City A.M. has interviewed Howard Womersley Smith, an expert Fintech and Data lawyer and partner in Reed Smith’s Technology & Data London team, on London’s current startup FinTech scene.
Sitting down with Womersley Smith, City AM reflected on a range of London Fintechs urging the Financial Conduct Authority (FCA) to break banks’ dominance over the use of consumer data. Womersley Smith sided with Fintechs and has long been saying that the startup scene needs exactly that to properly thrive in 2021. Fintechs have argued that the end of banks dominance would increase competition in the savings, credit, mortgages and pensions markets. However, Womersley Smith believes that we are some way off true portable banking. However, he noted that there is another factor in play, that of trust where banking with a household name provides an element of comfort for consumers which is difficult for challengers to compete with.
City A.M. questioned Womersley Smith on whether the COVID-19 pandemic made things more difficult for the challengers. He responded by saying that whilst the 2018 and 2019 saw an increase in the number of consumers taking up the offerings of the challengers, the disruption of last year caused consumers to return to the safety of the big institutions.
When asked about whether the challenger banks have a culture problem, Womersley Smith agreed that some are facing an identity crisis and it is not uncommon for many to see themselves as tech companies instead of financial services firms. However, if banks want to secure a full banking licence, they need to start to resemble the same stability as one of the big institutions.
The interview closed with a discussion on high valuations within the Tech and Fintech sectors, which Womersley Smith believes fuel confidence in the sector and attracts investment into the UK.
Please read the full interview here.