Starling to be in profit next year?
Starling Bank expecting to be in profit by the end of 2019 further illustrates the determination with which new entrants are competing.
Yet the retail banking market remains notoriously difficult for new competition to crack – just think of the building societies that converted into banks around the turn of the century and which are now no longer with us, or the raft of online-only banks that launched in the early days of the internet and have similarly disappeared. Changing a well-established market, where some incumbents have, literally, been around for centuries is clearly no small task.
To ensure success, the latest new entrants will have to ensure that their overall product and market propositions are just as eye-catching as their underlying technology. While the new IT platforms are being developed and deployed relatively quickly, it make take longer to woo relatively large numbers of new customer;, to develop truly differentiated products and persuade clients to open and use them regularly; and to demonstrate that the associated business cost, credit and risk profiles can be managed to deliver long-term financial success.
Of course, some challengers may be satisfied with establishing themselves as custodians of second and third banking relationships, perhaps in such sufficient numbers that some of the established banks, or other market participants with deep pockets, step forward to buy the most successful. But many have bigger ambitions than that. However the newcomers ultimately define their success, customers will benefit from their trying.