The complexion of Irish banking has changed drastically.
Over the space of just a few weeks, NatWest-owned Ulster Bank announced it was shutting down operations while KBC Ireland entered talks to sell off its loan book and make for the exit.
The moves could eventually leave just three banks in the Irish market — the two major players in Bank of Ireland and AIB, and Permanent TSB — sounding alarm bells about the state of banking competition in the country.
All the while, fintech (financial technology) upstarts well-heeled with venture capital funding, like Revolut and N26, have gathered pace in the market. Revolut boasts around 1.3 million users in Ireland, while N26 has around 200,000 users.
Adrienne Gormley, the chief operating officer at Germany’s N26, which is a fully regulated bank itself, is cognizant of the drastically altered market.
“Number one we view it as an opportunity. While the Ulster Bank news was probably on the cards for some time, I think people were taken by surprise at the KBC announcement,” she told CNBC.
It may present opportunities but it also begs the question, what challenges and problems are so prevalent in the Irish market that two major banks would wash their hands of it and leave?
“While we’re assessing what’s happening and why others are leaving, we still have to look with very clear eyes at our customers and focus on what is the customer need in the market. Obviously we have to look and see well, why are others leaving? Is it because they have to hold too much capital?”
The emergence and popularity of digital banking has played a significant role in altering this landscape. Earlier this year, Bank of Ireland announced plans to shut 103 branches in the country with CEO Francesca McDonagh saying the shift to online services was a major driver in that decision.
Digital banking and the arrival of fintech rivals have shifted the dynamics of the Irish banking market but serious questions linger over the state of competition and what that means for consumers.
Banks in Synch
Fintech operators, or neo-banks, have taken the baton in instant payments and left many of the incumbents trying to claw back market share.
A consortium of Irish banks — AIB, Bank of Ireland, Permanent TSB, and KBC for now at least — are attempting to win back some of that customer base with their own app.
Tentatively titled Synch, the app would allow for instant payments between accounts at each of the banks.
The banks involved have been tight lipped on the project but Michael Dowling, a professor of finance at Dublin City University, told CNBC that the prospect raises some warnings on competition.