Challenger banks have grown pretty impressively in Britain over recent months. London-based Revolut, which is in the process of raising funds at a reported valuation of between $7bn and $8bn, now has more than 8m customers across the globe; rival Monzo says it is signing up 55,000 new customers every week; and Berlin-based N26, which has over 3.5m users in total in various countries, signed up over 200,000 customers in the first six months alone of its arrival in Blighty (it has signed up more since).
And if their aggressive rhetoric is anything to go by, these fintechs have only just begun to scratch the surface. Revolut’s Russian CEO Nikolay Storonsky has said he would want a $20bn price tag before going to an IPO (which would give the company the seventh-biggest IPO ever in stock market history); N26 has said its goal is to have between 30m and 70m customers (which would make it bigger than Deutsche Bank, RBS or Barclays).
So the big bad boring banks should be quaking in their boomer boots, presumably?
Well it looks like they are. Signs of incumbents scrambling around to keep up with the fintechs are becoming increasingly apparent. Taxpayer-owned RBS, for example, recently forked out a cool £100m to launch its own “digital bank” complete with meaningless quirky name (Bó), brightly coloured card (not coral but yellow - different!) and budgeting tools (heard of them?).
But a new set of data from mobile data analytics company Ogury, which analysed the mobile banking behaviour of 688,000 people in the UK between 1 July and 30 September last year (with their consent!), suggests the old high-street lenders needn’t be getting too worried just yet.
Take a look at this chart:
On the X-axis is the proportion of people who use each of the major banking apps at least once a month, both challenger banks and incumbent banks. The Y-axis shows the proportion of those people that use that banking app exclusively. As you can see, the traditional banks not only still have a much larger share of the market, but also a far more faithful customer base -- at least in the sense that the majority of their customers don’t use other banking apps.
Monzo’s exclusive customer base, while the highest among the challenger banks, is only 20 per cent, or less than a third of Barclays’. When we last looked at this issue 18 months ago, using an earlier set of Ogury data, Monzo had a 22 per cent exclusive customer base, so this slight decline in that proportion (albeit with an increase in absolute terms) is not very promising, particularly for a company that has put so much effort into becoming a proper bank over the past year or so, offering services such as overdrafts, small loans and savings accounts.
When Monzo announced that it had hit the 3m customer mark in September, that prompted headlines such as “One in every 20 adults in the UK now bank with Monzo”. But are these people really “banking” with Monzo?
A couple of us here at Alphaville Towers have Monzo cards (and indeed Revolut cards), but we don’t consider ourselves to be banking with them. Despite the fact that we now have IBAN numbers, sort codes, deposit protection, and the rest of it, we think of Monzo as a kind of add-on; a secondary service that we use to pay friends quickly, to buy stuff abroad, and to set weekly budgets. Where do our salaries go? Where do we pay our bills out of? The traditional banks, still.
There is some good news for Monzo in the Ogury data. It is the biggest challenger bank in terms of market share, though its monthly active users were less than a quarter the number of Barclays’, at 6.2 per cent compared with 25.2 per cent for the traditional bank.
Here’s the full breakdown (note that this shows what proportion of Ogury’s sample uses each app, and that because many people use more than one app, the numbers add up to over 100 per cent. And even then the challenger banks only add up to a total of 14 per cent):
The data also showed a significant divergence between the behaviour of the customers of the various challenger banks.
For the 80 per cent of Monzo’s customers who have other banking apps, traditional banks are the the biggest competitor: the top three apps that Monzo shares its customers with are Barclays, NatWest and Halifax (in that order). It should be noted that the number of users who also bank with traditional banks might be even be higher than this, if they don’t use their bank’s app but instead bank online (which Ogury doesn’t monitor).
For Revolut, it’s a similar story: for its 81 per cent of unfaithful users, the top three other banking apps used are Barclays, Lloyds, and HSBC. In other words, most of Monzo’s and Revolut’s customers like having the comfort of having a boring banking app to go alongside their flashy fintech cards.
For N26, though, a company that -- unlike Monzo and Revolut -- has positioned itself as a proper bank from the moment it entered the UK market in October 2018, more of their customers share their loyalty with other fintechs: the top apps that N26’s 83 per cent of unfaithful customers use are Monzo and fellow challenger Starling, and only then Barclays.
Charlotte Diemer, Ogury’s head of insights for the UK told us:
N26 only recently launched in the UK in 2018, and they launched after seeing all the other challenger banks launching. But N26 had a very clear positioning as a bank, whereas if you take a Monzo or a Revolut, people started using them as an alternative debit card, with a nice function to look at the spends and analytics. So it was more of a mobile payment option, which is a very different positioning in terms of branding.
This shows to me that people are starting to use N26 as a proper bank as opposed to, say, Monzo.
Still, less than 1 per cent of Ogury’s sample were active users of N26 in the period they monitored. And even putting all of the challenger banking apps together, only 14 per cent of the sample used any of them at all.
There are some reasons for the bigger banks to be a little concerned, however. The fintechs tend to have a far younger demographic than the incumbents, and therefore could well start to gain more market share as new young customers get their first proper bank accounts (as they are well aware -- Revolut has a child-friendly version of its app planned for this year).
Of the challenger banks Monzo has the youngest user base, with 68 per cent of its users aged between 18 and 34. That compares with 53 per cent for Revolut users in that age range, and N26’s 57 per cent.
Monzo is also leading the whole pack in terms of monthly downloads:
Still Monzo, Revolut and the other fintechs have a long way to go before they can convince the public that they are worth ditching their traditional bank accounts for. That’s a problem: if they ever want to have any hope of making some money, they are going to have to become sticky. But in an era in which switching between multiple banking and mobile payment apps is so frictionless and beneficial for the user, and in which consumers expect to get services for free, becoming sticky is going to be tricky.
Related links:
UK fintechs aren't eating the banks' lunch just yet - FT Alphaville
How Monzo is banking on customer apathy - FT Alphaville
Is the fintech bubble bursting? - FT Alphaville
"traditional" - Google News
January 07, 2020 at 03:11PM
https://ift.tt/39HRVZU
Fintech users just can’t get enough of traditional banks - Financial Times
"traditional" - Google News
https://ift.tt/36u1SIt
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update
Bagikan Berita Ini
0 Response to "Fintech users just can’t get enough of traditional banks - Financial Times"
Post a Comment