Metro Bank Founder Paves Way For New Lenders
The founder of Britain's first new high street bank for more than a century is backing a technology venture which could assist the launch plans of dozens of lending start-ups.
Sky News has learnt that Anthony Thomson has struck a deal with Fiserv, the Nasdaq-listed software group, to create an infrastructure platform that promises to slash the cost and time involved in gaining a UK banking licence.
Mr Thomson is expected to join the board of Financial Services Technologies Limited, a new Fiserv subsidiary, as a non-executive director.
Called Agiliti, the new software venture will be aimed at licence applicants which are trying to gain a foothold in British banking in order to exploit consumer mistrust in scandal-hit high street lenders.
Details of Mr Thomson's new project with Fiserv could be unveiled as soon as this week, according to technology industry sources.
The Metro Bank founder, who stepped down as its chairman in 2012, is understood to have been working on plans for Agiliti for more than a year.
Accelerating the launch of new banks has been a subject of heated political debate since the 2008 financial crisis.
George Osborne, the Chancellor, and Vince Cable, the Business Secretary, have pushed City watchdogs to lower barriers to entry for start-ups, but many complain that the costs of launching a bank remain prohibitive.
The length and complexity of the authorisation process, access to payment systems and the capital burden for new entrants have been the principal obstacles to licence applicants.
Some, such as Home & Savings Bank, a telephone and internet-based lender, were effectively forced to abandon their plans altogether because of difficulties securing regulatory approval.
The cost of technological infrastructure has also been a significant factor.
IT failures at banks such as Lloyds Banking Group and Royal Bank of Scotland have led regulators to insist on "industrial-strength systems from day one", according to insiders.
Mr Thomson's venture with Fiserv will involve bank clients being charged fees annually based on the number of accounts they attract, meaning they will not have to contend with substantial up-front IT costs.
Agiliti will provide software that is suitable for retail and small business banking services, and could reduce the time needed for a start-up to establish a technology platform from three years to as little as six months.
"This will be a game-changer for new banks," said one person close to the project.
"It is a pay-as-you-go solution that will change the economics for start-ups."
Vernon Hill, Metro Bank's other co-founder and current chairman, has been a vocal advocate of the need for a cost-effective bank IT platform.
The Financial Conduct Authority and Prudential Regulatory Authority are understood to be examining bank licence applications from nearly 30 companies.
One of them is from Atom, Britain's first digital-only bank, which Mr Thomson is setting up and which could begin operating next year.
Sky News revealed earlier this year that Mr Thomson had recruited Mark Mullen, the chief executive of First Direct, to run the new lender.
Atom is expected to use the Agiliti platform, although that decision would be taken without Mr Thomson's involvement in order to avoid any potential conflict of interest.
In recent weeks, Tesco has announced its entry to the current account market, with Virgin Money among the other big names trying to mount an assault on the big five banks: Barclays, HSBC, Lloyds, RBS and Santander UK.
Around 2.5 million people change their current account provider annually, but the advent of a seven-day switching system means this number is expected to double quickly to about five million.
Mr Thomson could not be reached for comment on Sunday.