Last Updated on January 5, 2023 by Raoul Patel
UK Challenger Banks Disrupting Personal and Business Banking
The step-change that is occurring in global financial markets is creating digital and new banking startups that for the first time are potentially able to compete, over time, with conventional big banks.
Never before have financial markets or consumers been so open to fintech startups and disrupters. A number of new companies are heralded as the UK’s “big challenger banks,” including Monzo, Revolut, Starling, and N26. All are reportedly growing in popularity as consumers look to better digital, more expanded, and more accessible services.
Starling has less users but potentially more challenger bank customer money
Starling, with ex-Allied COO Anne Boden at the helm, has grown steadily since its creation in 2014. As per figures from August 2019, it now has 800,000 customers including 60,000 business accounts. Boden, as written by Wired, predicts Starling will surpass a million customers this year and achieve £1 billion in customer deposits.
Reports also indicate that Startling users deposit an average of £1,450 per month which is equivalent to average deposits made at more traditional banks. This suggests Starling users may be using their accounts as their primary ones, a significant step. Starling has less customer accounts than some of its challenger bank rivals, but the use and deposit figure suggests the new bank may have more money passing through its coffers than its rivals.
One competitor, Monzo, boasts banking executive and Starling leader Boden’s ex-employees Tom Blomfield and others at its helm. Speculated disagreements led Blomfield and other Starling employees to leave and found Monzo, now its biggest rival. The disagreements have persisted and the two company’s war over accusations of spying and employee defections.
Starling boasts common features expected of challenger banks including instant notifications of transactions, savings sub accounts, and categorised spending to help with budgeting. There is the ability to add business accounts or personal Euro accounts for travellers. The new bank’s application allows API integrations and third-party services and it has its own marketplace.
As per a Wired review, Starling could be ahead of its rivals with its overdraft and easy long-term loan facility. The loan facility tab displays available borrowing, personalised interest rates based on credit scores, and first repayment dates all clearly visible. Starling has a partnership with the Post Office for deposits and cheques can be posted directly to an account number.
Impressive growth and high ambitions for Europe’s challenger banks
The Financial Times recently wrote that challenger banks have
in the UK in recent months. Revolut now has a company valuation somewhere around $7-8 billion and has 8 million customers around the world. Monzo revealed it is signing 55,000 new customer accounts each week. N26, based in Germany, has around 3.5 million users globally but signed 200,000 UK users in its first six months operating in the UK.
These challenger banks, already disrupting finance, have big goals. Revolut wants to achieve a $20 billion valuation before it even considers an IPO and N26 is aiming for 70 million customers. This latter figure would make N26 bigger than conventional rivals Deutsche Bank, RBS, and even Barclays.