Fintech is the agent for change in financial services. It has kept pace with changing customer behaviour and the rise of mobile technology and as a result it has increased competition and reduced margins for incumbents.

There are risks concerning compliance and stability where banking is fragmented across multiple providers.

Fintech is a fast-growing area, gaining millions of customers and billions in investments over the last few years, but many businesses are finding it hard to turn that popularity into profit. For example, British Fintechs have been very good at raising money, amassing £10.75 billion between January 2019 and July 2021, according to Innovate Finance.

They have been less good at making money. Few are profitable, and those that are profitable have done so by lending money, which comes with a whole new set of risks, and capital adequacy and compliance rules.

Fintechs that only offer a current account or payments via a debit card are not profitable unless they charge a monthly fee for a package of services, including more free overseas transactions, travel insurance and insurance on purchases made on their debit card.

This raises questions about the strategy of going head-to-head with traditional banks over current account where profitability is already low and the market is already saturated.