Regulators must not stand in the way of UK fintechs buying US banks
Regulators mustn’t stand in the way of UK fintechs buying US banks, says Yerbol Orynbayev, ex-deputy prime minister of Kazakhstan, and now, president of TurmaFinTech. He argues UK-led buyouts will drive healthy competition and accelerate digitalization at community banks.
Orynbayev’s intervention follows reports that UK fintechs are exploring buying US banks to secure American banking licenses. Though Trump’s administration has adopted a softer approach to M&A, regulators have previously deterred challenger banks from the US market, leading Monzo to withdraw its application for a license in 2021.
The TurmaFinTech president warns the current M&A-friendly window could be temporary, and regulators must fast-track these acquisitions to bring a much-needed “shake-up” to Wall Street. Currently, the ‘Big Four’ of US banking sweep up over 40% of the sector’s profits, with no sign of slowing down. But players such as Revolut and Starling could challenge these banks’ dominance, forcing them to improve their offerings in order to retain market share.
Welcoming UK fintechs would also spur technological innovation at community banks. These providers make up 97% of the sector, yet only two-fifths of them are leveraging AI and machine learning. For Orynbayev, small banks need to innovate to survive, and the presence of digital-first contenders could encourage them to increase their digitalization expenditure.
Yerbol Orynbayev, president of TurmaFinTech, said: “Regulators have traditionally been very protective of the US banking market, but they have a window of opportunity here. Now is the time to encourage competition, and UK fintechs’ latest license effort is an opportunity they mustn’t waste.
“The entrance of these challenger banks will expand and improve product offerings sector-wide, taking the fight to the industry giants who dominate the market. Ultimately, the presence of the likes of Revolut and Starling will benefit community banks, too – acting as a catalyst for digitalisation, which, let’s be frank, is sorely needed.
“Competition across the US banking landscape is stagnating; we need new contenders to spark change and give the sector a shake-up. To halt the decline, regulators must welcome UK fintechs with open arms.”