The Bank of London has amassed £300m in deposits within six months of taking client money, making it comfortably the UK’s fastest growing SME-focused challenger.
Chief executive Anthony Watson said that the bank has been “inundated with demand” since exiting its regulatory restrictions in February this year.
Businesses in Britain have been “under-served by both heritage banking incumbents and the more recent challengers,” Watson said.
The £300m garnered by the Bank of London is significantly greater than the amount of deposits amassed by other SME-focused challengers in their first year of operation.
In its first annual report, Allica Bank – the second fastest growing SME lender – had accumulated £104m in deposits.
The Bank of London launched in 2020, becoming only the sixth clearing bank in the UK. Clearing banks provide payments and transaction settling servicing to other institutions. It secured its banking licence in February this year.
The London-based challenger does not lend its customers’ funds, meaning deposits are immune from the risks of a bank run.
At its most recent valuation, Bank of London was valued at $1.1bn, maintaining its ‘unicorn’ status despite the wider downturn in VC funding.
While the bank has attracted deposits significantly more quickly than other new challengers, this partly reflects the recent increase in interest rates.
As interest rates have risen, consumers have been more proactive in parking their money at banks offering competitive rates. Many challengers have benefitted from this trend over the past year.
Watson said this was just its “initial journey” as he flagged Bank of London’s ambition to “establish ourselves as pivotal players, not only within the UK but also internationally”.
Recently the bank said it would hire 300 staff members for its new Luxembourg office after applying for an EU banking licence.