DIGITAL CHALLENGER BANKS
IBS Journal March 2018
27
Challenger banks must work harder to join in with the big fish
The so-called ‘neo-banks’ are on the offensive, and to push the colossal banking establishment, they will need more than just a fancy app. This is just their long-term goal; in the short-term, they will need to do a lot of politics, and to be able to think on their feet, in order to swim with the bigger fish
Junior Fintech Reporter Henry Vilar
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hat is the basic dogma of a challenger bank? Provide a great user and banking experience for the customer, and keeping up with consumer requests and processes
faster than traditional banks, thus optimising the whole banking experience for the customer. This is according to Ben Chisell, product director at Starling, who alongside many peers, has a very customer- centric definition of the term.
Stewart Bromley, COO at Atom Bank, believes that the term has been largely misused. To be a challenger bank, you need to stand out somehow, and have a proposition that will shake up things. “Some banks and fintechs have been called such, but in reality they are doing nothing new,” he says.
It is perhaps a combination of both, as there’s no doubt that new digital propositions are ‘challenging’ the status quo in the banking industry, despite not everybody seeing them with keen eyes. “We’re aware we’re not for everybody, but we do have the advantage of delivering a better experience and price point than our competitors,” adds Chisell.
Mike Cunningham, founder and CEO of Clearly Bank, says: “As a neo bank, customers come to you because you look different, and you provide cheaper alternatives, but they stay for the experience. We’re creating loyalty just through the service, and this matters more than the variety in our offering.”
Chisell also remarks on the fact that challengers have had to be very efficient with tech and strategy decisions, due to lower IT capabilities and resources than the high-street banks. While decisions and changes go through too many levels in large institutions, being rarely effectively implemented, challengers boast of more decisive actions.
It seems that they still have some work to do, however. Dave Webster, financial services specialist at Quadient, has a different opinion when it comes to clear and effective customer communication by these banks. “It’s true they place a renewed focus on offering modern services such as mobile apps, but these are often delivered in a fragmented manner,” he says. “Just like their older, more established competitors, this leaves them unable to quickly respond to customer needs.”
Enlisting fintechs and other partners
One of the issues challengers may face is that they will not be able to offer the same range of services as well-established institutions, but
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