U.K. Banks Adopt Digital Platforms to Compete with FinTechs

ISG Provider Lens report also sees the COVID-19 pandemic pushing banks in the U.K. toward digital, cashless services

LONDON, Dec. 22, 2020 (GLOBE NEWSWIRE) -- Banks in the U.K. are shifting to digital platforms to gain a competitive advantage against the rising FinTech industry, according to a new report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2020 ISG Provider Lens Banking Industry Ecosystem Report for the U.K. finds banks in the country interested in cloud-based core banking systems, instant payment technologies, automated anti-money laundering services, and API-led applications. The COVID-19 pandemic has accelerated adoption of digital platforms in the U.K., with both banks and merchants pushing for a cashless society.

“The pandemic has fast-tracked the move in the U.K. toward online transactions,” said Bryn Barlow, ISG partner based in the U.K. and co-leader of the firm’s EMEA BFSI industry practice. “Banks are looking for better coordination between their own platforms and their customers’ digital information and records.”

The report also notes the ongoing exit of the U.K. from the European Union will require banks in the country to decouple their networks, including payment and know-your-customers systems, from the EU. For U.K. banks to become a competitive financial hub outside the EU, they will need to invest in cutting-edge technology and business processes, the report recommends.

In addition, the report notes many U.K. banks are closing branches to fund their digital initiatives. Newer and larger banks have begun offering online-only banking services, resulting in several growth opportunities for technology service providers.

Banks in the U.K. are also focused on retaining customers and attracting new ones through new services driven by technology, the report adds. Many banks are offering easy-to-use treasury management, supply chain and credit products in an effort to compete with FinTechs. While banks in the U.K. have been on the forefront of next-generation payment systems, FinTechs and other new challengers are pushing the boundaries of the payment ecosystem further with API-led service portfolios that include virtual payment cards, instant payment options and loyalty-based credit.