Challengers versus the High Street banks – David versus Goliath or a different kind of battle?

It seems like a new challenger bank enters the UK banking market just about every other month. The total since 2013 is 16 new banks receiving banking licences and there could be more if you extend the definition to include the likes of TSB. This new competitive environment could very easily be characterised as David versus Goliath or perhaps a small army of Davids’ against a platoon of Goliaths’ sort of fight.

One analogy with the biblical story certainly holds true – as with the slingshot – the challenger banks want to use the latest technology and the intertwined thinking on customer engagement and social media to win market share.

Yet that could also be where the analogy falls down. The big banks can embrace the latest thinking and the latest technology too. It is certainly not a case of whether they can afford to do so. It could be a question of whether they have the flexibility to deploy this approach as effectively as possible. No doubt they are working on it. A second relevant question is whether new technology is as good a defence as it is a form of attack. That said, relying on inertia and market size is no option at all for a growing segment of customers. We know the High Street banks are alive to the threat.

Whether the dominance of the big banks is at stake or not, it does not take a huge market share of current accounts, savings accounts, mortgages or business loans to establish a going concern certainly in the new tech based model.

We are sure we are in the midst of a banking revolution. It may just be that the real winners may be the makers of the slingshots.

There is a longer assessment of the challenge from the challenger banks on LinkedIn.