A recent article from Finextra delivered a sobering headline: UK’s high street banks are losing profits—and relevance—to digital-first challengers.
The numbers, drawn from KPMG’s State of the UK Banking Market report, are hard to ignore:
- A £3.7 billion fall in pre-tax profits across the sector in 2024, the first post-pandemic decline.
- A forecasted drop in return on equity from 15% to 10% by 2027, equivalent to an £11 billion annual hit.
- A 4% erosion in deposit market share for incumbents between 2019 and 2024.
- And a 6% spike in operating costs even as margins tighten.
As KPMG’s Peter Westlake puts it, “The winners will be those that move beyond tactical cost-cutting and proactively address oncoming market headwinds through business model transformation.”
We couldn’t agree more.
The Speedboat Era: Lessons in Missed Momentum
In the digital core banking space, we’ve long championed the concept of the “speedboat”: a standalone, agile deployment model that lets banks test new propositions quickly, without replatforming the entire business.
Some forward-thinking institutions took this seriously, leveraging platforms like Tuum to rapidly launch new digital banks, scale lending operations, or experiment with embedded finance models. One Tier-1 client used Tuum to drive double-digit growth in loan volumes without disrupting existing operations. But many others didn’t. Despite the warning signs, inertia prevailed:
“This is open heart surgery, too risky for us to take in such a turbulent geo-political world.”
“We’ll wait for the next leadership cycle.”
“Our tech team is maxed out and too busy to make changes now.”
“It’s just too complex to change core systems right now.”
And so, the opportunity narrowed—until now, when it’s no longer about testing ideas.
This Is a Lifeboat Moment
With profitability under pressure, customer deposits leaking to digital rivals, and operational costs rising, the moment for tactical pilots may have passed.
This is about survival strategy.
The banks that succeed next won’t be the ones with the flashiest fintech partnerships. They’ll be the ones with the architectural agility that allows them to:
- Launch new digital offerings without years of development.
- Enable product and operations teams to deploy continuous updates without writing code.
- Scale into new markets or business models without rebuilding the bank.
We’ve seen this firsthand. One of our largest clients recently launched a fully digital retail bank on Tuum, with minimal involvement from our team. Aside from a few tweaks to statement formatting, they managed the end-to-end build, test, and go-live process themselves. That’s the power of a truly modular, cloud-native, no-code-enabled platform.
What Now?
Banks can no longer afford to be paralyzed by internal complexity or legacy infrastructure. The good news?
You don’t have to rip and replace. But you do have to act.
This is the moment to move decisively, to shift from speedboat pilots to lifeboat launches that enable real business resilience, not just experimentation.
This isn’t just a UK issue. Across Europe, the Middle East and Africa, many institutions still rely on rigid legacy cores limiting their ability to respond to market shifts. Progressive modernization is no longer a niche strategy; it’s a necessity. Platforms like Tuum make it possible to evolve without starting from scratch.
The banks that move now, confidently, strategically, and with the right architecture, won’t just stay afloat. They’ll lead the next chapter of banking. At Tuum, we’re here to help them get there.
Get in touch to find out more.