Metro blames IT for banks’ lack of competition
20 January 2014 5:15am
BRITAIN’S banking sector cannot be broken open by challengers because the country lacks the vibrant IT sector needed to support new lenders, Metro Bank chairman Vernon Hill told City A.M. yesterday.
Hill founded the first new bank in the UK in over a century in 2010, but argues it is a much easier process in the US because entrepreneurs can access off-the-shelf IT systems.
By contrast UK banks have built their own computing systems, meaning there is no bank IT servicing industry from which new entrants can benefit.
“There are 7,000 separate banks in the US and they have a tradition of outsourcing IT. It is very efficient for a new bank to buy a packaged IT programme which is cheap to install and the provider keeps it up to date,” Hill said.
“That is just not here in the UK; no banks ever outsource IT. British banks build their own systems and you can see how far that has got them.”
His comments come after politicians argue over ways to boost competition in the banking sector.
The coalition government has introduced a seven-day switching scheme to enable customers to change current accounts to a new bank within seven working days. Meanwhile Labour’s Ed Miliband is looking at ways to make the biggest banks sell off more branches to open up the market.
Metro Bank wants to grow to 200 branches, but Hill said he will not buy any from the large banks.
“No great retailer has got great by buying someone else,” he said.
He was speaking as the bank raised £378.5m in an equity fundraising round which amounts to almost 50 per cent of the bank’s equity and values Metro at £770m. Hill wants to list the bank on the London Stock Exchange in 2016.
Fellow challenger Aldermore also confirmed yesterday that hedge funds Toscafund and Lansdowne Partners have put £40m into the bank, following reports of the deal last December.
In other news
A random combination of words and characters are automatically shutting down iPhone users' devices. [Read more]
London will play host to a record number of cyclists in August as the Prudential Ride London Freecycle event expands [Read more]
Commuters using London's Fenchurch Street could face a travel headache going home tonight, with operators confirming [Read more]
Eight candidates are vying for the role of deputy Labour leader in a crowded race alongside the high-profile leadership [Read more]
Between 1997 and 2013, people living in just four regions in the UK saw their disposable income increase when [Read more]
Swiss police are questioning 10 Fifa officials over the controversial award of the 2018 and 2022 World Cups to [Read more]
Dutch banking giant ING last night cut its stake in NN, an insurance and investment management company.
Update: Nearly 150 flights have been cancelled and 32 diverted to other European cities after a power outage shut [Read more]
A fresh investigation into migrant worker conditions in Qatar landed BBC reporters in prison recently. It is another [Read more]
The Bank of England will not back down on tough regulation, top official and ex-Barclays boss Martin Taylor said [Read more]
Perhaps the most enjoyable outcome of the General Election is the abuse now being heaped on the metropolitan liberal [Read more]
Private company SpaceX has received certified approval from the US to send military and spy satellites into space. [Read more]
Essex commuters will be the first to benefit from London’s Crossrail train service, with fare cuts of up to [Read more]
Boohoo’s finance chief Neil Catto was yesterday granted 1.6m share options worth £400,000 after his previous [Read more]
The FCA is considering whether to introduce new rules around PPI complaints following last year's ruling on the [Read more]
Politicians have been screaming for blood over the Libor scandal for years, as fines and firing have not sated [Read more]
The London-based tech startup notonthehighstreet.com has won a £6m loan from the Silicon Valley Bank.
Social media giant Twitter is in talks with Flipboard, to buy the media curation mobile app.
Charter Communications has finalised its $55bn (£36bn) takeover of Time Warner Cable. [Read more]