Fintech has taken the world by storm, revolutionizing the way we manage our money.
One of the most significant developments in this industry is the rise of challenger banks, which are digital-only banks that offer a range of financial products and services.
In this blog, we will explore the continued growth of fintechs and challenger banks and their impact on the financial services industry.
What are Fintechs and Challenger Banks?
Fintechs are companies that use technology to offer financial services. They are disrupting traditional financial institutions by providing innovative and user-friendly solutions to customers’ financial needs.
Challenger banks are a subset of fintechs that offer a full range of banking services, including checking and savings accounts, loans, and credit cards. They operate exclusively online and do not have any physical branches.
The Growth of Fintechs and Challenger Banks
Over the past decade, fintechs and challenger banks have grown rapidly, with more than 12,000 fintech startups worldwide.
In the UK, challenger banks have increased their market share from 1.3% in 2015 to 14.9% in 2020. Similarly, in the US, challenger banks’ market share has grown from 1% to 10% in the same period.
This growth can be attributed to the ease of accessibility and convenience that these digital-only banks offer.
Impact on the Financial Services Industry
The growth of fintechs and challenger banks has had a significant impact on the financial services industry. Traditional banks are now facing stiff competition from these digital-only banks.
This has forced them to rethink their business models and invest in technology to remain competitive. Traditional banks are also partnering with fintechs to offer their customers a wider range of services.
Challenger banks and fintechs have also made financial services more accessible to underserved communities. They have created products and services that cater to individuals who were previously unable to access traditional banking services.
For example, many challenger banks offer credit-builder loans to individuals with no credit history, providing them with an opportunity to build their credit score.
Wrapping Up
The continued rise of fintechs and challenger banks has disrupted the financial services industry, providing customers with innovative and user-friendly solutions to their financial needs.
Their impact on the industry is only set to grow as more customers embrace digital-only banking solutions. Traditional banks will need to invest in technology and embrace partnerships with fintechs to remain competitive.
The future of banking is digital, and fintechs and challenger banks are leading the way.
