Six firms with business models focused on providing banking services to customers digitally have already been authorised as banks since 2015.
A further 16 fintech firms are at pre-application or live application stage, compared with 26 non-fintech firms. These range from firms proposing digital/app-based banking services, firms using Open Banking legislation to provide customers with aggregated information across accounts, to firms looking to use distributed ledger technology or work in crypto-assets.
Many of the emerging risks identified and assessed for fintech firms are similar to other new start-up banks, in areas such as governance and technology-risk.
Through authorisation mechanisms such as ‘mobilisation’ (where a firm is authorised at an earlier stage of its developments but with restrictions) new banks are able to build systems and infrastructure while being held to appropriate standards.
There has been less interest from fintech firms seeking authorisation as insurers. The PRA and FCA are developing a more streamlined process for firms looking to become insurers and have launched the New Insurer Start-Up Unit. It is hoped this will lead to more firms coming forward in future.