Mickey Mouse banks

[Simpo Two]

Once upon a time there were five big banks.

Now there are hundreds of them popping up all the time like something from Dragons' Den. Are they sexily-dressed sub-divisions of proper banks, or three kids with venture capital who'll go pop next year? Has there been some relaxation on who can start a bank?

[grumbledoak]

Challenger banks. Same rules apply. No history or reputation, which could be a good or bad thing depending on your politics!

https://moneyfacts.co.uk/savings-accounts/guides/c...

[anonymous-user]

There is also a thought that because these banks are not a systemic risk, they should, in some way, be given help to increase competition

https://twitter.com/kevinhollinrake/status/1227588...

[Simpo Two]

grumbledoak said:

Challenger banks. Same rules apply. No history or reputation, which could be a good or bad thing depending on your politics!

https://moneyfacts.co.uk/savings-accounts/guides/c...

Interesting, thanks. I understand 'normal' banks have to keep billions in reserve, so how do these pop-up banks do it?

Anyone remember 'Bank of Dave'?

Should we found 'PH Bank'? Actually if that goes the way of Shareheads, best not.

[grumbledoak]

Simpo Two said:

Interesting, thanks. I understand 'normal' banks have to keep billions in reserve, so how do these pop-up banks do it?

No lending.

[anonymous-user]

Not all of them - some are built on lending and have to keep the same reserves as other banks to stay compliant

Eg https://livelend.co/ which is a brand from chetwood financial under its uk banking licence

[Simpo Two]

I'm sensing a fusion between pop-up banks and payday loan companies.

But if traditional banks don't cut it, why not? Witness the rise of couriers vs the post office.

[Frimley111R]

I do remember Bank of Dave. There was something he just couldn't get over which stopped him being a bank in the end so he became a building society IIRC.

More competition is usually better for any industry but i suspect the main banks will do all they can to stop/reduce it.

[anonymous-user]

Bank of Dave is still a live project. Currently it is Burnley Savings and Loans Ltd https://www.burnleysavingsandloans.co.uk/

It is in the process of applying for a banking licence from the BoE

It is easy to underestimate how difficult achieving that is. Even though the BoE is aiming to issue 20 - 30 new licences in the next 3 years or so and has set up a special New Bank Start Up Unit to help, it is not easy to gain a licence.

Vicki Rawstorne of Deloitte writes about it, e.g. here https://blogs.deloitte.co.uk/financialservices/201...