#Standard #Chartered, headquartered in London, is expanding its global digital footprint from Hong Kong to the west coast of Africa. The bank, which has $ 663.5 billion in assets and operates mainly in Asia, Africa, and the Middle East, announced in June that it would begin work on developing a disruptive new business model for the Hong […]
Bank Innovation
It’s not just startups that need watching — neobanks are springing up across the globe, and a particular breed is becoming more common &8212; those backed by traditional #banks. These banks are usually digital-only, but some may have physical branches. For a while, traditional FIs did not concern themselves with these neobanks, which typically offered […]
Bank Innovation
PREMIUM – Add another #challenger #bank to the mix, this time in Eastern Europe. Polish bank #Alior is working on launching a digital-first bank later this year, Bank Innovation has learned. Alior Bank, headquartered in Warsaw, was founded in 2008 and has more than 3 million customers, 216 branches, 219 high-tech mini branches that it […]
Bank Innovation
PREMIUM — The #German #challenger #bank N26 surpassed one #million #users, the bank announced yesterday — a significant feat for any neobank. The bank has doubled its customer base since last August. To put this in perspective, U.K.-based challenger bank Revolut, which just last month reached unicorn status thanks to a $ 250 million series C […]
Bank Innovation
EXCLUSIVE – When college student #Ollie #Purdue set out to create the student-centered digital current accounts company #Loot, the idea was to solve a personal problem. “What’s the minimum I can earn, and the minimum I need to work to last me till the next payday?” Purdue related to #Bank Innovation. At the time, Purdue was […]
Bank Innovation
In my first blog for Accenture, I discussed some of the large-scale changes facing the banking industry in Europe. One of the biggest of these is the rapidly evolving nature of the competitive threat that European #banks face. Overseas banks are receding in importance, as non-European banks have tended to refocus on their core markets and redefine their core businesses. Traditional banking competitors remain a factor, but the biggest emerging threat for European banks is from so-called “#challenger banks.”
In a survey co-sponsored by Accenture and Temenos, more #bank respondents (22%) cited challenger banks—loosely defined as banks based on digital delivery channels with a focus on improving the customer experience—as the top competitive threat, outpacing #technology vendors (20%), existing large incumbents (20%) and #fintech start-ups (16%). What’s more, the perceived threat from challenger banks has been growing, with 11% of respondents citing challenger banks as the top threat in 2015 and 16% in 2016.
Challenger banks have many of the advantages of traditional banks, including the right to undertake activities that require a banking license and the consumer trust that derives from being a regulated institution. But, they tend to be more focused on the customer journey, and by operating without cumbersome legacy IT systems or the “brick and mortar” infrastructure that drives up incumbent banks’ costs, challenger banks can compete effectively while offering a customer experience based on digital innovation.
Some banks are responding by offering their own challenger brands—such as Leumi with Pepper and BNP Paribas with Hello. These entities are, in effect, parallel universes for legacy banks. If they are successful in establishing a digital framework with a lower cost structure and an attractive customer proposition, they may be able to move their own customer base to the new entity over time or generate new clients through that channel. In the meantime, however, the legacy banks are running parallel institutions, dividing their time and attention, and adding cost and complexity.
Challenger banks have also found that the banking industry is not as easy for new entrants as they might have thought. The Financial Times has reported that capital demands for challenger banks are higher than anticipated and that the competitive marketplace is pushing UK challenger banks to offer riskier loans at low rates. As some of these challenger banks come from outside the industry—from areas such as telecommunications and retail—those constraints might prove a difficult hurdle to overcome.
The environment remains incredibly dynamic: Some banks buy challengers banks outright; others partner with them to offer new services; and still others team up with fintech providers to create new offerings. The introduction of Open Banking is another factor that will reshuffle the cards, providing new opportunities for start-ups and for alliances between innovators and established players. In my next blog, I will look in more detail at how established European banks are approaching digital transformation in this changing landscape.
The post The rise of the challenger bank appeared first on Accenture Banking Blog.
In my first blog for Accenture, I discussed some of the large-scale changes facing the banking industry in Europe. One of the biggest of these is the rapidly evolving nature of the competitive threat that European #banks face. Overseas banks are receding in importance, as non-European banks have tended to refocus on their core markets and redefine their core businesses. Traditional banking competitors remain a factor, but the biggest emerging threat for European banks is from so-called “#challenger banks.”
In a survey co-sponsored by Accenture and Temenos, more #bank respondents (22%) cited challenger banks—loosely defined as banks based on digital delivery channels with a focus on improving the customer experience—as the top competitive threat, outpacing #technology vendors (20%), existing large incumbents (20%) and #fintech start-ups (16%). What’s more, the perceived threat from challenger banks has been growing, with 11% of respondents citing challenger banks as the top threat in 2015 and 16% in 2016.
Challenger banks have many of the advantages of traditional banks, including the right to undertake activities that require a banking license and the consumer trust that derives from being a regulated institution. But, they tend to be more focused on the customer journey, and by operating without cumbersome legacy IT systems or the “brick and mortar” infrastructure that drives up incumbent banks’ costs, challenger banks can compete effectively while offering a customer experience based on digital innovation.
Some banks are responding by offering their own challenger brands—such as Leumi with Pepper and BNP Paribas with Hello. These entities are, in effect, parallel universes for legacy banks. If they are successful in establishing a digital framework with a lower cost structure and an attractive customer proposition, they may be able to move their own customer base to the new entity over time or generate new clients through that channel. In the meantime, however, the legacy banks are running parallel institutions, dividing their time and attention, and adding cost and complexity.
Challenger banks have also found that the banking industry is not as easy for new entrants as they might have thought. The Financial Times has reported that capital demands for challenger banks are higher than anticipated and that the competitive marketplace is pushing UK challenger banks to offer riskier loans at low rates. As some of these challenger banks come from outside the industry—from areas such as telecommunications and retail—those constraints might prove a difficult hurdle to overcome.
The environment remains incredibly dynamic: Some banks buy challengers banks outright; others partner with them to offer new services; and still others team up with fintech providers to create new offerings. The introduction of Open Banking is another factor that will reshuffle the cards, providing new opportunities for start-ups and for alliances between innovators and established players. In my next blog, I will look in more detail at how established European banks are approaching digital transformation in this changing landscape.
The post The rise of the challenger bank appeared first on Accenture Banking Blog.
Mobile-first U.K. neobank #Starling #Bank has integrated #Android Pay into its app, allowing Starling customers to use the digital wallet to make mobile payments. Customers can use Android Pay for contactless or “tap and pay” payments, a method that’s becoming steadily more popular in the United Kingdom, as Starling announced on Twitter today: Here it […]
Bank Innovation
After two years of work, British #challenger #bank #Monzo is finally #rolling out its free #current account product. The bank, which received its full banking license in the United Kingdom in April 2017, has been taking the rollout slowly, as promised, though as stated on its site, it aims to offer current #accounts to all […]
Bank Innovation
When #TransferWise first launched, CEO Kristo Käärmann did not expect a favorable response from incumbents, which still charge consumers considerably higher fees for cross-border transfers, compared to TransferWise’s 0.5% rate (in the U.K., on average). But the opposite trend began happening. “We learned overtime that #banks have an incredibly high cost-base to do the same […]
Bank Innovation
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