Directions (next ten questions) : Read the following passage carefully and answer the questions. Certain words/phrases are given in bold to help you locate them while answering some of the questions.
“I promise to open a bank account for a British citizen in just two minutes”. With a background in IT banking and asset management, this young entrepreneur is submitting plans to the regulators to start a new bank called Lintel, the two-minute pledge is one of his selling points. He reckons that he can do better than the existing banks, and is putting plenty of his own money where his mouth is, as part of the 5m ($7.5m) start-up cost. He hopes to start doing business early next year. Since April, 2013, three new British banks have appeared and three outfits have taken over old licenses. An official at the Prudential Regulation Authority (PRA) who does out banking licences is part of the Bank of England, says people are now applying to open banks in “unprecedented numbers.” Four applicants are likely to start operating this year, he says with a further four or so probably coming to market next year. At least as far as the consumer is concerned, banking could be on the verge of quite a shake-up.
Since March, 2013, the process to apply for a license has been streamlined. The PRA claims that a new bank can be up and running just six months after final authorization. The capital requirements for the start-ups are lower than they used to be. And many of the new entrants are acting like classic entrepreneurs. They work out how the existing banks are failing customers then look for niches, whether in products, customers of technology. All are encouraged by the growing willingness of consumers to switch from one bank to another, stimulated in part by regulations designed to make this easier.
One such niche market will be immigrants, both students on short-stay visas and longer-term economic migrants and new start-up banks promise to offer a full range of products, in many languages, digitally and also at a few branches, to be located at the most convenient places for his target customers—such as the railway stations in London that serve Heathrow and Gatwick airports.
Another niche (e.g. Atom Bank), by contrast, is technological. It will be the first British bank to be digital-only, with all transactions done through smartphones and tablets, via an app. This ought to lower the bank’s overheads. The banking sector is currently the subject of a review by the Competition and Markets Authority, an official watchdog. Most of the new entrants would agree with the authroity’s criticism that some features of the traditional banking system “prevent, restrict or distort competition”, in relation to both personal customers and small businesses. They attack what they call the opaque pricing of many current accounts and view to drive change. The entrepreneurs also claim that their innovative new products and technologies will help to address some of those criticisms.
