A new financial services firm that calls itself a “Coutts-Revolut” hybrid reflects on the recent “de-banking” saga in the UK and why some of the attitudes and behaviours on display should be avoided if UK banking and the wider economy is to flourish.
At a time when the banking and wider financial sector,
particularly in the UK, has been rocked by the “de-banking” saga
and the plight of politically exposed persons, it begs questions
of what new entrants to the financial sector think about
it.
A relatively new kid on the block in financial services is
Greengage, a
UK-based digital merchant banking shop founded in 2018, now
with 35 staff. Its chief executive, Sean Kiernan, says his firm
has even been referred to as a “Coutts-Revolut” hybrid. Greengage
provides a platform of relationship-based e-money account
services to small- and medium-sized enterprises, high net worth
individuals, and digital asset firms – with every client having
the personal service of a dedicated relationship manager.
Alongside account services, Greengage provides clients access to
a B2B lending platform offering traditional and digital sources
of money.
When this publication cogitated about the Coutts/Nigel Farage
case, and other incidents, it also noted the phenomenon of
“challenger banks” and “neo-banks” to wonder how they fit into
this picture, and what changes they might bring.
Kiernan takes the view that it matters that banking doesn’t get
ever more influenced into only catering to clients who lead
supposedly unblemished lives according to certain political,
cultural, social, or sexual agendas.
“Short of those who have broken laws of the land, banks that
choose to refuse business with people on various non-financial
grounds is not good for the wider economy,” he told
WealthBriefing. “Banking clients are wondering if they
might lose access to banking altogether, even when acting
lawfully, responsibly, and while creditworthy. It makes poor
financial sense, damages shareholders, etc.”
With the UK also now outside the European Union’s Single Market,
the “City” cannot afford to get a bad reputation for treating
clients poorly. After all, the new Consumer Duty regime
introduced by the Financial Conduct Authority is supposed to
tighten up standards.
Kiernan thinks London could be affected unless matters are
addressed carefully.
“De-banking, `de-lending’ and other practices also, unless done
in ways that are strictly explained and controlled, are going to
fuel more controversy that could damage London’s standing
internationally as a financial centre, and hurt the wider
economy,” he said. “Other than difficulties in finding bank
accounts for certain sectors (e.g. gambling, cannabis, and crypto
to name a few) which seems to be a broader issue for firms in
these sectors across advanced Western economies, it seems
de-banking for a client’s views is a relatively recent phenomenon
in the UK.”
Understandably, with a new model of financial services firm such
as Greengage, Kiernan hopes, is able to show a way forward – but
this is not automatic.
How new business models might help
“Traditional and even challenger banks alike are not only
de-banking clients, and in some cases limiting client access to
their own money, but they’ve largely taken out personal contact:
with several firms clients are now a number and a function in an
algorithm,” he said. “Technology is revolutionising banking, and
has much further to go, but is not a silver bullet on its own to
addressing issues around de-banking as it is by definition a tick
box (the infamous `computer says no’). This mechanisation of
client services is also being pursued by larger traditional firms
which results in a tick-box approach to their client
relationships as well,” he said.
As Kiernan argues that it is easier for new
banking/financial services institutions to deal with some
onboarding issues than established firms with layers of
management and incumbent costs. This is to a certain extent
driven by the “higher touch” approach that smaller firms can
apply when evaluating new clients on their own merits.
Nothing can replace personal service and empowering staff with
agency to deliver solutions to meet client needs.
Kiernan agreed with the contention that if the industry wants to
attract smart, enterprising young adults, and those from other
walks of life, into banking and finance, the culture must be
genuinely inclusive and interesting. An innovative workplace
tends not to sit well in an atmosphere of fear of
offending often-shifting definitions of what is the correct
way to speak and act.
Finally, Kiernan argues that the kind of de-banking that has
happened creates concerns about the loss of banking in a world
where people’s use of cash is falling and where being cut
off from the “plumbing” of a financial system can hit their
ability to earn a living. This is also a question of basic
justice and fairness. For banks to repair reputations still
affected by the 2008 crash and bailouts, de-banking hinders this
process.
