The central bank said that many incumbents are not fully aware of the danger.
The UK’s largest banks are: HSBC, Barclays, Lloyds, RBS, Santander UK, Standard Chartered and Nationwide.
The latest stress testing on the banks above has revealed that app-based fintechs could take a larger share of the market from incumbents. The stress test involved a scenario of a 7-year downturn in part instigated by digital disruption.
One major headwind to large banks’ profitability, the Bank of England said, is competitive pressure from smaller banks and from non banks in retail banking, in part facilitated by an expansion in the use of fintech.
Among the factors that could disrupt the banking industry, the Bank of England has included open banking and a higher cost of acquiring customers due to slow development of financial services.
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