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Mobile banking is currently experiencing a prior unseen level of growth in the UK. For instance, Accenture’s prognosis for digital-only banks suggests they should reach the figure of 35 million over the following 12 months (reminding you that now they are at 12 million only). During the first half of 2019, about 5 million users registered with a digital-only bank, which points to the fact that customer acquisition is growing with a 170% rate. Banks have gained account holders, whose average balance has grown from $84 to $422.
Challenger banks are working to enrich the already wide range of alternative features and actively use social media channels for marketing purposes, to reach out to a larger audience of potential customers that are willing to move away from traditional banking institutions. Digital-only banks have been successful in developing feature-rich apps that are popular among users worldwide, as well as customer service of the new generation. They have also done a great job on branding, efforts, which increases their perception as innovative and different. Challenger banks have changed the standard opinion about the banking industry, encouraging the shift towards new, modern, seamless and convenient services.
What was the reaction from the side of traditional industry players? They felt an urgent need to keep up with the pace of innovation and digitalize their operation, including customer service and feature and app development, in order to retain the existing customer base. The competition is clearly very high and the reluctance to acknowledge emerging customer needs might lead to great losses. Digital-only banks have some solid competitive advantages that make other industry participants worried. These are mainly related to costs, improved user experience, as well as extensive digital infrastructure.
Therefore, we can make a conclusion that currently the value proposition of such digital banks as Revolut, Monzo and N26 is superior to the one of traditional banking institutions. They have managed to create highly cost-efficient offerings, which have improved customer satisfaction and convinced users to trust challenger banks with their personal finances management.