Thursday 4 July 2019 6:55 am

Fintech champions face an uphill climb if they want to expand into America

When did you last pay with a cheque? I’d be willing to bet that many of you don’t even know where your cheque book is, and if you do, that it’s probably gathering dust.

If you’re living and working in a UK city, you’re totally accustomed to new ways of banking – from Apple Pay to contactless – with challenger banks popping up every day.

But given that today is US Independence Day, it’s worth considering what things are like for our American cousins. 

In the US, the banking culture couldn’t be more different. Cheques are very much alive and well, as are trips to your local branch, Christmas cards from your bank manager, and daily visits to the ATM.  


Why does this matter? To most people, it may not, but if you’re a fintech company planning to launch across the pond, these entrenched cultural differences should be front of mind.  

The challenge ahead

Challenger bank Monzo recently announced that it will be launching in the US, aiming to build on the customer base of two million that it has established in the UK. Elsewhere, Revolut unveiled plans to do the same, as did the German challenger N26.

The achievements and ambitions of these businesses should be applauded. After all, a British tech company scaling globally is as rare these days as a cheque payment in London. However, it’s well known that British fintech firms face challenges when expanding to the US. 

While fintech has skyrocketed in the UK, propelling a digital revolution in personal and corporate finance, the landscape is fundamentally different in the US.

Put simply, digital and mobile banking has not yet taken off in America. As a Brit living in Silicon Valley for over 20 years, I can tell you that banking remains a personal affair, far removed from technological disruption.

I was recently at a three-day Microsoft conference. There were sessions on artificial intelligence, cloud computing, and machine learning, but no mention of fintech. The technology isn’t on anyone’s radar here, which gives the UK an edge, but it also raises its own challenges.

Playing in the regulatory sandbox

A fintech startup looking to grow in the US needs to navigate the complex world of state-by-state regulation. Trust me, it’s no easy feat, and a core reason why domestic fintech has not made its mark in the States.


A regulatory sandbox was a central piece of the success that fintech has experienced in Britain. America is light years behind on that front, and there are entirely different governing principles across the nation.

I will admit that it may well be too early to say how fintech will fair in the US. In the end, a good business with a strong product that resonates with customers is hard to beat.

Just think back to the dotcom bubble, and the struggles of Adobe and Netscape. Both businesses faced fundamental challenges from incumbents. While Netscape failed to compete with Microsoft as it rolled out Internet Explorer, the quality of Adobe’s range of services ultimately allowed it to see off the competition.

As things stand, it remains unclear who the Adobe or Netscape of British fintech will be. But what we can bank on is that fintech faces an uphill climb in the US.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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