Monday, 7 July 2014

Signs of life in the UK core banking last

Is the UK core banking software market finally showing signs of life? Vendors large and small are flocking back to the once dormant space as around 25 entities are waiting for approval from the country's regulator, Financial Conduct Authority (FCA), to launch banking operations.

Some of the banks – such as Templewood and Edmond de Rothschild Private Merchant Banking – hope to tap into merchant banking opportunities, whilst others concentrate on the SME sector, including British Business Bank, a state-backed economic development bank. Retail banking is getting attention too, with new agile entrants – e.g. OneSavings Bank and Paragon Bank – challenging the high street behemoths. The latter, in their turn, are de-consolidating, with Lloyds and TSB parting ways, and the Royal Bank of Scotland (RBS) unbundling Williams & Glyn.

In the online banking space, next year will witness the launch of Atom Bank, the country's first digital-only bank, according to its founder, Anthony Thomson. Just a few years earlier he co-founded Metro Bank, with the completely opposite strategy focused on the ‘brick and mortar' branches and personal service. Hot on the heels is Fidor Bank, a German direct banking start-up that is eyeing international expansion. It is now waiting in the wings for a UK banking licence. BFC Exchange, a Bahrain-based money exchange and transfer operator with a network of offices in London, is queuing for a licence as well. In the meantime, it is understood to have made a decision on its core system and supplier. Meanwhile, Hampden & Co (formerly Scoban), a wealth management and private banking start-up, is aiming for its launch this summer. The bank's operations will be underpinned by a hosted version of Oracle FSS's Flexcube.

A host of lending institutions in the UK are keen to raise funds by taking deposits, but to do so they need a banking licence (and the relevant software). Clearly, there is business to be had for suppliers across the board.

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