The prime minister’s FinTech ambassador has predicted the “Amazonification” of banking, as global tech giants leverage their personal data dominance to branch out into financial services.

In an exclusive interview with FStech on the fringes of the Finastra Universe conference in London this week, Alastair Lukies, the founder of mobile banking firm Monitise, who has served as the UK government’s FinTech ambassador under two prime ministers, said tech giants could use Open Banking to challenge incumbent banks.

“What Amazon and Apple and Facebook and Google have is billions of users, so if they decide to get into financial services at any level, through Open Banking, through PSD2, then that’s a far greater threat because of the scale,” he explained.

“If you look at the five largest companies in the world by market cap, they are technology-driven network businesses,” said Lukies.

“What they have done, some via a Trojan horse and some more transparently, is accessed people’s permissions, they’ve utilised data very successfully to get consumers - not suggesting this has been done inappropriately - but they’ve got consumers to agree that you can utilise that consumer’s data to match them with products they might want to buy.

“That would be like my banking app or my interface to my bank not just offering me financial services but matching me to merchants I should shop at - the ‘Amazonification’ of banking.”

Lukies, who was also the inaugural chairman of FinTech trade body Innovate Finance, also warned that if traditional financial services providers don’t embrace financial data sharing to combine mobile banking and e-commerce services used by the Millennial generation “every single day”, the UK’s FinTech industry is poised to step in and take their market share.

He said: “The greatest challenge facing the financial services industry now under GDPR, PSD2 Open Banking, is getting those permissions right so you can give consumers more bang for their buck. So if banks don’t do that, then someone else is going to do that for them – that’s the thing that banks are starting to come to terms with.”

Lukies also warned that despite the “lipstick” of well-designed interfaces common to FinTech apps, the UK’s leading challenger banks need to remember to take their responsibilities as risk managers of other people’s money and livelihoods seriously.

“This is something that all the tech companies underestimate. If you’re looking after other people’s money, you’re a risk manager; your job is to make sure that money’s still available when they need it rain or shine.

He said that Fintechs enocouraging younger people to have a better interface with their money was a positive step which established banks have been “slow” to replicate, but warned that “encouraging people to spend money to drive up your own profits when you don’t have a proper risk management process in place is irresponsible”.

In the same same vein, he suggested that the likes of Monzo, Starling and Revolut should be open with consumers and the wider industry about their global ambitions as well as the scale of their business operations as they transition from startup status to consolidated multinational organisations managing billions of pounds.

“There has to be consolidation in that industry, and then you will have a load of risk managers that are managing two, three, four million customers.”

Lukies also suggested that some FinTechs have been quick to brand themselves as challenger banks without first having the infrastructure in place to offer the complex range of financial services needed to challenge the incumbent banking giants in the coming years.

“The neobanks have got to be very careful about how they describe themselves, so it concerns me when I read that a bank’s got a million banked customers when we know for a fact they’ve only got 100,000 customers using their bank service and 900,00 using a pre-pay card attached to a mobile phone.”

However, the upside to the maturing of the FinTech industry is a gradual process of governments and investors treating firms and their technology seriously, rather than the “it’ll be gone tomorrow” attitude he encountered from leading banks while founding Monitise in 2003.

He concluded: “What I’m pleased about having been in the industry for 20 years is we’re through the fad phase, so we’ve got through that early stage of noise and hype and now we’ve got some real unicorns being built we’ve got some real grown up companies, so I’m pleased that we’re now getting into the real stuff.”

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