by Mark Johnston
A New UK Bank Enters The Market!
Many financial experts believe that at the moment more competition in the financial lending market is both wanted and needed, especially from those who intend to offer more innovative and bespoke products.
The British Bankers Association (BBA) has always welcomed competition for high street banking services and choice for customers and therefore they have stated that “The UK has a highly competitive retail banking sector already offering greater customer choice than in many other countries.”
Ikano Bank is the UK’s newest bank to be launched, it is a UK branch of the Swedish Ikano Bank.
Ikano is an international company which was originally a part of the home furnishing company IKEA.
The bank has now been granted a banking licence, and therefore it could prove to be a badly needed competitor to the high street banks.
The Bank licence will provide a strong foundation for future growth in the UK Business, allowing it to offer new services direct to consumers as well as building its retail finance operation.
Previously known as Ikano Financial Services, the business already has around seven million existing customers. These are largely in the store and loyalty cards sector.
The bank has stated that personal loans are set to be launched in 2014.
Dan Joy, UK country manager for Ikano Bank UK, said: “Our new loan products are under development and will reflect our promise of ‘On Fair Terms’ and our values around simplicity.”
The bank is already on the Financial Conduct Authority (FCA) register but it is not yet covered by the Financial Services Compensation Scheme (FSCS). However, it is only issuing loans, so there is no risk to your money as it is not actually being stored anywhere, as with a savings account.
Recent research shows that in the past six months there has been a severe pricing war in the personal loan market and the introduction of a new lender will add an interesting element to the mix.
There are relatively few new entrants to compare the new bank with. Metro Bank, which opened in 2010, was the last new company to get a banking licence and it offers mortgages, savings products, credit cards, current accounts and loans. But it’s still relatively small; it aims to have 40 branches by next year, and 200 by 2020.
Industry insiders suggest that the market is very encouraging at the moment, but they add that any prospective new entrant must also be aware of the challenges that may lie ahead.
The fact is however Consumer confidence in banks has been battered in last few years and recent scandals and IT fiascos have done little to win customers back.
In conclusion the launch of a new bank in to the UK can only be good thing and only time will tell how it will fair in comparison to some of the leading high street bank.
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