Page 12 - AeM_January_2020

RESEARCH
ANALYSIS
TRENDS

Expansion of digital banking will

continue in 2020

‘Digital challengers’ are looking to extend their reach at “As a result, 2020 may be the year when a traditional
the expense of traditional high street banks, according bank takes the leap and acquires a challenger bank to
to leading banking industry experts. take advantage of the brand loyalty, as well as the
scalable cloud-native systems owned by those banks.”
GlobalData’s Retail Banker International asked leading
industry figures for their views on the coming year, and GlobalData banking editor Douglas Blakey, says: “The
digital banking was high on the agenda. challengers versus incumbents’ debate is a fascinating
one that will hot up in 2020. Digital-only challenger
Omnio CEO Adrian Cannon told GlobalData: “As retail banks are on the rise. Six challengers are already
bank branches have continued to close, Amazon, worth more than $1bn (Brazil’s Nubank $10.4bn, US’
Apple, Uber Money and others, have understood that Chime $5.8bn, Germany’s N26 $3.5bn and UK duo
by being hyper-relevant at multiple moments in their Monzo and Revolut at $2.5bn and $1.7bn respectively.”
customer’s everyday lives that they can reinforce their
brand value and become an embedded and trusted However, Blakey warned: “For the challengers, the aim
partner. is to do more than just raise capital, offer great looking
apps and grow customer numbers. They need to
“These [digital challengers] are set to increasingly expand their product ranges into more profitable
extend their product set into the financial services sectors of the market. At the same time, they need to
sector, challenging the big banks to raise their game grow the number of customers signing up to use their
quickly.” premium subscription products. “Switch rates for
primary banking relationships remain stubbornly low.
Ian Bradbury, CTO Financial Services, Fujitsu told Despite the hype, UK challengers such as Monzo,
GlobalData: “Many challenger banks are now in a Starling, Tandem, Revolut and N26 are not yet eating
position where they are serious competitors to the incumbent banks’ lunch when it comes to primary
traditional banks, largely thanks to the huge investment banking relationships. Nor are the majority of the
in the fintech sector over the past year. This will see challengers remotely close to break-even yet alone
them move even further into the mainstream in 2020.
profitability.”
January 2020: Digital Marketing Trends & Predictions 12