The use of the term ‘challenger bank’ to describe any bank that is not a recognised main high street bank has become commonplace. However, our research and interviews with the CEOs of these banks have highlighted four key findings about this part of the UK banking market.
The term ‘challenger bank’ does not reflect the breadth of these banks’ offerings and varied strategies
These banks actually consist of four broad groups with different models, aspirations and challenges. Many do not define success in terms of their ability to challenge or rival the main high street banks. Rather, their goal is to serve their specific target markets profitably. As a result, many don’t anchor their propositions around current accounts as they recognise that customers are willing to multi-bank.
This was substantiated by our survey of British consumers, carried out in conjunction with YouGov, that showed over half of the respondents preferring to use a range of banks for different products and services, according to which is best placed to serve them. Some of the new digital players are offering current accounts, and are focused on developing exciting propositions that help customers control their finances and access the best value banking and non-banking products available from third parties.