Everyone’s heard of the ‘big four’. With Barclays, HSBC, Lloyds and the Royal Bank of Scotland between them shouldering the majority of our country’s finances – along with medium-sized players such as Santander, Halifax and Natwest – you wouldn’t think we’d need any more banks. But you’d be wrong. Here to revolutionise the way we bank, are new challenger banks – and they look set to change the game.
What is a challenger bank?
A challenger bank is a small, recently-created retail bank that has cropped up to go toe-to-toe with the big hitters of the financial industry. Plucky start-ups they may be, but don’t underestimate these companies. Some find a gap in the market, and specialise in banking for certain underrepresented or uncatered-for groups of individuals – but most all of these new banks have embraced technology to innovate how we spend and store our money. Here are the new names on the money block you should be looking out for.
Originally founded in 2015, this digital, mobile-only bank saw its banking license restrictions lifted last April – meaning that it can now offer a current account rather than simply a prepaid debit card. First named ‘Mondo’, the brand set the record for “quickest crowd-funding campaign in history” when it raised £1m in 96 seconds in 2016.
Regarded as one of the first app-based challenger banks in the UK, Monzo founder Tom Blomfield told Gentleman’s Journal last year that his aim was to make people less anxious about spending. “The overriding emotion people feel when they talk about money is anxiety, because it’s just numbers on a screen and they don’t really know how much money they have,” Blomfield said. “What Monzo gives to those people is a feeling of visibility and control.”
Securing its first banking license in 2015, Atom Bank too provides its banking services through a smartphone app. With no physical outposts, the bank nonetheless managed to raise over £200 million in funding last year, and in March 2017 experienced over 5,000 new customer signups in one day – a record.
With a focus on keeping things uncomplicated, everything from application to everyday banking has a focus on ease. “We hate bureaucracy and paperwork,” says Mark Mullen, CEO of the Durham-based bank, “so we’ve banished them from our vocabulary!”
A little older than the other banks, Zopa was first founded over a decade ago in 2005 as a peer-to-peer lending company. Cutting any existing financial institutions out of the money lending process, the brand aimed to directly bring together borrowers and savers – and is, this year, hoping to launch fully as a bank.
Shaping the future of finance by offering competitive rates, flexible and intuitive products and award-winning customer service, Zopa exist to make money simple and fair for everyone – to enable people to do more with their money and take control of their finances. ‘We believe a loan should be there to help you,’ says Zopa – ‘not hold you back.’
Tandem Money Limited
Currently not offering accounts to the general public – the company have a waitlist at the time of writing – Tandem got their banking license when they acquired Harrods Bank. Notable for the calibre of its investors – eBay founder Pierre Omidyar among the best – when Tandem goes live this year it plans to offer an app-based, full-service retail bank.
With almost 35,000 currently on the waitlist, the extensive budgeting features built in include: Alerts when bills increase or a payment comes in; Advice on switching energy supplier and automatic advice on how much customers can afford to spend each month.
Tandem Money Limited
In 2013, Norris Koppel – a serial entrepreneur from Estonia – started Monese. After having his application for a high-street current account denied when he could not provide local proof of address 17 years earlier, a problem compounded by his lack of credit history in the UK, Koppel spent time creating his brand, an instant open mobile current account.
56,000 customers pre-registered for the service, hailing an account opening process that can be completed on your smartphone in under 3 minutes. Awarded Best Challenger-Bank at the 2016 European Fintech Awards, Monese wanted to “make opening and using an account as easy as ordering an Uber, and also ensure it was accessible to everyone and not just a select few with perfect credit scores and several month’s worth of utility bill documentation.”
Want to know more about money? Learn here about London’s top venture capital tech firms…