HSBC aims to dodge the iceberg with digital-only banking project

I find it interesting that the traditional banks see the need to compete with the Fintech banks in this way [setup standalone Digital only banks]. Although there are lots of "successful" examples many [Challenger Banks] are reliant on VC investment and aren't actually making money! (yet). Is this a bubble that will burst at some point? Surprised that they don't just invest in an existing start-up and buy the expertise? With Open APIs and PSD2 can't they just partner to ensure they can meet the [still] niche demands of digital customers?

Andrew - It is quite understandable when you look at the state of the legacy infrastructure of banks like HSBC. This approach -also referred to as 'speedboating' by some - will become increasingly common amongst the large, legacy banks. You are right, they could invest in  other challengers but that would most likely not give them enough influence over the functionality and more importantly, more control over customer migration. With regard to Open Banking/PSD2, I'm afraid there is still plenty of room for improvement (just look at rhe debate with the banks and CMA9 in the UK!). 

As a business and retail customer of HSBCs, I am now left wondering how long will it really be before I can jump aboard their new Sunseeker because I now know that they are not  going to invest in their existing platform.

Goldman (Marcus), JP Morgan (You Invest) and ICE (Bakkt) are doing the same. In some cases, it's about self-preservation instincts; in others, partial self-cannibalisation can, in fact, be profitable as the rails and mechanisms are already in place. If you don't take care of your customers, someone else will...

Neobanks typically have one or two products and 4-5 figure customer counts. While I don't know HSBC's plans, there are other traditional banks who have announced full-feature digital only banks with plans to acquire 10s or 100s of millions of customers. I'm not surprised they've opted for the BUILD route - the difference in scope and scale between neobanks and digital banks of traditional banks is too stark for traditional banks to risk the BUY option, especially at the kind of frothy valuations of VC-funded neobanks.