Standing out during a period of economic uncertainty, the last month has seen a lot of positive news concerning challenger banks; those smaller, newer financial institutions offering an alternative to the traditional big name high street banks.
Having steadily risen since the beginning of July, Metro Bank shares hit an all-time high on Friday, even though the company had 22.2 per cent wiped off their value following Britain voting to leave the EU. Last week also saw Tom Blomfield, CEO digital start-up bank Monzo (formerly known as Mondo), telling the Press Association that he thinks “many of the big incumbents right now will die”, citing a failure to keep up with modern technology.
Blomfield added that he’d heard rumours that, in the wake of the Brexit decision, many of the UK’s biggest banks would be cutting funding for digitisation projects to focus on staying afloat. Meanwhile, he’s set to officially launch an all-digital bank in six months which he says will avoid the traditional pitfalls of the “broken” retail banking system.
From a personal perspective, I’ve been hearing extremely positive feedback from candidates interviewing with a range of challenger banks and similar minded businesses, many of them praising longer and more personal interviews, welcoming and positive office environments and greater flexibility on benefits packages and salaries. I think the most common thing I have noticed, something that really puts this topic into perspective, is the fact that candidates come out of these interviews excited that they can add value to the business, shaping the future of their role and also the wider company. This dissolves the common idea associated with a large amount of multinationals whereby you can feel like, as Pink Floyd would say, just another brick in the wall.
I’m not sure I’d go quite as far as Tom Blomfield – I expect that five years from now, all or most of the biggest name banks will still be alive and well, but I do think we’re entering a period where we’ll see retail customers using a wider range of banks and financial services providers than ever before. While high street banks work in a one-size-fits-all manner, we’re going to see more and more specialist, niche organisations tailoring their offerings to the needs of specific demographics and incorporating new technology into their operations much faster than a bigger organisation would be able to.
What do you think? Are we witnessing the beginning of a seismic shift in the banking landscape that will eventually end traditional retail banking as we know it? Or is this more a case of the playing field growing and changing with the times, with enough space for all of the competitors to succeed?