There is some serious disruption happening in the London Tech scene at the moment, and financial services seems to be a core focus for a lot of this disruption. With the increasing popularity of micro-finance, alternative currencies like bitcoin and stellar , as well as P2P and B2B lending, there are plenty of options for startup technology companies looking to get involved.
The larger financial institutions also face increased competition from challenger organisations; like Aldermore, Shawbrook and even Tesco who have set up their own bank and have around 7 million customer accounts.
In the race towards growth and dominance, the challenger banks have two major advantages; firstly they do not share the legacy issues of contributing to the financial crisis, in the way the major banks did. Secondly, and probably more importantly, they do not have the legacy technology footprint the major banks have.
The age old saying of what goes up must come down is true, and for most part this is a sweeping explanation for the role which major financial institutions all around the world played in the recent global financial crisis. For this reason, issues relating to the cause of the crisis may be forgiven over time, however, sleeping at the wheel when it comes to technology advancement will not be forgiven.
A recent McKinsey&Co publication stated; that due to a lack of spending and delayed digitization of retail banking processes, most European banks “have relatively shallow digital offerings focused on enabling basic customer transactions”.
My personal opinion and one of the major factors in my decision to recently move from Australia to London, is that the UK FinTech scene is such a buzz at the moment because there is so much pressure on the oldest financial hub in the world, to lead the way into the new banking and finance era. Innovation support from heavily backed organisations like Innovate Finance are being set up to promote the evolution of the financial services sector into a technology driven industry, as opposed to the relationship and manual process driven industry of decades gone by.
The internet movement has created connectivity, more personalised service, and overall transparency. These are all much needed factors in financial services. To see the combination of consumer demand and startup technologists focusing their efforts on disrupting the control held by so few, will be a very interesting development to watch.