The new challenger bank ethos: Why sustainability is fueling the next wave of disruption
If you were to take their marketing at face value, you’d assume that big banks were leading the finance sector’s charge regarding sustainability. And while they undoubtedly play an essential role, especially when financing major renewable energy projects and the like, the biggest disruption comes from challenger banks.
Increasingly, popular challenger banks such as Monzo and Starling, for example, are marketing themselves as more sustainable, capitalizing on a growing desire for banks to prioritize the environment. In fact, a recent report found that 67 percent of customers want their bank to be more sustainable.
Neobanks are on the rise: Can legacy banks keep pace?
Neobanks have shaken up the banking status quo since the introduction of PSD1 and PSD2, tempting customers in with user-friendly interfaces and streamlined processes. Legacy banks have struggled to keep up with the pace of innovation in the sector, and as a result, the industry is littered with rushed digital offerings that exacerbate the feeling that neobanks are pulling ahead in the digital transformation race.
In this day and age, having a low-quality digital banking platform is enough to turn customers away in favor of the digitally proficient neobanks. Customer loyalty doesn’t hold as fast as it once did, and customers are far more aware of the alternative services available to them at challenger digital banks. The traditional incumbents can’t continue to hope that their history and experience will win out as customers continue to experience low-quality customer service and deficient digital banking services.