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UK start-ups to challenge traditional banks

30/04/14

The British banking sector has been undergoing something of a shake-up in recent years, not least thanks to the criticisms levied at many institutions for their role in the mis-selling of complex financial products and the turmoil brought about by the global economic slump.

Responses to the new environment have been varied - many established organisations have pledged to revamp their digital offering, leading to many analysts sounding the death knoll for traditional high street banking.

Atom Bank, set up by former Metro chairman Anthony Thomson, is to launch in 2015 and will be the first British institution to have no bricks-and-mortar branches.

"Opening a bank in 2015 with branches would be like BT putting telephone kiosks back on the high-street," declared Mr Thomson.

He is not the only entrepreneur to feel that new, fresh ideas are needed to shake up the British banking establishment.

Ismail Ahmed, the Somali co-founder of money transfer service WorldRemit, recently told the Financial Times that London is the best place in the world to set up a start-up with a focus on finance and technology.

"As the global centre of financial services and a tech hub, London gives fintech entrepreneurs access to an unparalleled pool of talent, from developers to product managers to compliance officers to sales," he added.

This could be refreshing news for financial services workers keen for a change of scenery, as the boom in so-called 'fintech' companies may offer them a new opportunity in a very different business environment.

Reasearch from Accenture found that financial technology start-ups in the UK and Ireland raised some £418 million from investors between 2008 and 2013. While that is less than the amount brought in by Silicon Valley companies, the rate of growth recorded was faster.

Nutmeg chief executive Nick Hungerford admitted that big banks are still in the driving seat but expressed his optimism for the start-up scene.

"Innovators are nibbling away at all the different financial services," he declared.

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