The Changing World of Money - a review

  • neil_edwards.pngBy the power of LinkedIn, I found myself reading through a new KPMG publication titled: 'The Changing World of Money'.

    Authored by Richard McCarthy, Head of UK Banking, and Warren Mead, Head of Alternative Finance, at KPMG, it is a warning shot for Retail Banking that it is in danger of having its lunch stolen by the combined power of alternative finance and FinTech.

    There is not much new news for those of us immersed in the industry, but there are enough interesting snippets and soundbites to make it worth the read.  Amongst my favourites are:

    • Banks are approaching their e-books moment. In the same way that Amazon killed the independent bookshop, Retail banks are under a three-pronged attack on their lending, deposits and payments from everything from Altfi start-ups to retailers, coffee shops and tech giants.
    • New providers are not in fact looking to eat all the bankers' lunch, they just want the best bits - or the bits they find most tasty.  There is a parallel drawn with how Kwik-Fit emerged and took the tyres and exhaust business away from garages and dealerships
    • The five big banks could lose 10% of their lending books to the challengers by 2020 if present trends continue. This will be painful for them, but not fatal.  But what happens if it goes to 20%+?
    • Credit analysis is moving beyond credit history.  Galen Buckwalter - the scientist behind relationship matches for eHarmony - is now working on algorithms for assessing creditworthiness based on social profiles.
    • The UK is losing its savings culture, which is creating demand for investment products better suited to individual risk preference and savings goals. Peer-to-peer is providing these, the banks aren't. 
    • There is £100m sat lodged on Oyster Cards, £1.4bn on Starbucks cards and a massive £9bn on PayPal accounts.  We have a whole generation of people growing up who will no longer associate payments with going to the bank
    • Bitcoin could be the Internet of money.  Few people understood the Internet at first, but now it's as ubiquitous as oxygen.

    We are left hanging on an answer to what the banks' response will be.  We are told that they have the people and the resources to be fast followers - 'the challengers to the challengers' - but not how they will be deployed. The question though is if they have already left it too late.

    HSBC may indeed be allocating £6bn to local lending decisions, but as Graeme Marshall, CEO of FundingKnight, pointed out in his blog, a whole generation of experienced lenders has been lost. How long will it take to find and train the new ones? We have young people growing up who no longer associate payments with going to the bank, and the point of a bank deposit account as anything more than a number 2 current account has long been forgotten.

    The banks have survived challenges before, but the difference this time is that consumers are embracing and supporting the challengers rather than being suspicious of them. The depth of the banks' wallets and their hold over the retail banking market will insulate them for a long time, but as McCarthy and Mead point out, the biggest inhibitor to Alternative Finance is its lack of awareness, which, in itself, shows what the huge untapped potential is.

Related articles

  • Read More

    Bank Referral Scheme - is 3% success, success?

    We suspected that the Bank Referral Scheme was going to be a slow starter when, five months ago, The Marketing Eye asked the Treasury’s Press Office how it was getting on. Despite the fact that no...

  • Read More

    Peer-to-peer lenders should not fear APRs

    Following the Competition and Markets Authority's (CMA) announcement that the new pricing rules on business loans will not apply to peer-to-peer lenders, some are heaving a hefty sigh of relief,...

  • Read More

    Peer-to-Peer lending passes £10 billion mark

    Peer-to-peer lending has reached a significant milestone since Zopa launched the world’s first P2P platform in 2005. Over £10 billion has been cumulatively lent across 23 UK P2P platforms....

  • Read More

    Peer to Peer featured in Queen's birthday honours

    Good to hear that the pre-eminent pioneers of P2P lending in the UK are receiving formal recognition for their outstanding achievements. Described an a ‘Peer to Peer and Financial Inclusion...

  • Read More

    New Fintech Collaboration: Xero + Liberis

    Liberis, the card based finance provider, has announced an integration with Xero, the UK's leading online accounting software, to improve small businesses’ access to capital and credit....

  • Read More

    Consumer debt rises while businesses save

    Soaring levels of consumer debt are evidently causing the Bank of England, the Government and others in authority some sleepless nights. According to a recent report in The Guardian, the number of...

  • Read More

    Liberis and Sage launch Sage Pay Business Finance

    Sage Pay has teamed up with alternative business finance provider, Liberis,to give Sage customers access to flexible financing for the first time....

  • Read More

    ArchOver receives FCA authorization

    ArchOver, one of The Marketing Eye’s longest standing clients in the alternative finance sector, has been granted full authorisation by the Financial Conduct Authority (FCA). The news represents a...

  • Read More

    Australian Budget sets scene for FinTech growth

    The latest Budget statement from ‘down under’, on May 9, reaffirmed the Australian Government’s intention to turn the continent into a global fintech centre....

  • Read More

    FinTech as a force for good

    Kids, they say, grow up quickly and nowhere is this more true than in FinTech. Barely five years ago, the phrase wasn’t even invented. Now it is the collective noun for billion dollar enterprises,...

Take the first step

To find out more about how we can help you grow faster, please get in touch. We'd like to hear from you.  Or try our instant marketing healthcheck, it's free!

Quick Contact

Quick contact


Contact us

T 01825 765617


Our offices

Full details of our offices in London and Uckfield more

Request a call