However, one industry expert believed that there was “certainly room for more consumer choice” in banking.

Specialist Banking asked brokers, banks and industry experts whether there was room for more banks or if the industry was already overcrowded.

Brokers

“I think it depends upon which part of the market you are looking at,” said Robert Collins, co-founder of Sirius Property Finance.

“The specialist space is getting increasingly crowded now, but the newer entrants are generally looking at areas where they can charge premium rates for more flexible credit.

“This has meant that the more vanilla deals are still [being catered for] by the traditional names.

“Metro has done its bit to challenge the established commercial lenders and Atom did try to shake the market up, but I do think there is an opportunity for lenders that have a low enough cost of capital to compete at the mainstream end of the market.”

Chris Dawe, sales director at LDNfinance, believed that new entrants to the market were always welcome if they brought something new to the sector.

“Whether [that] be higher leverage, better pricing or more aggressive lending criteria, new banks can often mean that some underserved sections of our client bank are exposed to better options than those offered by the traditionally dominant lenders.

“There are certainly many more lenders then there have ever been, but this just makes the benefit of using a good broker even greater as they will be able to present a greater breadth of options to the client.”

Edward Horn-Smith, managing director of structured finance at Arc & Co, thought a wide selection of debt providers in the market would drive pricing and service.

“There is room for more banks in the industry providing they have a target customer base within the market.

“This can either be by way of product offering or service provided.”

Financial institutions 

"We believe that increased competition should be treated as an opportunity,” said Nik Storonsky, founder and CEO at Revolut.

“As long as there is innovation, there is room for more players in the space.

“If banking services continue to create new products or utilise new technology, we'll be able to offer a more competitive marketplace and provide better customer experiences for customers.

“We also believe that competition in the banking space prevents complacency.

“If companies are constantly trying to create better financial products for their customers, we'll improve the financial services industry as a whole."

Andrew Garvey, chief commercial officer at Countingup, thought that more competition was a positive as there was more choice for consumers and businesses.

“For me, it’s too early to say there are too many as there is so much change in the industry and, more importantly, in the way people view banking.”

Industry experts

“The emergence of the challenger banks shows that there is certainly room for more consumer choice when it comes to everyday banking services,” commented Gordon McKenzie, European managing director at Ondot Systems.

“With the introduction of Open Banking, we can expect ‘neobank’ fintech providers to deliver integrated consumer experiences with some degree of banking element included; be it onboarding a service or switching providers of utilities, for example.

“There will be a range of third-party providers that connect to our banks through the Open Banking APIs.

“Therefore, in order to remain competitive, core banking providers will have to innovate using new tools and technology that allows their customers to have more control.”

Christoph Tutsch, CEO at ONPEX, concluded: “Currently, there is a gap in the market for fintechs and API-driven technology that enable plug-n-play integration of flexible banking and payments services.

“Fintechs are beginning to adopt IBAN-issuing capabilities and integrate the offering into their services.

“This allows customers to make fast and secure cross-border payments and gives fintechs the ability to compete against traditional banks.

“The industry is not saturated, but it is becoming more competitive.

“New institutions are being created to fill the gaps that currently exist in the market, meaning many customers are underserviced.”