By Allen Jones
I was struck by a recent headline in an online financial services journal at the start of this month, ‘Challengers take a third of new banking revenue’. The headline was based upon a new report by Accenture that identified that up to one-third of new revenue in the banking sector is being driven by digital challengers.
Clearly, such a shift places significant pressure on the established banks and this pressure is only going to intensify with the Accenture report revealing a 63 percent rise in new financial players in 2017.
As a business that is working with a rapidly growing audience of new challenger financial services business around the globe, I can report that they come in all shapes and sizes and many have a specific niche focus. The existence and growing influence of these challengers is a reflection of many factors, including:
• Access to funding
• Weaknesses in the traditional FS processes
However, above all of these, I rank agility as No. 1.
This agility characteristic is most evident in the way these challengers think and is then seen through in the way they act. Above all, they understand the importance of an agile and flexible approach to serving the needs of their customers.
Challenger financial services live up to their moniker; they challenge everything. Like their customer base, they want; ease, speed, service, access and they are not slaves to convention or reputations. In short, for us as a like-minded tech business, they are a pleasure to work with because their thinking mirrors ours and our continuing success relies upon us being rapid, flexible and imaginative; many also like us to challenge them and use our wider experience to help guide them. Challenge it seems is a two-way street.
The confidence and ambition displayed by challengers is often in stark contrast with the slow-moving and cautious nature of traditional financiers, which continue to face legacy issues regarding technology and the continuing hangovers from PPI and the banking crisis.
Where solidity was a traditional banking strength with a High Street profile that saw the ‘birds of a feather flock together’ in impressive High Street premises that eschewed status and importance and a nice old-fashioned word ‘fidelity,’ today, many of these same buildings are bars and coffee shops. There is a certain irony that these are places where success depends upon hospitality, efficient service and fresh ingredients.
Traditional banks are struggling to find their place in today’s digital age. There can be no question that these traditional banks will remain important, their sheer scale and deep economic influence assure this, but they must change. In the meantime, challenger banks will grow, often providing the more niche services that consumers and the fast-growing SME businesses who are driving the UK economy demand.