Challenger banks have continued to sustain momentum in 2017, evident in their financial results. They have successfully made their mark in the financial services industry, but the term ‘Challenger banks’ does little to explain the breadth of their ambitions or the complex business models they employ. Is there a better way to define them?
Since the financial crisis in 2008, more than 50 institutions have been granted a banking license in the UK. The market is becoming increasingly saturated – particularly in the catchall space of the challengers. Many argue that the challenge has already taken place, and in a diverse market, the label is now redundant. ‘Challenger’ remains little more than convenient shorthand and the diversity of an ever-changing market suggests we need some new ways of looking at the strategies of these banks.
As challengers mature into their own niche offerings, the really interesting decisions will be driven less by where they come from and more by where they’re heading. So while this year’s report summarises the state of play in today’s challengers, its main purpose is to outline how they might respond to the drivers of change.
Over the past year, we have seen a number of emerging trends that show what the drivers for growth will be in banking.