{"id":16872,"date":"2022-04-07T19:30:33","date_gmt":"2022-04-07T14:00:33","guid":{"rendered":"https:\/\/coforge.site\/cigniti\/blog\/?p=16872"},"modified":"2022-04-07T19:30:33","modified_gmt":"2022-04-07T14:00:33","slug":"challenger-banks","status":"publish","type":"post","link":"https:\/\/coforge.site\/cigniti\/blog\/challenger-banks\/","title":{"rendered":"Challenger Banks: Business Drivers and Success Imperatives"},"content":{"rendered":"

Challenger Banks are the new age banks that have come into existence riding on the waves of technological and regulatory enablement.<\/span>\u00a0<\/span><\/p>\n

These banks, in general, are completely digital and don\u2019t have a branch, saving loads of money, which makes the entire process convenient and cost-effective for the customer.\u00a0<\/span>\u00a0<\/span><\/p>\n

Every year, they are gaining more and more popularity and have already taken over some categories like payments and transfers.<\/span>\u00a0<\/span>\u00a0<\/span><\/p>\n

In the banking domain, using emerging tech\u2019s challenger banks’ core differentiators is\u202fdriving innovation and improving customer service levels.<\/span>\u00a0<\/span><\/p>\n

These banks build on the weaknesses of the incumbent large banks in terms of customer experience, legacy infrastructure, and slower adoption of industry trends while driving down the cost of service significantly.<\/span>\u00a0<\/span><\/p>\n

Challenger banks are steadily making a dent in the customer base of the large incumbent banks by offering higher returns and value on their service offerings. The Neo Bank global market is estimated to be $627.99bn by 2028, growing at a CAGR of 47.17%.<\/span>\u00a0<\/span><\/p>\n

The growing demand for superior customer experiences facilitated via digital channels has led to increased requirements for digital onboarding, contactless services, and engagement tools.<\/span>\u00a0<\/span><\/p>\n

The introduction of Artificial Intelligence (AI) among challenger banks, coupled with the pandemic, served as a game changer in the way people avail banking services.<\/span>\u00a0<\/span><\/p>\n

\u00a0<\/span>Benefits of Challenger Banks:<\/span><\/b>\u00a0<\/span><\/p>\n

\u00a0<\/span>Digital or app-based banking has many more benefits. Some of these are that by not operating as an in-person branch system, they can avoid the high costs associated with it, which can be utilized into better services and innovation of products, and sometimes even by giving lower costs to customers.\u202f<\/span>\u00a0<\/span><\/p>\n

\u00a0<\/span>While opening a bank account at any physical bank might take a couple of hours, with a digital bank, the process is done within\u202fa matter of minutes.<\/span>\u00a0<\/span><\/p>\n

\u00a0<\/span>Not only that, they have been particularly thriving throughout the pandemic, and before, due to the way their customers are now able to access their banking needs through their mobile phones, tablets, iPads, or any computer systems from the comfort of their own sofas.<\/span>\u00a0<\/span><\/p>\n

\u00a0<\/span>Challenger banks often come preloaded with different features too. Whereas with a challenger bank, you\u2019re more likely to be able to use services that physical banks have yet to offer\u2014like budgeting, tools, instant spending notifications, or even opportunities to invest your money.<\/span>\u00a0<\/span>\u00a0<\/span><\/p>\n

\u00a0<\/span>Challenger banks also often come with bright, modern branding, with fun-colored debit and credit cards appealing to millennials.<\/span>\u00a0<\/span><\/p>\n

\u00a0<\/span>By using BaaS, or Banking as a Service Infrastructure, they allay users’ fears about security. They often partner with traditional banks to provide better financial protection. On the cybersecurity side, challenger banking apps have built-in features such as fingerprint scanning instead of passwords or requiring two-factor authentication (2FA) to keep client information secure.\u00a0<\/span>\u00a0<\/span><\/p>\n

Challenger Banks across the Globe:<\/span><\/b>\u00a0<\/span><\/p>\n

\u00a0\"Challenger<\/span><\/p>\n

\u00a0<\/span>source<\/span><\/i>: <\/span>fintechnews.am<\/span><\/a>\u00a0<\/span><\/p>\n

\u00a0<\/span>Business Drivers for Challenger Banks<\/span><\/b>\u00a0<\/span><\/p>\n

Driver #1: Open Banking:<\/span><\/b>\u00a0<\/span><\/p>\n

Seamless integration with banks and other service providers is highly imperative.\u00a0<\/span>\u00a0<\/span><\/p>\n

Open banking plays an important role in developing new services and integrating customer data with bank APIs available to third parties, which enables challenger banks to be more successful in the marketplace. Challenger banks adopt an open architecture, laying the foundation for the following:<\/span>\u00a0<\/span><\/p>\n