iFAST Global Bank: The History of Digital Banking in the UK

Amid the global wave of financial technology, the development of digital banking in the UK has attracted attention. 

The rise of digital banks in the UK can be traced back to the early 21st century. At that time, some financial technology companies saw the pain points in traditional banking, such as high fees, cumbersome processes and less personalized services, and began to try to use technology to provide more convenient and efficient financial services. 

Moneybookers, founded in 2002, is one of the early representatives. It is a subsidiary of Gatcombe Park Venture Capital Company in London, UK, and is also the world's first electronic bank officially recognized by the government. It is also a member of the British Electronic Money Association EMA. It has many advantages, such as only an email address is required for registration, no credit card is required; its foreign exchange can be transferred to domestic bank accounts ; it saves the trouble of Paypal's activation with a credit card, and can be authenticated with an email address and a photo ID; and there is no payment fee, and the collection fee is also low. 

As time goes by, more digital banks emerge in the UK. For example , Revolut was founded in 2015. Its original concept was to solve the problem of high exchange fees and provide users with global multi-currency consumption services and international remittance transfer services without hidden fees. Revolut 's innovation lies in its global use and simultaneous management of multiple currencies. Users can transfer and consume in multiple international currencies through prepaid cards and mobile apps, and can also view bank statements, buy and sell cryptocurrencies, or trade other financial products. Revolut has expanded its services to all parts of the world through cooperation with MasterCard and others.  

The promotion of the UK's open banking system has also provided favorable conditions for the development of digital banks. In August 2015, at the request of the UK Treasury, the Open Banking Working Group (OBWG) was established to study the sharing of data to serve customers and build open banks. In March 2016, the OBWG officially released the "Open Banking Standards" and proposed relevant standards and governance models. In August 2016, the Competition and Markets Commission (CMA) clarified the concept of open banking, that is, a new and secure business model that allows consumers to share information and allows new and old companies to provide ultra-fast payment methods and innovative banking products. 

The relevant policies of the European Union have also played a promoting role. The Payment Services Directive PSD2 issued by the European Union in November 2015 and the General Data Protection Regulation (GDPR) launched in 2018 provide guarantees for the standardized development of open banking and the protection of personal data. PSD2 requires the European banking industry to simplify the interface specifications for sharing data information with third parties, aiming to promote competition, innovation and transparency in the payment market, while enhancing the security of Internet payments and account access. 

However, the development of digital banks in the UK has not been smooth sailing. Brexit has had a certain impact on it, and some digital banks that originally enjoyed EU banking passports have chosen to stop their banking business in the UK. 

In the process of development, digital banks also face many challenges and regulatory requirements. The UK does not have a dedicated digital bank license. Most digital banks are developed from fintech companies that obtain banking licenses. Their businesses are strictly regulated and must be approved by the Prudential Regulation Authority (PRA) under the Bank of England and the independent Financial Conduct Authority (FCA). 

Despite this, the development of digital banks in the UK still has its own characteristics. Some digital banks focus on niche areas and have achieved success as a supplement to the banking market. For example, OakNorth Bank was established in September 2015. It is the first cloud -based bank in the UK. It uses Amazon's cloud services to host its IT system on the cloud, reducing operating costs and providing competitive interest rates for retail savings customers. It is positioned specifically for lending to small and medium-sized enterprises, solving the problem of small and medium-sized enterprises having difficulty in obtaining loans from traditional banks. 

In general, the development of digital banks in the UK is full of innovation and change. They use technology to improve customer experience, reduce costs, and continue to explore and grow in a strict regulatory environment. In the future, with the further development of technology and changes in market demand, digital banks in the UK are expected to continue to play an important role in the financial field and provide valuable experience and inspiration for the development of digital banks around the world. 

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