Will it be Monzo? Maybe it will be Tandem? In fact, its Starling Bank who just nosed ahead in the competition to be Britain’s most promising challenger bank.
Challenger banks are providing a new form of banking that is often more focused on mobile, allowing consumers to track their payments instantaneously and avoid the usual obscure extra charges, and pushing of financial products like credit cards, or insurance.
Starling has won direct access to the UK’s Faster Payments service, which means it can process instant payments anywhere in the UK, itself, and not in partnership with one of the major “legacy” banks.
This is no mean achievement for a startup because the criteria for entry are onerous. First you need a full banking licence, and many challenger banks have had to admit defeat at this point, then you have to pay an ongoing fee to use the service.
Plus, it is not an easy system to plug into from a technical perspective, either, reveals Business Insider.
But ultimately this is a significant hurdle to have overcome. Nobody, or at least nobody sensible, felt that disrupting the UK’s 4 major high street banks would be easy – and it has not proved to be either. Progress is often checked by the sheer size of the opposition, who can afford to spend their customer’s money on complex systems, and have no problem paying out a fortune in external fees.
But with each incremental gain, challenger banks like Atom, based in Durham, who have raised £135 of funding to date, Monzo, founded by ex-Starling co-founder Tom Blomfield, and Starling itself, the banks move a step closer to convincing the public they have what it takes – and they are much cheaper and more efficient than the existing deal the customer has.
More and more early adopters and influencers are flashing Monzo cards or becoming “co-founders” of Tandem. Now we’ll see if the rest of the UK has the appetite to follow their lead.