04 May 2016, 23:45 / Finance

Financial start-ups are increasingly crowding out banks in the UK

is a conservative client and it is not easy to change them Tatiana Bochkareva Barclays didn’t come out with a new product because of a good life / Matt Dunham / AP

Barclays has started offering mortgages without a down payment, writes FT. Provided that the borrower's family opens a three-year deposit in the amount of 10% of the cost of housing. This is the first such offer in the UK since the crisis of 2008. Northern Rock, which went bankrupt during the crisis, became famous for issuing loans of 125% of the cost of housing.

Barclays did not come up with a new product out of a good life. In 2015, the UK's top five banks - HSBC, Barclays, Lloyds, Royal Bank of Scotland and Santander UK - cut lending by 4.9% as their rivals, known in the UK as challenger banks, sought to take market share from them. ), increased lending by 31.5%. The Five reduced pre-tax profit by 5.6 billion pounds ($8.1 billion), while the newcomers increased it by 194 million pounds.

Challengers are divided into two groups. The first consists of smaller traditional banks such as TSB and start-ups such as Richard Branson's Virgin Money. The second includes young start-ups including Aldermore, Metro, OneSavings and Shrawbrook.

Meteor time

“They are dinosaurs, and I am a meteor, and they still have business practices that should be extinct,” Mike Cagney, CEO of fintech startup SoFi, says of large retail banks.

Virgin Money increased its mortgage origination by 30% to £2.1 billion in the first quarter and its market share to 3.4%. The bank's credit card portfolio since 2015 grew 77% in the quarter to £1.8 billion. Virgin Money plans to start lending to businesses before the end of the year, and will launch digital accounts in 2017.

“It is absolutely certain that many of the new banks that are just entering the market will not be able to achieve their goals in the coming years and months,” says Victoria Raffe, a former FCA director and now a member of the board of directors of Starling Bank, “Some will close, some will not be enough.” gunpowder, some are consolidating.”

Some of the newly created banks, including online banks Atom and Tandem, have already felt how difficult it is to lure customers away from traditional banks. In March, 124,615 accounts were transferred to other banks, while there are 51 million retail bank accounts in the UK.

But challengers also have an advantage over large banks - higher profitability. According to KPMG, for small startups it increased in 2015 from 15.8 to 17%, for their larger competitors - from 8.8 to 9.5%, for the five largest banks (controlling more than 80% of the country's banking market) - from 2.8 to 4.6%.