I attended a talk recently on ‘Impact through Fintech’ where Revolut, PR and Community Manager, Ieva Kazakeviciute, talked about the $1.7 billion start-up and its 2.5 million customers. When asked about the company’s ambition, she said, “World domination!” Proving they can compete, Revolut as well as counterparts, Monzo, have compelling business models and are moving into international markets. So why is it that people still don’t trust digital banks?
Unless you have been living in a cave these past few months, you will have noticed Revolut recently taking more hits in the press than Anthony Joshua’s punching bag. With talk of Russian links, suspicious payments and abusing unpaid employees, they have been on defence to reassure potential and existing customers.
But Revolut is just one case which illustrates a broader trend: that the general public's perception of challenger banks, and fintech in general, is different from traditional banks. Even with their problems, broader scrutiny still persists when comparing fintechs to established players like Lloyds and NatWest? We forget that Open Banking only came into effect a year ago, and with it, innovative solutions in fintech have already made an impact.
Traditional banks have noticed and are cashing in – learning from what challengers are doing and sidestepping what trips them up. There have been a few copycat products that have rolled out in traditional banks. For example, HSBC announced the freeze/unfreeze card option on their app in the event a card being stolen or lost. Likewise, Italian bank Unicredit launched a digital concierge which offers 24/7 support for customers last year. Most neo-banks have had these options for a while now, alongside interactive customer service.
Challengers have clearly made an impact. And while, traditional banks are benefitting from their heavy investment in new tech to become competitive with the likes of Starling and Monzo, as traditional banks are investing in fintech, the lines will increasingly blur. We know that fintech is a vital component for the future development of banking, and while it has laid the foundations, it is difficult to say how the big bank / challenger / fintech nexus will develop as technology becomes increasingly integrated and commonplace.
And as challengers and traditional banks become increasingly indistinguishable, we must ask what role the consumer experience, and ultimately trust, will play in how successful these companies become.