A survey of U.K. fintech and crypto firms found that 50 percent of the firms surveyed have been rejected from opening a bank account or had an account closed by a major U.K. bank. Only 14 percent managed to successfully apply for a bank account with one of “the CMA 9” – the nine biggest mainstream banks in the UK – without it being closed at a later date.These figures will shock policymakers following a decade of promoting the U.K. ecosystem as the global home of fintech and crypto, as well as the new Labour Government, with its stated intention of supporting innovation and digitization.
The lack of access to this basic universal service has meant that firms from across the fintech, crypto, blockchain, and Web3 ecosystems have faced challenges in innovating and scaling, limiting their capacity to introduce new products and services while remaining competitive on a global scale.
Katie Harries, who leads Stand With Crypto’s U.K. initiative commented, “The growing difficulties firms face is a huge barrier to growth. It’s not an issue reserved for start and scale-ups but also one medium and large companies face too. We are hugely supportive of Labour’s ambitious growth and investment plans but we currently have a situation where some of the U.K.’s most innovative companies are effectively being deprived of access to basic banking services – hampering these objectives.”
The survey, conducted by the Startup Coalition , the U.K. Cryptoasset Business Council (UKCBC), and Global Digital Finance (GDF) found that 81 percent of respondents were legally based in the U.K. with 98 percent having activities in the U.K.
“Such findings severely undermine the U.K, Government’s ambition to becoming a global cryptoasset hub and the world’s web3 centre,” commented Simon Jennings, executive director of the UKCBC.
Regulatory Roadblocks And Risks
On the debanking crisis, the U.K. Financial Conduct Authority (FCA) stated in their report in September last year, “given the limitations of the data, [they] had not been able to draw detailed conclusions on the types of personal or business customers affected by suspensions, terminations and declines.”
One firm surveyed and rejected by HSBC indicated on their survey response that they were “[rejected because of our] business profile (despite that we are an FCA Regulated firm).”
The survey found 81 percent of firms agreed that difficulties accessing banking services are a significant barrier to their company succeeding in the U.K. and 70 percent had found that this made it more likely they would leave the U.K.
“This obstacle has pushed many U.K. based firms to consider expensive alternatives like setting up accounts in locations such as Estonia, Poland, and Bulgaria,” says Marcus Foster, head of policy campaigns at the Startup Coalition.
Adds Foster, “In the absence of adequate banking services, these firms are being pushed to seek out riskier financing and banking options. This also ma