An Italian bank is set to enter the UK this autumn as another contender in the challenger banks’ battle against the Big Four.
FinecoBank launched in 1999 as a subsidiary of UniCredit Group and has grown rapidly to have 1.1m Italian customers.
It’s disrupting the banking industry by being the only company in Europe to combine digital banking and stockbroking platforms alongside a network of financial advisers, says chief executive Alessandro Foti. It aims to give customers a strong digital experience and slicker online services than established banks. It now has €55bn of customer assets and floated on the stock market in 2004.
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“Clients in Italy are less and less satisfied with the service provided [by banks] and this is producing a growing propensity for people to change their banks,” he says.
A unique part of the model is that it doesn’t open typical branches with bank tellers and the option for transactional banking, such as taking out money or making deposits. Instead it has “shops” where people can speak to staff for help with online banking or have a sit-down with a qualified financial planner to discuss more complex matters. It has 350 shops in Italy.
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Getting rid of cash handling in branches removes a huge cost for the company. Regular banks have to be run like fortresses, thus incurring large expenses for the business – which are ultimately passed on to customers through fees and poor interest rates. FinecoBank will launch in the UK initially with current accounts, Isas and Sipps, as well as stockbroking for people who don’t need an adviser, known as execution-only. Financial planners won’t be part of the offering initially.
Italian banks have made headlines in recent weeks as some are saddled with great swathes of non-performing loans, commonly known as bad debt.
But this doesn’t affect all Italian banks. The country has 250 ordinary banks and a further 350 co-operatives which offer banking. Fineco is purely a retail bank and offers very limited lending, so it hasn’t been invovled in non-performing loans.