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As challenger banks plan for their futures and look to ensure they can weather any Brexit uncertainty, they are now looking at where best to allocate their resources.
Before deciding how to best allocate your resources, it’s important to first understand the needs of your challenger bank.
Here are four of the requirements that most challenger banks will have to contend with.
Keep up with regulatory trends
Since the financial crisis of 2008, and the rise of the fintech sector, a number of new regulations have been imposed on the industry. As we have blogged about previously, PSD2 is one of the latest pieces of legislation, and it’s due to come into force in 2018.
With each new piece of regulation, incumbent banks as well as challengers and fintech’s need to adjust their internal processes to comply. Whilst some in the industry believe that the pace of new regulation will be slow moving forward, any player in the market needs to have the ability to react quickly to any new piece of future regulations.
For most small fintech’s this can be a job in itself. To implement a regulatory framework and constantly ensure compliance with it, can take up a lot of time.
Ensure your security is up-to-scratch
The recent cyber attacks on the NHS and other institutions have highlighted the need for good cyber security.
One of the main outcomes of the financial crisis in 2008 was a lack of trust with the incumbent banking sector. The fintech sector has been able to leverage that lack of trust, and has garnered a lot of support from customers who had previously used traditional high street banks.
If your challenger bank is the victim of a cyber attack, you risk the trust that your customers have placed in you, so you need to ensure your banking platform is built to withstand potential problems, but that it also develops as the threat from cyber security evolves. This too, takes time and energy.
Provide value to your customers
Developing an offering that provides value for your customers is very important for challenger banks, because it is such a competitive marketplace.
If your platform is built to provide just one service, you should look to expand your offering or partner with another fintech to provide your customers with new products.
You can provide the most value by basing your fintech on an account management platform that provides the flexibility to make different functions available at different times to different customers.
Be able to respond to new industry trends
The fintech industry is developing rapidly, and the rate of innovation means that many struggle to keep up.
Fintech’s face a risk though. If they don’t keep up with the industry they could miss the market opportunities.
One of the key things to solving this is to get to market as soon as possible with a solution that you can build your business on top of.
Clearly there are a number of different priorities for challenger banks at every stage of their business development. Just as is the case for startup fintech’s, those looking to scale their business need to allocate the resources they have to match the skillset of those working on the business.
The article originally appeared at: Trusek.com
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