Challenger banks received a vote of confidence today, four days before a crucial meeting with the Treasury over the “utterly counterproductive” bank surcharge.
More than three-quarters of banking sector executives believe the likes of Metro Bank and Virgin Money have a significant technological edge over high- street rivals.
The verdict, delivered in a survey by the management service Interim Partners, comes just weeks after both Royal Bank of Scotland and HSBC suffered embarrassing IT glitches that delayed customer payments.
“While established banks have been investing in fintech in order to stay at the forefront of technological advances and stave off competition from challenger banks, they are often hampered by having to redesign, update and integrate labyrinthine legacy systems,” said Angela Hickmore, a partner at Interim Partners.
The bosses of Britain’s challengers will meet the Treasury’s director-general of financial services Charles Roxburgh on Friday over the new surcharge unveiled in George Osborne’s Budget.
Under the measure, lenders making profits of more than £25m a year will have to pay an 8 per cent corporation tax surcharge. New banks such as Aldermore, Virgin Money and OneSavings are on course to make profits of more than £100m this year or next.
The tax will partly replace the bank levy on international balance sheets, which had prompted the likes of HSBC to consider moving their headquarters abroad. Instead, banks will pay the levy only on their UK balance sheets.
Challenger banks and building societies say the change will punish them disproportionately and jeopardise government efforts to increase competition in the sector.
Paul Lynam, chief executive of Secure Trust Bank, has branded the surcharge “utterly counterproductive”.
He said: “The big banks are subsidised to the tune of billions of pounds a year because of ‘too big to fail’. With the surcharge, the playing field is even less level.”
Nationwide has said the tax will cost it £300m over five years, which could have provided the equivalent of a further £10bn in lending.
Challenger banks have also written to MPs in constituencies where they are based warning that the tax could have an impact on local jobs.Reuse content