What is a challenger bank?

What is a challenger bank? image

A challenger bank offers customers in the UK an alternative choice of banking arrangement with added value services challenging high street banks to retain their customers. Due to regulatory change and deregulation in the banking market, challenger banks have been able to enter the market through an easier process.

Challenger banks are seeing a year on year sign up growth, and there are more challenger bank licenses in the pipeline at the Prudential Regulation Authority.

A 12,000 survey of SME’s has revealed that those who have also used ‘challenger banks’ are actually happier with their service levels than that of the high street banks.

It really does seem that there has been a shift to an alternative solution for businesses up and down the UK.  Not only does it seem based on the research that people have tested out challenger banks but on the whole have found the experience to be extremely positive – so much so that SME’s are using the alternative challenger bank sector more and more.

The big four banks are feeling the pinch

The big four high street banks Lloyds Banking Group, RBS, Barclays and HSBC have an 85 per cent share of the SME market all have a low customer satisfaction report – below 60% in fact which in turn triggered an enquiry by the Competition and Markets Authority into the sector last year.

The same findings also showed that challenger banks are struggling to gain market share from the main high street banks because SME’s are slow to change their lender.

So what is a challenger bank and how can one help me?

A challenger bank, in a nutshell, is there because of the failures by the high street banks.  Through the economic downturn and the banking collapse, the high street big names have created this new market which offers the customer a real alternative banking solution.

As a business, you may find they offer better rates, more products with better service levels, more access to speak with personal business managers, more access to alternative business finance, innovative technology for tracking your finances and more.

Top 10 Challenger Banks in the UK

  • Handelsbanken
  • Co-operative Bank
  • Cater Allen
  • Santander
  • Yorkshire Bank
  • Danske Bank
  • NatWest
  • RBS
  • Bank of Ireland
  • Bank of Scotland
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