The life of a challenger bank is far from smooth sailing. I would happen to know, because I’m living it right now. As some of you have probably experienced, maybe not at a challenger bank but at a startup, when you’re getting a product or company to market, you wear multiple hats – from evangelist to application processor, from product expert to customer counsellor. It’s a heady mix, and one that can sometimes make you feel like you’re battling just to keep your head above the water.
The question is, would you really have it any other way? Probably not. In my opinion, only by immersing yourself in your customers problems can you truly embody the ‘challenger’ mantle. And when it comes to financial services, only by putting yourself in the shoes of your prospective clients can you possibly start envisaging technology powered banking solutions that make their lives easier. You just have to get your hands dirty, period. If that’s not for you, then stay well clear of fintech.
So this got me thinking about other challenger banks around the world. It would certainly be interesting to share war stories with them at some point. We could all drown our ‘Know Your Customer’ sorrows (and smiles) over a glass of wine at the end of the week. Or we could relive the moments when we made a real difference in transforming a small business owner’s or customer’s life. I kid you not, it can feel pretty good knowing you actually helped someone win more customers or reduce their admin overheads simply by implementing a better banking solution. And it really can happen. We do it at Tyro every day. Seriously.
So in the spirit of challenging the status quo, here are 3 challenger banks worth following, and why:
Ok, I’m starting with the obvious, but I still think Australia is yet to wake up to the immenseness of what Tyro has achieved. Talk to anyone from the US or the UK, which I did twice this week, and they get it in an instant – a challenger bank, approved by the regulators, with a customer base and banking products live in the market. This year we launched our first deposit account for small businesses, which sits alongside our existing credit card processing facility. Integrating with cloud accounting and point of sale software means we can bring ‘best of breed’ solutions to SMEs on a platter known as the Tyro platform. Watch this space.
Given the famous New Zealander Ernest Rutherford split the original atom, does challenger bank Atom plan on splitting up banking? Building a completely digital bank, the UK’s Atom is yet to fully launch but plans to do so with a full suite of banking solutions. Without having too much visibility on how exactly they are building differentiated banking products, one imagines (and hopes) they are deep in the customers world figuring that out. With £82 million in funding riding on the result, it’s more than likely.
Granted regulatory approval in late 2015, UK’s Tandem Bank is positioning itself as the ‘good’ bank’ (because banks are bad?), with strong overtones of the Wizard of Oz throughout its mission statement. They claim to be, ‘A bank that lives to solve your problems, with a techie brain and a human heart.’ It’s not clear at this point what their product line up looks like, if they are targeting businesses or consumers (one imagines consumers) or how they will get their solution to market, but their quest is certainly admirable. In their own words, they hope ‘people will consider their bank as one of the most helpful entities in their life, not one of the most painful.’ I’ll drink to that.
This is by no means an exhaustive list, and more challenger banks will come. Consumers and businesses will have more choice. The billion dollar valuation questions that will follow are how will they do banking in a way that is responsible, affordable, sustainable and ultimately better than before? If there is one word of caution however, it would be for challenger banks to not underestimate banking as being as broken as they once thought – banks are catching up fast and delivering mobile platforms quicker than they were 2 years ago. The other conundrum facing challenger banks is over promising verses under delivering. Stylish websites and friendly copy are one thing, but what’s under the hood, that’s what really matters.
One thing is certain though – we are living through interesting banking times, and some challenger banks look set to leave a lasting impact on the lives of millions around the world. As a participant in the change, it is a great adventure to go on.