The Evolving Landscape of the UK Banking Market: Shifting Perceptions and Their Impact

For over two decades, my professional life has been at the intersection of technology and finance, predominantly within the UK. This has allowed me to closely observe the nuances of the country’s banking and financial services sector. A robust regulatory framework has fostered a delicate balance between innovation and security. Reflecting on the trends shaping this sector, the pace of change continues to accelerate.
As the leading global financial hub, the UK is undergoing a significant transformation, driven by evolving customer expectations, rapid technological advancements, and increasing regulatory scrutiny. Perceptions of financial institutions are shifting, compelling the industry to adapt and innovate at an unprecedented pace.
The Digital Evolution
Open banking has been a catalyst for smaller players to offer seamless and relevant services, allowing end-users to share data with third parties. This advancement made banking services more accessible, fast, and user-friendly.
This environment gave rise to many neobanks and fintechs, such as Monzo, Revolut, and Starling Bank. While still building trust, they boast loyal customer bases thanks to their intuitive platforms and targeted services that address gaps often overlooked by traditional players. These experiences, layered over the high standards already set by non-financial sectors like retail and travel, create a level of customer experience that many traditional banks struggle to match. Due to the sticky nature of the business and trust being a core factor, these banks have still benefited from customer loyalty.
However, as customers embrace digital-first banking options, UK financial institutions have responded with their competitive alternatives. Established players now offer biometric authentication (HSBC's Touch ID since 2016), dedicated small business platforms (NatWest’s Accelerator), in-app video consultations (Lloyds Bank), and WhatsApp banking services (Ulster). These efforts demonstrate the sector’s commitment to achieving fintech agility.
Fraud and Security
The exponential rise of AI tools has led many to conclude that cybercriminals, fraudsters, and scammers have moved to more sophisticated methods, and that security threats are spiralling out of control. However, UK Finance’s Half-Year Fraud Report 2024 offered some reassurance. Since the pandemic, total authorized push payment fraud has declined by 29%, from around £300 million in H1 2021 to £213.7 million in H1 2024. The number of APP fraud cases also dropped 16% to 97,344.
This improvement is attributed to advanced fraud detection systems implemented by banks, strong customer authentication (SCA) rules, regulatory support, and active awareness campaigns. Notably, banks also prevented £710.9 million of unauthorised fraud in the first half of 2024, a 13% increase from the previous year.
The ESG Imperative
Driven by regulatory changes, industry pressures, investor preferences, and customer sentiments, the financial sector has taken significant steps toward environmental, social, and governance (ESG) goals. Lending decisions are increasingly considering ESG risks as funding is directed toward green energy projects. This sector directly influences which industries will thrive or gain further promotion, and which will face financing friction. Therefore, as ESG reshapes finance, banks must ensure that they have transparent and standardized ESG reporting.
The good news is that regulators have established clear governance and reporting, and many banks align with these recommendations. Tech Mahindra’s globally recognized sustainability capabilities are reinforced by deep expertise and a strong ecosystem of partners and platforms, enabling seamless ESG data management and transparent reporting.
Role of Regulation
The regulatory ecosystem has been commendable. In digital finance, the UK has been at the forefront of open banking, with the Competition and Markets Authority (CMA) mandating its adoption by major banks since 2018. The framework has expanded to include broader data-sharing standards and stronger consumer protections.
A more recent milestone is the Financial Conduct Authority’s (FCA) Adaptation Report 2025, published in January 2025, which assesses climate-related risks for financial services firms and outlines the necessary adjustments to risk management. Accordingly, the authority has tightened its climate-related disclosure rules, demanding greater ESG transparency and accountability.
Another standout example is the implementation of SCA rules to reduce fraud by verifying customers' identities during high-value online transactions.
Challenges and Opportunities Ahead
As the UK banking landscape evolves, institutions must respond to emerging trends and prepare for future disruptions. While the sector is ripe for innovation, it faces systemic challenges that require strategic action. Let's look at the key areas where banks must balance legacy hurdles with future-forward opportunities:
- Legacy Systems: Many traditional institutions grapple with outdated IT infrastructure, which hinders their ability to innovate and adapt quickly. Transitioning to a modern core is neither easy, cheap, nor fast. However, as Pankaj Kulkarni, Head of BFSI Europe at Tech Mahindra, highlights in his recent article, banks have several viable options to consider in their modernization journey, including building in-house or adopting commercial off-the-shelf (COTS) solutions. Collaborating with the right partner to orchestrate a strategic blend of COTS and bespoke components enables low-risk modernization and enterprise-wide transformation.
- Talent Acquisition and Skill Development: The dynamic landscape demands a workforce equipped with skills in data science, AI, cybersecurity, and digital customer experience. Attracting and nurturing talent is key. The rise of Global Capability Centers (GCCs) has allowed global organizations to tap into vast talent pools, not just for cost efficiency, but to drive strategic innovation. In a recent interview with FinextraTV, Sharada Nandakumar, CEO of Voya India, and Roshan Shetty, BFSI and Public Services Head at Tech Mahindra, shared best practices such as creating localized talent hubs and continuous learning programs to drive strategic growth through GCCs.
- Regulatory Changes: Regulations have consistently focused on boosting competition and delivering greater value and security to end consumers. Financial service providers must operate within these frameworks while continuing to innovate. Instead of viewing regulation as a constraint, banks can use it as an opportunity to evolve faster and smarter. Adopting a proactive stance to modernize systems, align with ESG mandates, and launch innovative services can help organizations stay competitive and compliant, turning regulatory change into a long-term advantage.
Conclusion
The UK Financial Services sector, for one, doesn’t need to act out of urgency or competitive pressure. The industry has championed innovation and growth, setting benchmarks on how financial services and banking should run and grow.
However, AI, ESG, data security, and regulations have created as many opportunities as they have challenges. Players will have to move at a faster velocity in the same spirit of innovation that the industry has always propagated. A partner like Tech Mahindra, with its global presence and entrepreneurial mindset, can be the right enabler to adopt these new technologies and business models. The focus will remain on delivering value, convenience, security, and a positive social and environmental impact.

Madhukar is a senior executive with 25+ years of experience driving digital transformation, business growth, and strategic client partnerships in the Banking and Financial Services industry. He currently leads Tech Mahindra's UK and Ireland BFS business, focusing on delivering innovative solutions, deepening client relationships, and scaling high-impact engagements.
MoreMadhukar is a senior executive with 25+ years of experience driving digital transformation, business growth, and strategic client partnerships in the Banking and Financial Services industry. He currently leads Tech Mahindra's UK and Ireland BFS business, focusing on delivering innovative solutions, deepening client relationships, and scaling high-impact engagements.
He has previously held leadership roles and managed top-tier banking clients across Europe. He is known for building trusted CXO-level relationships and leading large-scale delivery teams. Madhukar is passionate about building high-performing teams, fostering innovation, and creating long-term client value through industry knowledge, technology expertise, and client-first thinking.
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