New current account competitor, U has launched its attack on the retail banking model today.
It has developed one of the UK’s first Banking-as-a-Service (BaaS) platforms which has been covertly built in the Digital Technology Park in Sheffield over the past 3 years.
The services-based platform acts as an orchestration piece, using APIs to intermediate between consumers and banking services providers (such as BIN sponsors, agency banks, account processors, card issuers, Vocalink access and so on); it paves the way for banking and financial product providers such as credit and other lending providers, current account and money management tools, to interface programmatically to a core current account.
The aim of BaaS technology is to act as the facilitator of an open data, disaggregated set of banking services which are not dependent on one single banking provider. It anticipates a PSD2 compliant environment where users can eventually consume services from whatever provider they choose without necessarily being tied to a bank.
“The U brand demonstrates that within a BaaS world, consumers no longer need to deal directly with a bank” say Alex Letts, the CEO at U. “People now have the choice of getting access to the banking product set, using modern, transparent and digital providers without all the frustration and cost that comes with dealing directly with banks”.
Letts is at pains to point out that the major clearing banks are merely changing their role, not being targeted for obsolescence within the BaaS model. “Retail banks will gradually move towards their natural comfort zone, to a more wholesale function, where their touch with people is removed. This is not an attack on the banks, but it is a restructuring of the model to the benefit of all parties.”
The U brand launches with a core “personal” account product already showcasing added value to users over traditional current accounts. These include tools to manage money, a dashboard to oversee additional accounts, and new services such as mobile phone style charging options and advance notifications of impending direct debits and other payments.
“The brand is itself very interesting, and is targeted at the underserved, overcharged niche, where the banks have reputational issues over transparency of charging, service problems and lifestyle relevance” add Letts. “But this is the start point of the journey only. We have created a working blueprint for the future of retail banking, which can now begin to re-aggregate financial services from all sorts of application providers as they come on-stream over the next 2-3 years. This will gently nudge the powerhouse banks further towards the back-office.”
U has been developed in-house on the back of expertise built-up over 3 years of operating the Ffrees brand. “U is 100% our service, on our own new technology and new infrastructure” says Letts. “It can be a significant catalyst in disruption of the banking model and the fintech revolution”.