Are non-banks finally getting a cut through in the UK Business FX Market?

The rise of alternatives to established banks in the UK has been predicted by many industry commentators for a number of years, with many encouraging it to break the domination of the incumbents and provide much needed innovation to a sector held hostage to legacy technology.

Cross-border payments has been one area seen as ripe for such change, especially small businesses poorly served by big banks. The opportunity this presents has attracted many new entrants, such as FinTech players, along with established payment providers who see new growth channels to pursue.

In cracking such a market, mind share (brand recognition and recall) is key. This has proved to be a major challenge for these new entrants and has become somewhat of a black hole for their hard-fought investment funds in marketing spend. So, despite lots of PR noise about their arrival, the big bank incumbents have continued to reign, even with small business. But change maybe finally happening.

While domestic banks have been consistent mind share leaders with the likes of HSBC and Barclays enjoying double digit mindshare and market share, others such as NatWest and Lloyds are in single digits and declining in both measures. In the last 12 months, this decline in mind share for many domestic banks has been impacted further as non-bank BFX providers’ mind share reinitiates growth after 18 months of no-growth, potentially indicating that non-banks are finally breaking through a ‘glass-ceiling’.

Looking more closely into the non-bank space, the recent increases in mind share have largely been with Micro and SME businesses. This would seem to indicate that non-bank providers are now more effectively focusing their marketing efforts on these size of businesses.

However, while non-banks’ mindshare is significantly less with lower corporates there is a growing awareness for them within this segment. To date banks have been far more dominant with lower corporates, especially with hedging FX products. The upturn in mindshare for non-banks in this segment however presents a very lucrative opportunity for them in the future if they can capitalise on it.





The real question these mind-share successes pose is whether the marketing efforts of these non-banks have been useful in providing any ROI in the form of greater market share?

In the UK spot FX market E&P’s BFX insights show the answer is “yes”. The latest insights show there has been an upward rise of non-bank providers in this competitive product line. Over the past three years non-banks have seen their market share rise by a resounding 5.9 percent and with a distinct upward turn in the first half of 2019, whilst domestic and international banks have fallen by 4.9 percent and 1.5 percent respectively. Non-banks are now definitely, albeit slowly, stealing market share from the incumbent market leaders.

This transition in market share corresponds with businesses openness in using a non-bank provider for their cross-border payments. E&P’s UK BFX research in H1 2019 found that there is a strong propensity and willingness for Micro and SME businesses to use a non-bank provider – particularly for cross-border payment transactions. Reported with an inverse rating scale, businesses rated their openness in using a non-bank provider for their cross-border payment transactions on a scale of 1 – 5, with 1 being ‘very open’ and 5 being ‘not open’. The average rating score for Micro and SME businesses were 1.69 and 1.94 respectively. Any rating lower than 2.25 can be viewed as businesses being open to using a non-bank provider.



There are winners and losers with this dual-dynamic of mind share and market share. In the UK, non-bank winners include Monex, SAXO and Worldfirst, all benefiting from increases in both mind share and market share. However, losers don’t just include some of the UK’s domestic banks. A long-established non-bank, Western Union Business Solutions, is suffering from the reverse with this dual dynamic, with declines in both mind share and market share in the UK.


About East & Partners Business FX program

East’s ‘voice of the customer’ metrics provide access to trackable unprompted brand recall, market share, wallet share and other fundamental metrics on Micro, SME and Lower Corporates use of BFX. With competition at its peak and the number of providers (including FinTechs) growing in all product lines, it’s never been more important to keep track of a provider’s performance relative to their competitors. East captures this insight as part of its Business Foreign Exchange (BFX) programmes’, reporting that enables providers to track their performance relative to their competitors every six months.

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