Why Challenger Banks are growing in users vs Traditional Banks.
Over the last few years, we have seen FinTechs and Challenger Banks steal market share away from Traditional Banks. But Why? And How?
Are FinTechs, with their digital-only propositions, here to stay?
THE CHANGE IN REGULATIONS
The world around us is constantly changing and altering our behaviour, especially towards how we manage our money.
The need for transparency is contributing to the change in consumer mindset.
Banks have made eye-watering amounts of money from their customers for a long time with high account fees, overdraft charges, bank transfer fees and foreign exchange fees. As it happens, after the 2008 credit crisis, when restrictions on finance providers were relaxed to encourage competition, challenger banks started to emerge on the scene. Offering more modern, convenient banking options via mobile applications allowed challenger banks to grow in popularity, especially among younger consumers.
The digital revolution is changing the way people want to interact with their bank. Ease of use, ease of account opening and attractive use of technology are just some of the reasons why customers move away from traditional banks and choose challenger banks like Revolut, Monzo or Starling Bank instead.
Challenger banks are challenging traditional banking services in their offerings, which has allowed them to find ways to reach new markets. By using consumer-oriented design and marketing strategies to reimagine what banking can look and feel like, challenger banks are changing consumer interactions and expectations.
So far, challenger banks have focused their offerings on tailored banking services and more customer-centric products to meet everyday banking needs. Features include lower transaction fees when using bank cards abroad, instant notifications on spending, and budgeting tools to allow you to keep track of ongoing bills, similar to the offerings provided by sync.money.
WHAT THE RESEARCH SHOWS
Research on digital-only FinTech adoption published on finder.com said:
“14% of Brits plan on opening a digital-only bank account within the next 12 months, and 7% intend to do so within the next five years. This means an estimated 11.2 million new accounts will be opened by 2025 and a total of 23.2 million Brits (44%) will have an account by 2025.”
In addition, almost a quarter of British adults (23%) currently have a digital-only bank account, and this number is likely to rise significantly over the next 5 years.
The research also highlights the fact that the adoption rate of these challenger banks depends on where you are located in the UK. For example, Londoners have the highest adoption rates in the country (39%), compared to Wales where only 16% of adults have opened a digital-only currency account, making it the most reluctant region to adopt the new banking trend.
Let’s make a difference.
Share this article
to download on