There are many different models of challenger banks, some providing one product, focused on doing one thing incredibly well, others providing full offerings to a particular customer segment, and many models in between.
What is common among challenger brands launched by established financial institutions is that their product offering is often driven by a business need. For example: increasing total deposits, creating cross-selling opportunities, acquiring new customer segments, or providing liquidity. The downside of challenger brands founded on the business need of a parent company is that they often come with a lack of inherent user-focus.
Conversely, independent challenger banks face a number of other obstacles - they may have a completely different operating model, and potentially lack a banking licence (which means that customers don’t benefit from deposit insurance). Alternative models are often built specifically for a customer need and can involve pre-paid cards, creative product structuring, personal financial management tools, or great mobile applications.
A potential downside faced by independent challenger banks, particularly in North American markets, is a lack of trust, which can be an enormous barrier to customer acquisition in the banking sector.
At ATB, as we explore our own challenger brand, we are learning from both the institutional sub-brand model and the startup approach, looking to leverage the upside of each while avoiding mistakes and pitfalls. How do we build banking for the growing segment of the population who are ‘digital natives,’ no matter their age, without being weighed down by assumptions about what ‘banking’ is?
Rather than starting from scratch, we’re coming in with the the power, experience, and resources of an established institution. In the founding of the Transformation Team at ATB, we’ve harnessed the grit, passion, and agility of a startup, and now we’re applying those skills and taking the best from both worlds.
Developing a challenger brand is more of a ‘mindset’ than a set process. For us, It is about tuning in to our customers to guide us; outsmarting, rather than outspending more traditional models; and creating a whole new game instead of playing by the old rules.
It’s quite a task we’ve set for ourselves to transform banking, we look forward to finding like-minds to help set the new rules. Whether you join our team, follow our journey on alphaBeta, or bank with us: buckle up, it’s going to be an exciting ride.