FinTech created new banks, Covid-19 is creating new customers

By Robin Amlot

Recent news that new digital-only challenger bank DF Capital is topping ‘best-buy’ tables for savings rates in the UK is a sign of the times. “Uncertainty surrounding Brexit and Covid-19 hasn’t dented investor confidence in FinTech. Instead, given the type of disruption we are seeing, it seems to have accelerated the shift from traditional banks to fintech competitors. In fact, since the pandemic started, the number of customers using digital banking services or apps has grown by 11%. This adds to an existing 58% of customers that were already using digital banking,” said Alex Kwiatkowski, Principal Industry Consultant, Global Banking Practice, SAS.

“The momentum FinTech banks are gaining could spell trouble for traditional banks. Customers that have grown used to digital banking may be resistant to returning to the old normal. For the traditional banks, it is imperative that they invest in their digital capabilities. Improvements to online banking, apps and online customer service are now crucial if they want to stave off the competition,” he added.

Distribution Finance Capital is a niche lender founded in 2016 as a provider of working capital solutions to dealers and manufacturers across the UK. The firm received its banking licence on 29 September 2020 and, since then, has launched a range of personal savings products to retail customers through a digitised and paperless account opening process. Having been granted its banking licence, the Manchester-based FinTech changed its name to DF Capital Bank.

On receiving the banking licence, Carl D’Ammassa, Chief Executive Officer of DF Capital said: “We have been bank-ready for some time so are pleased with this news and feel well placed to look beyond the near-term challenges of Covid-19 to support our dealer and manufacturer customers in the knowledge that we will have an additional, and sustainable, funding source in place. I believe we have all the tools we need to progress our growth plans, whilst remaining a strong and well-capitalised bank lender.”

DF Capital is certainly making headlines in the face of Covid-19 in the UK with its chart-topping savings offers – a 90-day notice account paying 1.12%, currently the best variable rate online for deposits of between GBP 1,000 and GBP 85,000, and a one-year fixed rate account at 1.18%.

D’Ammassa previously held the position of CEO at White Oak UK, a specialist lender to SMEs while co-founder and CCO Andrew Stafferton has over 20 years of financial services and distribution finance experience. He is the former leader of the Global Business Development team at GE Commercial Distribution Finance.

While DF Capital does have a website, its banking service does not have a portal, instead it operates its account through secure messaging to send emails to savings customers. The secure messaging service holds all emails in a secure account for customers to login at any time, view and respond to messages.

Kwiatkowski noted: “Traditional banks must now recognise that sticking to their old ways is no longer an option. In the world of banking, tradition has moved on. Convenience, ease of use and the ability to control your finances at the tap of a screen: this is what customers now consider to be normal.”