Global FinTech Guide
Country Name
United Kingdom
Online banking services
FinTechs belonging to this area offer traditional banking services in a modern way, usually through online services or mobile applications as well as ancillary services – e.g. enabling customers to manage their giro- or custody-accounts online and in real time or offering e-wallet services. Keywords in this context are also API-Banking or Banking as a Service (BaaS)/ Bank as a Platform (BaaP).


API stands for application programming interface and is offered to access data banks and to extract and insert information. API-Banking consequently means the access to data banks of banks to offer new and innovative banking applications.

Through these services FinTechs offer services with new functions, e.g. enabling customers to manage their accounts online and in real time.

BaaS – Bank as a Service/BaaP – Bank as a Platform:

The API-based Bank as a Service platform has a full banking licence, but merely serves as the back end for standalone independent FinTechs, which “use” the licence and the back end of the bank to offer new financial services, launch additional financial products or expand into additional markets.


Attitude of the country towards online-banking services

Although the UK banking industry remains dominated by the big “bricks-and-mortar” banks, online FinTech banks (often referred to as “Challenger Banks” or Neobanks”) are growing in market position and popularity. The growth has been driven by various factors, such as traditionally poor (and reducing) customer service levels by the mainstream banks, the ease of use and sophistication of banking apps, and the UK Government’s desire to increase competition and fragment risk concentration in the UK banking sector.

As a result of growth in popularity of online banks, many traditional banks have embraced FinTech’s and technological change, seeing it as an opportunity for their own growth and to reduce operating (particularly staff) costs.

Generally, the UK regulators are supportive of innovation in the financial services sector. Numerous challenger banks and FinTech firms have received authorisation in recent years to carrying on banking (accepting deposits) and banking type (payment services) activities. The FCA provides a ‘regulatory sandbox’ which allows firms to test innovative products in a controlled environment.

The UK Government’s aim is to establish the UK as the global leader in FinTech and Open Banking.
Please see the General Overview of the UK’s FinTech Sector, in the Payment Services section.

Legal affairs

Obligations and requirements to provide online-banking services described above

Online banking services are regulated in the same way as traditional banks in the UK, by the PRA and FCA. The PRA is part of the Bank of England and is responsible for prudential issues such as capital and liquidity. The FCA is responsible for conduct issues, with the aim of protecting consumers, enhancing market integrity and promoting competition.

The essential regulated activity of a bank is accepting deposits. Banks authorised under FSMA are generally able to also provide Payment Services and to issue E-Money.

All banks are required to maintain adequate financial resources, and are subject to qualitative and quantitive liquidity requirements, as well as detailed reporting requirements. Broadly, banks must hold a buffer of unencumbered high quality liquid assets to meet liquidity needs under a 30-day stress scenario.
Banking is the most highly regulated of financial services activities, and banks must comply with a wide range of legislation, including the PRA Rulebook and the FCA Handbook. There is also a considerable amount of regulatory guidance and expectations beyond the strict rules.

Fees for banking authorisation (as contrasting with banking type activities such as lending and payment services, but not accepting deposits) are set by and payable to the PRA. Application fees range from £50,000 to £315,000. Annual regulation fees for banks range from around £35,000 to £57,000. Other fees are likely to be payable.
UK bank capital requirements are still based on the EU’s Capital Requirements Directives (2013/36) (“CRD”) and Capital Requirements Regulation (575/2013) as now on-shored into UK domestic law. The Minimum capital requirements for a bank under CRD are €5 million, or if the firm can demonstrate it is a Small Specialist Bank (a bank carrying out one or more of the activities of: providing basic banking services which could include current and savings accounts; lending to SMEs; and residential mortgage lending), €1 million or £1 million (whichever is higher).

In general terms, obtaining full banking authorisation (to accept deposits) is likely to take several years and incur costs into the millions of pounds in advice and consultancy fees, to design and implement the required systems, and to build a resilient infrastructure and operational base.

Additional comments regarding the legal situation for online-banking services or what FinTech’s must be aware of in this business area

The majority of digital banks and payment services companies are protected under the FSCS, which means that up to £85,000 of a customer’s money is protected in case the bank goes under.

E-Money accounts are not considered to be banks, so consumers are not protected by the FSCS.

Economic conditions

Market size for online-banking services and biggest companies in this business area

Banking FinTechs represent about 13% of the UK FinTech industry. There has been slower growth in recent years compared to other FinTech sectors, possibly a result of the market becoming more saturated.

Key players include: Starling Bank (1.8 million users); Monzo (3.9 million users); Atom Bank (65,000 users); Monese (2 million users); Revolut (over 12 million users).

Whilst the market breakdown for online-banking FinTech’s is not expressly discernible, see 1.a.i for a more general overview of the FinTech sector.

Additional comments regarding the economic situation for online-banking services or what FinTech’s must be aware of in this business area

The PRA and FCA have jointly set up a new initiative called the New Bank Start-up Unit, to give firms interested in authorisation as a deposit-taker the information and support they need to set up a bank in the UK. The regulators will review several business areas as part of their assessment, to assist firms with the requirements for authorisation (

Some well-known and established FinTech companies offering banking like services (such as Revolut, which offers an electronic wallet, payment services and other activities rather than a regulated bank account) are still in the process of applying for full PRA banking authorisation.

The FinTech banking and payments sector has faced some issues in recent years. For example, in 26 June 2020 the FCA suspended Wirecard authorisation to operate as an E-Money provider. This has led to an increased level of scrutiny for payment services and E-Money firms.

Due to the vigour of regulation, there have been no notable failures in the UK banking sector since the financial crisis of 2008/9 (when bank failures were managed by bank sector merges, and ultimately by substantial Government financial support).

Some EU state regulated banks withdrew from the UK market in response to Brexit and the loss of passporting rights. Other banks (such as Raphaels Bank) have ceased business in an orderly way, and entered solvent liquidation.

The UK banking sector is generally considered to be well regulated and stable. 



© 2022, Penningtons Manches Cooper LLP; Shakespeare Martineau. All rights reserved by Penningtons Manches Cooper LLP; Shakespeare Martineau as author and the owner of the copyright in this chapter. Penningtons Manches Cooper LLP; Shakespeare Martineau has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this guide.

The information in this guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.


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