Staying Agile: The Key to Longevity for Today’s Challenger Banks

Staying Agile: The Key to Longevity for Today’s Challenger Banks

Sarah Jackson

Director at Equiniti Pancredit

Views 709

Staying Agile: The Key to Longevity for Today’s Challenger Banks

22.05.2017 10:15 am

Despite their fragmentation, challenger banks remain united in their need for operational agility, says Sarah Jackson, Sales Director, Equiniti Pancredit.

The term ‘challenger banks’ is fast becoming a misnomer, such is the level of diversity displayed by today’s diverse range of financial services providers. At one end of the spectrum are the mobile only banks, like Atom, Monzo and Starling. These are true start-ups and focus on delivering an entire banking experience via the device in your pocket. Then there are the digital contenders, like Fidor Bank, whose ambitions and customer-base extend beyond the mobile environment to encompass online banking and API links to social networks. Also in play are the banks that, despite being branch-based, are rethinking the traditional approach. Metro Bank - open seven days a week - is a case in point. If that wasn’t enough, there is also the range of specialist banks that focus specifically on vertical industries, Virgin Money and M&S Bank, for example. With such diversity on display, it’s getting harder and harder to nail down what it is that brings them together under one coherent category.

One suggestion is that they all share the need to operate differently, with far greater agility than their traditional high street counterparts.

These young, new lenders operate fleet-of-foot, unencumbered by the legacy systems and entangled processes that have long-hampered the bigger players. Innovation is the key to their success; each strain of challenger has a different view of the world, but all are committed to delivering a customer service experience which is both fresh and carefully differentiated.

But as ‘the challengers’ continue to grow they are starting to face some very familiar challenges. How can they scale their operations, creating and dedicating resources to accommodate more customers, more accounts and more products? These issues seem so familiar because they are a mirror reflection of the very banks that they are hell bent on challenging

So what can they do to avoid getting bogged down? Put another way, how can they protect the agility which has, so far, been such a key ingredient in their success?

The answer is simply said, but much harder to achieve: they must stay the course. Only by maintaining a laser-like focus on innovation, together with their own differentiated value proposition, can these banks realistically expect to establish themselves as long-term contenders.

As traditional high-street banks have demonstrated, delivering financial services at scale does not lend itself well to business agility, particularly in this age of heightened regulation. It’s worth remembering that challengers must apply the same rigorous discipline to their own systems and processes as the bigger players, and with a fraction of the internal resources available.

Outsourcing is the key, and will play a fundamental role in enabling this fragmented sector to continue to flourish. Challenger banks, in all their guises, must make a decision: Should they undergo the rigmarole of recruiting and training in-house staff, designing and establishing FCA compliant processes and integrating new servicing technology platforms? Alternatively, should they join forces with a tried and tested credit servicer which can manage their day-to-day operations with trained staff, pre-approved processes and proprietary systems which are already up and running in the marketplace? The best of these offer blended solutions that combine specialist technologies to automate the management of loan portfolios, for example, with skilled customer service staff and auditable, best-practice processes, all wrapped up in a tailored package designed to address the specific needs of each bank.

This collaborative model will buy ‘the challengers’ the breathing space to innovate their way ahead of the traditional players. What’s more, it will also help them focus on cementing their own brand of differentiation in an almost impossibly diverse and crowded sector.

The challengers face challenges of their own. That said, fragmentation does not mean failure and if there’s one thing that these banks are not afraid of, it is doing things differently. It will be interesting to see how many are prepared to apply this ethos to their internal operation as well as their business models. The potential payoff is huge.

Latest blogs

Robert Flowers DivideBuy

It Doesn’t Have to Be the End – How Retailers Can Grow in Light of COVID-19

It’s no news that the retail industry has been flipped on its head by the COVID-19 pandemic. Due to the lockdown, most in-store operations have been shut down, and nationwide furloughs, reduced pay and steady streams of income at risk have fuelled a Read more »

n/a n/a

4 Ways to Protect Your Small Business Against Cyber Attacks

Just because you are running a small scale business doesn’t mean you are beyond the reach of hackers and attackers. Many small businesses have this thought, which is why they do not invest in their cybersecurity. Unfortunately, every year small Read more »

Kirston Winters MarkitSERV, IHS Markit

IBOR transition update: €STR grabs a foothold?

In the latest development in the IBOR transition, on the weekend of July 25th, we saw the major CCPs perform the much-anticipated Euro discounting and price alignment transition from using EONIA to EuroSTR (a.k.a. €STR) for all Euro OTC interest Read more »

Richard Gendal Brown R3

Digital Transformation Must Be Focused on Entire Industries, Not Individual Firms

The current crisis has forced businesses and entire industries to rely on digital technology more than ever before. Aside from the fact colleagues and customers have only been able to connect via phone and video conferencing for months, inefficient Read more »

n/a n/a

Top 5 Techniques To Improve Physician Medical Billing Services

Revenue is the only support that helps businesses to sustain their existence in the industrial landscape. Most importantly, the healthcare industry is the most fast-paced industry in the modern era. It has become inevitable for practitioners to Read more »

Related Blogs

Simon Wilson Icon Solutions

Strange New World: What Next for Banks?

What’s next for banks in this strange new world we find ourselves in? Forget the forecasts and predictions, we are in unchartered territory and the only honest answer is that no one truly knows exactly what is coming down the line. But what we do Read more »

Andrew Stevens Quadient

Monzo Outage Impacts Payments, Bank Transfers and Chat Services - Expert Comment from Quadient

At a time when consumers are already faced with such uncertainty, being unable to pay bills, access their wages or even view their balance can be stressful, especially if they are not adequately informed of the severity and likely duration of the Read more »

Béla Vér ApPello

The survival of banks is at the mercy of their technology vendors

Governments around the world have responded on a scale not previously witnessed to protect people around the world from becoming a victim of COVID-19. With many lockdowns still in place and now coordinated on a local level to respond to second COVID Read more »

Alex Malyshev SDK.finance

The Biggest Danger to Branchless Banking

With a third of the global population on lockdown and scores of bank branches closed, many are convinced that branch banking is dead, and the future is branchless. Is this really true? Read more »

Simon Wilson Icon Solutions

The end of the world as we know it: Banking’s new reality

There are decades where it feels like nothing happens, and there are weeks where decades seem to happen. In just over 100 days, COVID-19 has swept around the planet, more than half the world’s population has been forced into lockdown, far too many Read more »

Magazine
ALL
Free Newsletter Sign-up
+44 (0) 208 819 32 53 +44 (0) 173 261 71 47
Download Our Mobile App
Financial It Youtube channel