The banks are racing to secure deals and boost income as The Prudential Regulation Authority (PRA),  the supervisory arm of the bank, said it wants new lenders to “focus on reaching profitability” instead of relying on investor capital.

The PRA has said last month in a consultation paper that it wants start-ups to make a profit, or be very close to profitability.

The Bank of England could impose stricter capital requirements when it finalises rules later this year. The consultation paper said start-ups had often “underestimated the development required to become a successful and established bank” and often lost “the longer-term focus of becoming a sustainable business” after gaining regulatory authorisation.

The review is the first to be conducted since the PRA established rules for setting up new banks in 2013, The Times reports.

Leading digital bank Monzo revealed that losses doubled last year to £114 million. Its auditor, EY warned over the bank’s ability to be a going concern beyond 12 months. 

However, in the latest Ipsos MORI Personal Banking Service Quality survey published last week, Monzo has topped the charts for customer service amongst UK banks as 86% of respondents said they would recommend the bank.

Conversely, rival Starling Bank is set to make a monthly profit by the end of the year.

Revolut, the most highly valued fintech in Europe at $5.5bn (£4.2bn) is applying for a bank licence, meaning it will have to comply with the new rules. However, the bank saw operating losses triple to £107m last year.

Tandem has agreed a deal to acquire Allium, a green lending business financing projects such as solar panels.