Following on from discussion in the Tandem and N26 topics, some space to talk about possible changes to the UK banking market.
Will N26 buy a UK bank to reenter the market?
Are Tesco Bank, Sainsbury’s Bank, Co-Operative Bank and TSB acquisition targets? Who might buy them?
Which overseas players are looking to enter the UK market?
To pick up on comments from other threads…
On N26:
And on Tandem:
I’m not quite sure I can see a future for Tandem, nor much potential for Atom (although apparently they’re still aiming for an IPO in the next few years).
It feels to me that both of these would be good candidates for anyone wanting to either get a banking licence or get into lending (both offer mortgages). So I wouldn’t be surprised if Starling, N26, Revolut - or even Monzo - were looking at them for different reasons. I suppose it’s all about the valuation though - strikingly I can’t quickly find a source for either.
Otherwise, the media seems to suggest that Tesco Bank, Sainsbury’s Bank, Co-Op Bank and TSB are all potentially on the market. The branch network ones would seem to be perhaps less interesting - unless there’s a high-street based competitor (Metro, Virgin?) that would fancy it, or there was an interesting deal to split the licence, customer base and branches across different acquirers.
Aside from Goldman Sachs and JP Morgan (with their Marcus and Chase brands), are there any other banks that are looking to enter the market? 
Well, TSB is officially unofficially up for sale. Sabadell has made it clear it wishes to exit the UK market. And the hedge funders who bailed out Co-operative Bank will look to make good on their investment at some point.
I see Brexit playing out with established (boring) banks buying up smaller (perhaps digital) banks either side of the Channel to passport back into the respective markets.
Maybe I’ve missed something, but why on earth would N26 re-enter the UK market. They had a dismal product and there is no way they exited simply because of Brexit and the UK banking license.
My nieces piggybank is a better banking option than N26
I didn’t think the product was dismal. Under-developed perhaps. N26 seriously underestimated the UK market though.
Absolutely, I have some more thoughts on this which I’ll post tomorrow, but I think this is it in a nutshell.
The viability of supermarket banks especially, and small banks in general, is now an open question. Market forces, the regulatory and economic environment and consumer preferences/demands are conspiring to make it extremely difficult for independent small banks. So it wouldn’t be surprising to see consolidation in the sector.
My feeling is that TSB may eventually be absorbed into Virgin Money, if the time that Sabadell starts getting serious about a sale matches up with when Virgin have completed the Clydesdale integration.
Of the other branch-based banks, Metro bank seems vulnerable but it’s smaller size means it could potentially get absorbed fairly easily by a group like Lloyds; clearly they would quickly shut many of the existing branches.
I suspect the others may be quietly wound down, like Intelligent Finance, or potentially sold for a banking license as we’ve discussed in the case of Tandem. The other option is to pick off parts of the portfolio of products and sell them separately - credit cards to a provider like Jaja or NewDay, loans and mortgages to existing large banks, and so on.