CHIP & WIN - Are challenger banks helping or hindering the banking experience?
What are challenger banks?
Challenger banks are relatively small retail banks that have the intention to compete with the larger and long-established banks. They often tend to be web or app based with little-to-no presence on the high street.
They differ by normally aiming their marketing and functionality at generally a younger and more tech-savvy generation. Whilst a normal bank will have certain rules and permutations in order to be eligible to sign up for an account with them, challenger bank applications can be completed in minutes from a phone or computer and qualifying rules for each bank can vary.
For example, with Monzo – to qualify you scan documents with a phone camera on their app and send in a video to prove your identity and others like Bofin, you are not even required to have a proof of address in your application.
How did challenger banks come about?
For the longest time banking has been accepted as just banking. It’s not an industry made to look glamorous and exciting as it is one that hasn’t majorly changed until the last 10 years.
From the collapse of Northern Rock, Alliance & Leicester and Bradford & Bingley as an effect of the 2008 recession – the number of banking options gradually became fewer. Larger banks were buying those going bankrupt, and to avoid a potential further disaster – the UK government backed all of the major banks. This made banking licenses and restriction tighter than ever before.
Whilst major British banks such as Barclays, RBS, HSBC & Lloyds are still the major players in the UK banking industry, the opportunity to challenge them was getting increasingly difficult.
Sensing in a new digital age where banking can be done digitally from anywhere and a noticeable pattern with younger generations tending to prefer not going into a physical bank – the initial concepts for ‘challenger banks’ was born.
16 | MANE PRODUCT & TECHNOLOGY | FEBRUARY 2019