’s financial solutions to House of Fraser’s customers in 2017. However, a few months later the investment was pulled (except the initial £6 million injection).

As a result, Tandem had to shelve its plans to offer savings products and temporarily gave up its deposit-taking licence. However, it assured the market that the setback wouldn’t delay its launch to the market in the course of 2017.

The existing investors pumped £3.6 million emergency cash into Tandem – in return they received a hefty discount for the bank’s shares.

In August 2017, Tandem announced the acquisition of Harrods Bank, which is expected to bring £80 million of capital from Harrods’ current owners and a banking licence.

Templewood Bank
A new independent merchant bank, awaiting a banking licence.

Thinkmoney
An independent financial services provider based in Salford, UK, with about 1,000 staff.

The company focuses on helping people with “money worries”. Its flagship product is a managed personal account service, Thinkmoney Personal Account. It comes with a MasterCard card.

Thinkmoney says its offering is “a smart alternative to a current account” and is “like two current accounts in one”. It has around 100,000 takers.

The idea is simple: a customer pays in his/her salary, benefits, pension, etc and Thinkmoney keeps enough in the customer’s “salaries account” to pay all the bills he/she has set up. Once the bills are taken care of, the rest of the money is moved over to the customer’s “card account”.

Intelligent Environments (IE) provides Thinkmoney with front-end applications, including self-service online/mobile banking software, for current accounts, deposits and pre-paid cards.

At the back-end, there is Fiserv’s Agiliti – a hosted solution that is an amalgam of around 18 Fiserv and partner products. For its core processing, it has Fiserv’s Signature core system.

The core banking project started at Thinkmoney in spring 2014. The go-live was scheduled for early 2016 (making it the first go-live for Agiliti).

Tide
Another banking service, rather than a bank. It is aimed at SMEs and is currently in the private alpha testing stage. It aims to open for business this autumn.

Tide will offer a “nimble small business current account”, with a swift set-up and no monthly frees. It claims to be among the “world’s first” mobile-first banking services for SMEs.

Tide’s proposition is a fully featured current account and business MasterCard, plus SME-oriented finance apps, accounting capabilities and interaction with Tide’s community online.

The Services Family
This digital bank will cater for the UK military personnel, veterans and their families. It plans to open for business by Q4 2016 and introduce products and services in a phased manner. To begin with, it will commence trading as a mortgage provider. By 2017, it hopes to become a fully licensed retail bank.

On the tech side, it will be underpinned by Sopra Banking Software’s core banking system, Sopra Banking Platform, and digital channels software. The solution will be delivered on a managed services basis.

Together Money
A new name, but the operations behind it have a 40-year old history. Together Money is a new brand of Jerrold Holdings Group, which unites Auction Finance, Blemain Finance, Cheshire Mortgage Corporation and Lancashire Mortgage Corporation.

Together Money’s focus is on residential and commercial mortgage loans to niche market segments underserved by mainstream lenders.

It is understood that it has applied for a banking licence.

Ummah Finance
Ummah Finance aims to be “the first UK born Islamic bank solely set up and operating from London”, with a fully digital proposition.

Ummah Finance says it is building a “safe and user-friendly mobile bank”. It will incorporate all features of a standard bank but will be fully compliant with the Islamic principles.

The service will be available on the iOS and Android devices.

Its parent company is HWK Group, which also has the National Association of Pakistani Entrepreneurs under its umbrella.

Union Bank of India (UK) Limited
A subsidiary of one of India’s largest banks, now with a UK banking licence.

For its tech, Union Bank of India (UK) uses Infosys’ Finacle. Its parent is already an established user of the Finacle core banking system across its international locations.

Wyelands Bank
Wyelands Bank is small entity previously known as Tungsten Bank and before that as FIBI Bank.

FIBI Bank was purchased by Tungsten Corporation from First International Bank of Israel in mid-2014 for £30 million. In late 2016, it was sold to Wyelands Holdings (part of Gupta Family Alliance/Liberty House Group) also for £30 million.

It will relaunch in 2017 with a new identity and focus as a specialist provider of financial solutions to commodities, steel and engineering enterprises. Sanjeev Gupta, executive chairman of Liberty House Group, says the acquisition is part of the group’s strategy to support the UK manufacturing.

Wyelands Bank will also have a new core banking system to replace its legacy Misys’ Equation core. This is understood to be ERI’s Olympic.

Zopa
The world’s first peer-to-peer (P2P) lender, Zopa, made an application to the PRA and FCA for a banking licence in H2 2016. It expects to receive the licence in 15-24 months.

Zopa’s bank will offer deposit accounts and overdraft alternatives to borrowers, in addition to the lender’s existing suite of investor and borrower products.

Jaidev Janardana, CEO of Zopa, says existing Zopa customers will get the “first opportunity” to try out the bank’s new products and provide their input in shaping these.

Comments
  • Saradha S 25 October, 2016 at 0638

    Hi Tanya,
    Excellent… very informative.
    thanks,
    Sharadha

  • Mackson Wakama 28 October, 2016 at 1326

    Quite informative!

    Seems a challenger bank need not be a digital-only bank

  • Craig Cockburn 30 November, 2016 at 0750

    Still looking for a comprehensive list in one place of which challenger banks have accounts for businesses. Far too difficult to find such simple information.

    • Tanya Andreasyan 30 November, 2016 at 0913

      The article above includes information which banks/financial institutions offer products and services for businesses/SMEs

  • John Robertson 2 February, 2017 at 1418

    Airdrie Savings Bank has lost the will to remain independent. They only accepted new customers personally at a branch until recently, when they stopped accepting new customers at all. Someone who reads this page might want to do something with the remaining organisation and banking licence, which has been a challenger bank since 1835

  • Catherine Waller 25 February, 2017 at 1908

    Thank you for updating the list and for providing any information at all. As Craig says, it is inconceivable that a comprehensive list does not seem to exist. It would be super useful to have dynamic data and search facility eg. by those operating in the SME space versus Retail etc. or by pending vs licence granted.

  • John-Henry Wicks 5 April, 2017 at 0835

    Hello,

    Good article, thank you!

    Have you looked at CurrencyWire (own RacingFX)? They’re ahead of most on this list in providing a multi-currency current account with a multi-currency mastercard. Their marketing and profile remains low, but I’m convinced their tech platform and licensing is well ahead of most the competition.

    Thx,

    JH

  • Dimi 6 June, 2017 at 1059

    Really comprehensive article. Any particular reason Revolut is missing from this list?

    • Tanya Andreasyan 6 June, 2017 at 1211

      We’ll put it on our update list, thanks!

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