Having long been dominated by a handful of high street giants, Britain's banking sector has finally begun to open up to a host of new entrants in recent years, in thanks largely to government action to boost competition taken in the wake of the 2008 economic crisis.

However, the new breed of lenders now faces the prospect of trying to bloom in a tough post-Brexit environment, with the all-important small and medium-sized business sector expected to be particularly troubled.

Evidence that Brexit is expected to hurt small banks more than the international giants comes in the form of share prices. According to Reuters, since the referendum, challenger banks Aldermore, OneSavings Bank, Shawbrook and Virgin Money have fallen an average 37%, while the country's biggest four lenders have seen their price drop a relatively modest 21%.

Yet, PwC says that nine of its 10 challenger clients that were planning to set up a new financial services firm before the referendum, are still committed, encouraged by the attractive returns achieved in the retail banking sector, the strategic direction of some incumbent global investment banks, a positive regulatory environment, and the potential of technology.

Stephen Morse, financial services partner, PwC, says: "We are working with approximately 20 prospective new banks and other large FS businesses looking to set up in the UK. They are a mixture of domestic UK businesses, EU-based individuals and businesses and those from around the world including from China, Turkey, Japan, South Africa, Asia and the Americas.

"What is striking is the variety of new businesses that are applying for UK licenses is not just limited to "mainstream" retail challenger banks, mortgage lenders and asset managers. There are a range of new technology-enabled banks, fintech businesses, commercial banks and even niche investment banks who have identified gaps in the market in part caused by big global banks having pulled out of some businesses over the past few years."

Morse's colleague Andrew Kail says that there is also still a strong pipeline of money for these new entrants, with investors still keen to back firms that have a strong strategy for cracking the market.

PwC has estimated that the total capital already committed to challengers exceeds £200 million, with total capital and funding of approximately half a billion pounds featuring in its clients' business plans.