Although the impact of Brexit remains unclear, the UK’s financial sector will remain one of the most significant contributors to the UK economy. With over 1.1 million people working in the financial services, the sector generates £200 billion in revenues and £125 billion in GVA annually.
The UK financial services sector has consistently been the top country for foreign direct investment for the last twenty years. By promoting innovation in financial software, products, and services, the UK attracted the next generation of fintech leaders. The UK was the first nation to create a regulatory fintech sandbox in 2015, and the investment is paying off.
The number of digital-only bank accounts, relying on innovative banking software in the UK, has soared in the last five years. According to some estimates, almost one in four Brits has a digital-only account, and the adoption rate is expected to climb further.
Digital-only bank adoption in the UK is expected to increase. Source: Finder.com
Over 40% of people switch to digital-only banks because they are more convenient than incumbents. Outdated banking software in the UK that traditional banks rely on is not only less functional but costlier as well. Compared with incumbents’ £170 cost per account, it costs neobanks far less (£20-£50) to serve their customers.
The functional and cost advantages of financial software used by neobanks let them offer better rates and cheaper transactions. Revolut, for example, offers free currency exchange at market rates. Read more about how to build a digital bank like Revolut in our previous article.
Why UK customers are switching and sticking to their bank. Source: Finder.com
With fintechs and neobanks putting significant competitive pressure on the UK’s financial sector, incumbent banks need to adapt or risk losing even more market share. Goldman Sachs has already rolled out their digital bank arcus that has attracted 300 thousand users since 2018. In response, industry giant JP Morgan is set to launch a UK digital bank in an attempt to acquire a share of the increasingly competitive market.
As entrants with stronger digital competencies continue to establish their brands in the UK, incumbents could be set for a shake-up as customer preferences evolve, and competition increases. Collaboration between incumbents and specialized fintechs can address these digitalization pressures and lead the way to the future of banking.
Global core banking software providers like SDK.finance can help banks in the UK reach a broader market with modern solutions faster, cheaper, and more efficiently. The digital retail banking software is available in all popular formats: web, iOS, and Android applications that help to reach the new generation of mobile customers quicker.
SDK.finance provides technology and supports banks of all kinds at every stage of the digital transformation from market research to product launch and scaling. Banking customers can benefit from a modern and secure experience guaranteed by two-factor authentication, biometric checks, security notifications, and Strong Customer Authorization for payments.
The Platform consists of 5 main components: a back-end wrapped in 400+ API endpoints, 3 front-end frameworks, and a web for system management with capabilities in iOS and Android for our clients.
Advantages of software that is built on API-first architecture:
- The speed of releasing new features and functionality is much faster
- The cost of ownership is more economical
- Fewer bugs and more stable products exist
- Better flexibility, scalability, and features are just some of the advantages of the SDK.finance core banking software ready for UK banking.
Click here to find out more about the UK banking software solution and how it can help your business unlock new opportunities.