Would you swap to a challenger bank?
Over the past few years the Financial & Professional Services Practice at Interim Partners have worked with some of the UK’s leading challenger banks.
Challenger banks are a fairly new concept to the UK retail banking market. They were launched in part as a reaction to the financial crisis and the near collapse of Lloyds Banking Group and Royal Bank of Scotland. Our big four banks have long dominated Britain’s high street so these start-ups fighting against the UK’s banking giants have received great encouragement from the UK government and Brussels.
Many of these new establishments sensed a demand from customers to bank with partners they trust. Some have opted to return to the values of banking from yesteryear with a strong emphasis on customer service and providing a bespoke service. Others are changing the face of banking as we know it with the creation of the UK’s first digital only bank.
The new entrants often get classified into the same category, when in fact many of these challengers are focusing on different target customers rather than making a play for traditional retail customers.
However, their ability to boost competition in the retail market and reduce the market share of the big four lenders has come into question.
Whilst the thinking behind the model is well founded, some newcomers are yet to make profit. Those challengers that were carved out of the big four banks have the costly exercise of separation with the burden of inheriting outdated IT systems, diverse product range and supporting a large branch network.
Seeing some of the great work and innovation of the challenger banks has left me pondering whether it is time I switched banks. I have been a loyal customer of one of the big four banks through the good times and the bad. If it is time for a change, then is a challenger bank right for me?
In a highly competitive market place what can a challenger bank offer that is uniquely different to what I already have?
I would be interested to know how many of you within our Interim Partners community are customers of challenger banks?If you are an interim manager working in the sector, have you switched accounts? What attracted you to the challenger bank?
How would you rate the service you receive in comparison to the larger banks? Do you feel they are changing the retail banking market for the better?
It would be great to read about your experiences.
Mellissa Brown is the Principal of Retail Financial Banking at Interim Partners.