Earlier this month, it was reported that Lloyds has a mission to become the UK’s largest Fintech by leveraging customer data and automating compliance.
In the FT, Chief Operating Officer Ron van Kemenade said this goal is part of a broader tech overhaul to cut IT costs significantly, and to monetize customer data, automate processes, and reposition the bank as a fintech leader to compete with digital banks like Revolut, Monzo, and Starling.
Laurent Descout, CEO and co-founder of Neo, commented on the report, noting that challenger banks will continue to pressure legacy operations, and that while old banks will improve services, Fintechs may still have an edge in innovation and customer experience.
Descout believes that when it comes to company culture, Fintechs have a clear advantage.
“Fintech companies are typically built around solving specific customer frustrations, whether that means addressing slow onboarding or expensive cross-border payments, and they constantly refine their services to address those issues. Traditional banks have often focused on modernising their digital interfaces, but that alone is not enough if the underlying problems customers face are not addressed,” says Descout.
While traditional banks can innovate, they struggle to match the agility and speed of the upstart Fintechs. Big banking operates within an organizational structure that can be stultifying with many layers of governance, oversite, regulations and, of course, corporate politics.
While these systems are needed to manage risk at scale, they can slow decision-making and product development.
Descout adds that Fintechs, which must adhere to the same rules, tend to have leaner teams and more flexible technology systems, which allow them to adapt more quickly as customer expectations and technologies evolve.
He states that legacy banks struggle to launch standalone Fintech products within the bank, citing HSBC’s shuttering of Zing, a payments app launched in 2024, after a single year of operation.
“Building a startup-style proposition within the structure of a global bank means navigating compliance frameworks, internal priorities and long decision-making processes. Those realities can make it difficult to maintain the speed and focus that Fintech startups rely on. For many banks, the lesson has been that competing with Fintechs is not just about launching a new digital brand,” Descout declares. “It requires bigger changes to how products are built, how teams operate and how quickly organisations can respond to customer needs.”