The online banking startup Charter Savings Bank has been awarded a banking licence, allowing it to now target the customers of traditional UK banks.
Charter Savings Bank will launch an online savings account early this year following the granting of the licence by the Prudential Regulation Authority.
New technology enables Charter Savings Bank to compete with existing banks through online services, without the need to invest heavily in bricks and mortar stores.
The technology gives them an advantage in being able to adopt modern technology, compared to traditional banks that are held back by high maintenance and costly legacy IT infrastructures that are
The technology gives them an advantage in being able to adopt modern technology, compared to traditional banks that are held back by high maintenance and costly legacy IT infrastructures that are not designed to work with modern technologies.
A statement from the bank said: "The online and telephone based proposition, which removes the cost associated with a physical presence on the high street, is set to launch early 2015 and will be a UK bank for UK savers."
The CEO of Charter Court Financial Services Ian Lonergan said: "We see the development of a retail banking proposition as a logical extension for our business, enabling it to diversify into new markets and build a sustainable and competitive business model for the future. Being granted this licence by the PRA demonstrates the strength of our offering and the ambitious plans we have to champion savers and help them realise their financial goals."
UK regulators are looking to introduce competition in the banking sector and there are currently applications licenses with regulators from new challenger banks.
A recent survey by banking software supplier Fiserve found that 80% of people would trust a bank if it had the right technology in place, and over half said a new bank would have an advantage over rivals if its IT was reliable.
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