Description
The UK domestic retail banking market was for several decades one of the most concentrated in Europe. This situation contradicts conventional economic policy wisdom that holds competition to be a key determinant in national economic success. However, since 2014, there has been a noticeable increase in the number of market participants offering core retail banking services in the UK. The article focuses on recent interest in ‘open banking’ and fintech to explore why there have been so many new entrants and what this demonstrates, if anything, about the relationship between banking and the state. Building on the bank power literature we argue that against the background of disillusionment with incumbent banks a more incisive, pro-competitive statecraft emerged during the design of open banking (2015-18); under these conditions bank power waned. However, regulatory inertia and conflicting institutional strategies took hold during the implementation of open banking (2018-2022), allowing resistance on the part of incumbent banks to slow progress. We conclude by problematising UK competition policy and questioning whether open banking was destined to fail.
