Concerns over Brexit rule changes and the environment have triggered a “monumental surge” in interest in apps offered by challenger banks.
This is according to international financial consultancy firm deVere Group which reported that enquiries about Vault, its global money app and card service founded in 2017, have grown by 67% in Q3 of 2020.
The company has attributed this in part to a growing demand for green banking. There has been a growing awareness of the environmental impacts of banking, be it through choosing banks that do not invest in environmentally damaging industries such as fossil fuels, or those which offer paperless banking, or those working to reduce their carbon footprint.
Nigel Green, CEO and founder of deVere Group said:
“The monumental quarter-on-quarter surge for banking-style apps is, we believe, attributable to two main drivers. First, individuals and companies are increasingly embracing and expecting green, paperless banking.
“This is partly fuelled by the pressing need for us all to drastically reduce waste and better protect the environment – something the pandemic and issues such as raging wildfires has collectively focused minds on – but also because a paperless system is, typically, a more convenient and efficient one.
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“Traditional banks have a long way to go to catch-up with tech-driven challenger banks and fintech [financial technology] firms, which are intrinsically much greener and are leading the charge to a paperless future.”
Challenger bank apps provide financial solutions after Brexit
In Europe, this has also been driven by the imminent end of the Brexit transition period and the impact this could have on banking. UK citizens living in Europe may lose access to UK bank accounts as current EU ‘passporting’ rules that mean that expats without a UK address can still hold a bank account with a UK bank.
However, this rule will no longer apply to the UK, meaning banks will need to apply for new licenses and will result in some banks, including Lloyds, Halifax and Barclaycard, closing accounts.
Green believes that this has led to many looking for alternative banks that will not be affected by the rule change:
“This will cause significant disruption for many individuals, families, businesses and other organisations. As such, people are flocking to firms that already operate under pan-European rules.”
He added that this shift towards digital banking is driven by young people:
“For Millennials and Gen Z clients especially there’s been a radical shift toward ‘less stuff, more impact’ in banking and financial services. And this is just the beginning of this global and far-reaching trend.”