Tech giants could disrupt UK High Street banks’ ability to offer free accounts, according to the Financial Conduct Authority (FCA).

The regulator yesterday published the final report into its long-running study of retail banking business models, concluding that new payments services could open the path to global tech giants such as Amazon entering the banking market, Reuters news agency reported.

“In terms of where we think real challenges are going to come into this market, it will be potentially around the entry of Big Tech firms,” Christopher Woolard, executive director for competition at the FCA, told reporters.

“We suspect that many of those firms will not want to take capital on their balance sheets, they won’t actually want to become a bank as such, but they may well want to offer products that compete directly with banks, like simple lending products.”

Woolard explained that the move of the likes of Amazon, Google and Apple into banking products could become more like a utility to support “front end” operations with the tech firm’s branding and user technology.

This could change the existing profit-making model, the FCA suggested, explaining that the entry of tech challengers could necessitate the introduction of charging for the use of bank accounts.

The warning echoed recent predictions made by HSBC’s global head of payments that digital challengers were poised “to eat banks’ lunch” and comments from Alastair Lukies, the prime minister’s FinTech advisor, who predicted that the “Amazonification” of banking would be the next major challenge for disruption in the financial services industry.

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